This post's title is a question I was asked a dozen times in December in front of live audiences or by email. It's not a short or easy answer.
The bad news first.
1. The recession is nowhere near over (although technically it apparently ended in July of 2008--I wish I lived in THAT world), and with US employment still just under 9%, those nonprofits who are either heavily dependent on donations OR state funding are a long way from daylight.
2. Nonprofits continue to close their doors. There's a bad and good part of this: recessions are brutal on weak organizations, both for profit and nonprofit. So, in theory, the weaker nonprofits (read: the ones with less cash or a too single funder dependent business model) are the ones that are closing. No matter, the people who depend on these nonprofits are being hurt or displaced, often as a new (unfunded) burden on the stronger nonprofits that remain. The small good news here is that less nonprofits mean less competition for limited dollars.
3. There's no real end in sight to state and local budget cuts as long as we, as a nation, remain as committed to avoiding taxes as Superman is to avoiding kryptonite.
Now to the good news.
1. Thousands of the unemployed have shown up at nonprofits' doors to volunteer.
2. Donations overall have remained fairly steady, and in the face of the unemployment numbers this is a testament to Americans' generosity.
3. Businesses have stepped up their commitment to social outcomes, even if this doesn't mean simply giving money to existing nonprofits. In many cases, businesses are being formed to both make a profit and fund specific social outcomes. Think TwoDegrees bars or Tom's as great examples.
So what should your nonprofit do to minimize the bad and take advantage of the good?
First, re-examine your business model. Is it time for a significant change?
Second, look at your people resources. Do you need to change your skillset on your staff, or your board, or ramp up more use of volunteers?
Third, examine your marketing (and I don't just mean your fundraising--ALL of your marketing). Are you spending your time and money wisely, and targeting the right demographics?
Finally, can you, even in tough times, put aside a bit more cash this year? In a crisis, cash gives you time to think and not kneejerk. The fact that you're reading this means your nonprofit is one of the stronger ones, one that has survived to this point.
Here's hoping that 2012 is a great one for your mission and the people who depend on you!