Chartered Accountants Journal, Vol. 89, No. 3, pp. 38-39, 2010
3 Pages Posted: 5 Jul 2010
Date Written: April 2, 2010
Not-for-profit organisations play an integral role within New Zealand’s society, providing employment to over 200,000 full time equivalent staff, contributing 4.9% towards New Zealand’s Gross Domestic Product, and offering a diverse range of services to assorted individuals. Despite the importance of this sector, these organisations continually face uncertainty surrounding their ability to raise the funding needed to maintain operations and offer a variety of services to their members. These organisations are dependent upon the government, community trusts, other funders and the greater public for funding.
While not-for-profit organisations are obviously important to New Zealanders, to date there has been a noticeable absence of literature exploring how New Zealand not-for-profit organisations are affected by different macroeconomic conditions. This research aimed to help fill this gap via examining the way three prominent New Zealand not-for-profit organisations (Intellectually Handicapped Children New Zealand (“IHC”), The Royal New Zealand Foundation of the Blind (“Foundation of the Blind”) and The Royal New Zealand Plunket Society (“Plunket”)) were affected by varying macroeconomic conditions. In particular, we investigated whether the macroeconomic conditions resulted in changes to these not-for-profit organisations’ funding inflow mix.
Interestingly, whilst all three organisations indicated that economic downturns had impacted upon their organisations via increased organisational stress and uncertainty, relatively few organisational staff interviewed linked their changing revenue composition over time to the changing macroeconomic conditions they were facing, drawing instead upon a number of other factors influencing their organisations.
This research identified that, notwithstanding their size and longevity as charities, IHC, the Foundation of the Blind and Plunket all appeared to be vulnerable to the affects of poor economic conditions Revenue instability caused organisational stress levels to rise, reduced their ability to plan effectively, impacted upon the services these organisations were able to offer their members, and potentially influenced the future of their organisations. Despite this they all showed that the effects of economic downturns were able to be partially insulated against via the establishment of sound funding relationships, building on prior experience, and by implementing internal efficiencies. As such, this illustrates that whilst not-for-profit organisations within New Zealand are gravely affected by the prevailing economic climate in which they operate, this does not mean the worst, but rather that clear strategies can provide a coping mechanism to ensure their services continue to meet the needs of those they were formed to serve.
Keywords: Economic Downturn, Impact of Recession on Nonprofits, New Zealand, Intellectually Handicapped Children New Zealand, IHC, The Royal New Zealand Foundation of the Blind, The Royal New Zealand Plunket Society
JEL Classification: M41, L30
Suggested Citation: Suggested Citation