How charities survive tough times

Some charities are aggressively deploying new technologies' social networking to extend their fundraising efforts. Doctors Without Borders, which typically relies on direct appeals, recently launched a tool modeled after a sports event where donors are asked to raise money from their friends and family. The hoped-for result: an army of donors.

"There's a lot experimenting going on right now with social media," says Stacy Palmer, editor of The Chronicle of Philanthropy. "But it's way too early to say whether it's working or not."

Another survival tactic: cooperating with rivals. "We're starting to see a number of nonprofits with similar missions sharing administrative functions," says Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog. "That's something most thought would never have occurred."

The Center for Nonprofit Advancement, a Washington-based group that helps local nonprofits, created a program called "Back Office in a Box," which pools nonprofits, enabling them to share financial management and accounting resources. In San Francisco, meal providers Project Open Hand, St. Anthony's, Glide Memorial, and the San Francisco Food Bank have joined forces to share kitchen space. Some donors are pushing for those consolidations. The San Francisco Foundation recently recommended that the city reduce the nearly $500-million a year it spends on outside social-service organizations by helping some of the 7,000 local nonprofits cut costs, merge, or close.

To make up for the cuts in staff, some charities are also using more volunteers. "With unemployment high, many nonprofits are relying on volunteers to stay afloat," says Klein. According to the Corporation for National & Community Service, more than 61.8 million Americans volunteered this year – an increase of about 1 million from last year (see chart). Ironically, the increase has many potential volunteers struggling to get called back, or being placed in jobs that don't match their skills.

But the strategic use of volunteers remains a boon for many organizations. One San Francisco nonprofit, the Jewish Voice for Peace, enlisted 14 volunteers to help with fundraising. "The team … ended up raising $40,000 more than last year," says Klein, who advises the organization. "That's more than what the existing staff would have been able to do."

Even with the greater attention on efficiencies, many nonprofits won't survive, watchdogs say. There are simply too many, says Mr. Ottenhoff. "This is the time that we'll see a lot of consolidation."

But Klein hopes that nonprofits will remain optimistic. "With so much attention focused on deliverables and outcomes, I just hope that [nonprofits] will continue to experiment. It's crucial for everyone."

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Also:

Holiday giving: How to choose a charity

The 50 largest US charities ranked by total income (PDF)

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