A new survey paints a bleak economic picture of the region's nonprofit sector, with many organizations reporting funding shortfalls, layoffs, and reductions in programs.

Forty percent reported running a budget deficit this year, according to the Nonprofit Center at La Salle University's School of Business, which conducted the online survey of 185 area nonprofits this month. That is double the number that ran a deficit last year, according to the survey.

At the same time, the survey found that nearly seven out of 10 nonprofits reported an increase in demand for their services.

"More than half said their current fiscal situation is worse than it was a year ago," said the center's director, Laura Otten, who wrote and tabulated the survey, "while 65 percent have already experienced an increase for services in the same period."

Otten said she found it particularly telling that nearly half of the organizations that responded were relatively large (more than 10 employees) and well-established (older than 20 years).

"These are the organizations we would expect to be able to weather the economic storm with the least harm," she said. "The fact that they are reporting that they are suffering a lot of harm really concerns me. What does that mean for the really small organizations?"

Other key findings included:

59 percent reported individual giving was down, while 45 percent reported drops in corporate and foundation support.

39 percent said they had reduced or frozen salaries, with 49 percent considering the same in the next year.

39 percent reported reducing or eliminating programs.

22 percent reported cutting staff.

Otten said she was taken by how many nonprofits reported drops in individual giving.

"In almost every other period of economic difficulty, individual giving has managed to sustain itself, or if not, drops in giving were minimal," she said. "The reduction in individual giving that nonprofits are reporting is staggering. It is really, really scary."

Frank Monaghan knows firsthand the effect of the economy. President of the board of directors of the Philadelphia chapter of Habitat for Humanity, Monaghan said donations were down, forcing layoffs and a drop in the number of houses Habitat would build this year.

"We have had people write to us and say: 'I've given in the past, but I've lost my job. I'm still going to give, but it will be 20 percent of what it was,' " Monaghan said. "That is very admirable on their part, but it still means we need help."

Corporate and foundation funds are down as well.

"I certainly understand why," he said. "With the economy, everyone is much more conservative than they were."

With less funds, there will be fewer houses.

"We put 12 families in houses this year," he said. "It will be nowhere near that number next year."

Habitat has laid off three of 12 paid staffers, including its executive director. Monaghan has taken over the executive director's job without pay.

"I've been told I'm one step closer to heaven," he said, looking at the bright side.

Recession Reaction

Percentage of survey participants that have taken or will take these steps to adjust to the national economic slump.

                           In the last             In the next

Action                   12 months              12 months

Cut / freeze pay             39%                49%

Lay off staff                 22                      32

Reduce worker hours        13                     31

Eliminate a program        13                      28

SOURCE: Nonprofit Center, La Salle University School of Business

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Contact staff writer Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.