Moody’s Gives Favorable Nonprofit Review

25 Apr

Today’s sluggish economy has been hard on many people, and non-profit organizations are no exception to that. Many have worried that as we try to find our way out of debt and back into a thriving economy, philanthropy will struggle just to survive.

For some, that’s certainly true—and maybe it always has been no matter the state of the economy. But on Tuesday, April 23rd, Moody’s gave two of Kansas City’s major non-profit foundations positive credit reviews—and that makes way for the hope that more will soon follow.

Charity

Nonprofit organizations often struggle in times of economic hardship.
Image: Shutterstock

The Hall Family Foundation and the Nelson Gallery Foundation both have high A ratings and stable outlooks. Ray McDaniel heads up Moody’s, which praised the Hall Foundation for having “excellent balance sheet coverage of debt and operations, exceptional liquidity and prudent fiscal management.” The Nelson Gallery received similar praise, with Moody’s noting that it had significantly increased gallery visits and memberships in the past year.

For nonprofits and companies alike, there is a wide array of factors that contribute to credit reviews. Debt is evaluated both as a number and by the organization’s ability to manage and repay it. Operations and expenses must be carefully documented and kept in control, and liquidity in cash flow is an important factor as well.

Liquidity in cash flow is perhaps the most important factor of all, as it helps to protect organizations when things go awry with a funding source. Groups that have money flowing in from many different places are less vulnerable. A good example of this is the recent report that the top 7% of Americans are now earning 28% more than in 2009 while the bottom 93% is earning 4% less.

Affluent Americans tend to have financial holdings in many different places—stocks, bonds, housing, investments, etc.—while lower-earning Americans invest much more of their money in one place, most notably their houses. When the Great Recession hit in 2007, the housing market and the stock market both took huge hits. But since then, the stock market has rallied back to good health while housing is only just beginning to heat back up.

As in that situation, nonprofit organizations that have many sources of income and who are actively keeping donors interested will have a much greater chance at survival in the coming years—and the Moody’s report serves to confirm that.

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