Non-Profit Financial Viability during the Great Recession: A Case Study of the Ronald McDonald House of Greater Cincinnati

The Great Recession from 2008-­2010 adversely affected the non-­profit sector as charitable donations were greatly reduced in the United States. While aggregate measures are useful to look at the non-­profit sector as a whole, it does little to show how each non-­profit individually handled its finances during the recession. To show an individual non-­profit perspective, I examined data from the Ronald McDonald House of Greater Cincinnati to determine whether or not it was financially viable during the Great Recession. To answer this question, I used data from IRS 990 forms to complete a series of financial ratios that evaluated different aspects of a non-­profit organization’s budget: revenue sources, expenses sources and unrestricted assets. I then compared the results from the Cincinnati House to four other Houses as a benchmark. My results show that the Ronald McDonald House of Greater Cincinnati was financially viable during the recession. This is supported by the House’s general diversification in revenue sources, pointing to stability in contribution types. The House also provided the same level of its program services during the recession, showing that its mission was most important even during the financial downturn. Finally, and perhaps most importantly, liquidity ratios show that the Ronald McDonald House was able to pay for its program services during the recession and also pay off short-­term debts. This is especially important as the Cincinnati House completed a 30-­room capital expansion to its facility in 2009. Increasing liquidity rates during this time points to the fact that the House was successful in structuring its budget so finances were stable even after the expansion