Nonprofits feeling economic pressure, remain hopeful

As the wintry chills set in, the multicolored lights brighten the city and the red kettles make their annual appearance on the sidewalks, pangs of poverty dig a little deeper in some homes. There is no question why the holidays are a time for giving. But this year, the economic crisis has caused some giving hands to hesitate, dwelling on the bank accounts and wallets that are a little bit tighter – a little bit emptier.

Central Dallas Ministries, an area nonprofit, primarily serves the working poor with hunger relief, health care and housing. With more than 90 percent of its revenues dedicated to programs, the organization is a reputable organization in the charity world and with Charity Navigator, a national charity evaluator, which gives it four stars.

But with the recent economic downturn, even the most reputable charities fear they soon won’t have enough to offer the needy.

Although nonprofits in general are on their toes about potentially losing donors to the economic crisis, charities that serve those who are most vulnerable to the economic conditions face a greater concern.

“When the economy is bad, we get hit by a double whammy,” said Tim Delaney, president and CEO of the National Council of Nonprofit Associations.

While charities are asked to provide more services at a time when more people lose jobs, portions of their salary or health insurance, corporations and individuals have little to give to support those services.

“We’re trying to do a whole lot more with a whole lot less,” Delaney said. “Basic math shows us this can’t go on.”

Katie Goldberg, manager of donor relations at Central Dallas Ministries, said her organization is seeing a 30 to 40 percent increase in demand compared to last year.

And although donations, while slower, have been on par with demand, it’s too early for sighs of relief, she said.

Fifty percent of individual giving occurs between Thanksgiving and New Year’s because of tax incentives, said Sandra Miniutti, vice president of marketing for Charity Navigator. Nonprofits see especially huge spikes in giving on Dec. 31, she said.

Central Dallas Ministries is staying hopeful but not optimistic, Goldberg said.

“A lot of people have given us the heads up that they’re not going to be able to give in the same capacity,” she said. “We know it’s coming but haven’t felt the full effects yet.”

Public Policy

Compounded with worries of the nation’s economy are concerns of public policy at a time when nonprofits are preparing for a new president and administration in the White House.

In a survey, Johns Hopkins Nonprofit Listening Post Project found that almost 90 percent of nonprofits have seen little improvement in government policies concerning their organizations in the past two years.

The policies that are of most concern to nonprofit executives are those that would help secure private donations, according to the survey, released Oct. 22.

Delaney said a major concern for nonprofits is that even though the federal government invests billions in small businesses, nonprofits are largely ignored even though they are a significant part of the American economy. According to the Johns Hopkins survey, nonprofits employ more than nine million citizens, or about 7 percent of the country’s workforce.

“We’re not asking for a handout,” he said. “We’re asking the government to underwrite basic training and transfer of knowledge so we can do our jobs better and serve communities better.”

More than half of nonprofits whose primary focus is in community and economic development support federal grants for training and capacity building for their organizations, according to the Johns Hopkins survey, and almost 60 percent prioritize restoration or growth of funds for their organizations in the federal budget.

Another fiscal concern for nonprofits is energy prices. Almost 80 percent of nonprofits reported that high fuel costs are negatively affecting their ability to deliver services.

Tarrant Area Food Bank, for example, has had to reduce food donation deliveries from places outside the vicinity of the Metroplex and the state because of gas prices, said Andrea Helms, the food bank’s communications director.

As a whole, the food bank hasn’t felt the impact of the economic crisis yet, Helms said, but like Central Dallas Ministries, her organization is expecting a slowdown in giving toward the end of the year. But her hope is that donors will continue to see that feeding people is a basic need that must be met, she said. Because of this perception, food banks should continue to receive consistent donations even if donors cut funds to other types of organizations, she said.

Improving Society

Barry Silverberg, president and CEO of the Texas Association of Nonprofit Organizations, remains fairly optimistic that nonprofits will prevail in the midst of economic hardship. He said organizations with strong foundations should be able to withstand the pressure.

“The economy may in some cases be used as an excuse for what have been weak entities in the past,” he said.

Silverberg’s optimism comes from 35 years of experience in the nonprofit sector. He said, historically, people who give to nonprofits continue to do so even during difficult times. Although there might be dips down the road, and organizations might have to restructure their budgets, nonprofits will persevere overall, he said.

Instead, Silverberg said nonprofits should take this opportunity to refocus their goals and vision. Charities should also involve donors and volunteers in problem solving so they feel a sense of ownership over the nonprofits’ goals and in turn volunteer more time and money, he said.

One thing to watch out for, however, is across-the-board reductions, such as firing employees, Silverberg said. Nonprofit employees are in higher demand at times of economic crisis, and the organizations would continue to struggle even after the economy has been restored because of the workers they fired in a knee-jerk response.

“I’m less inclined to push the panic button,” he said. “When one does that, one almost creates a free fall.”

Silverberg said that although public policies such as tax incentives for individual giving are legitimate factors, most people contribute because they want to improve society. He said instead of fiscal policies, he would focus more on policies that promote mutual responsibility and connectedness among the citizens.

Delaney said when people’s wallets feel lighter and their budgets look strained, they should realize how much of their lives have been influenced by nonprofits.

“I was actually born in a nonprofit hospital,” he said. “In high school, I took the PSAT and SAT – both sponsored by nonprofits. I’m drinking cleaner water and breathing cleaner air because of the American Lung Association, the American Heart Association and the Sierra Club. I got married at a nonprofit and went to university at a nonprofit. Nonprofits are all around us, and we don’t respect this American gem.”