As appeared in the Christian Science Monitor
SAN FRANCISCO In her fight against the spread of HIV in her community, Pat Christen faces the loss of a key tool in her arsenal: the donated funds that have helped her campaign to raise awareness.
Ms. Christen, executive director of the San Francisco AIDS Foundation, is not alone.
Across the country, small and mid-size nonprofits are struggling to keep services afloat in harsh economic times. While the economic impact varies widely, few regions have been shielded, and nearly every charitable service has been challenged.
Cuts in public-sector grants have been a factor. In Connecticut, for example, more than 1,000 private nonprofits could face cuts of 5 to 10 percent or more in state funding, according to the Associated Press.
Connecticut legislators are still rankling over the details, but several dozen private nonprofit groups learned earlier this month that their contracts with the state might end unless the state can find more money.
For many national nonprofits, a downturn in individual and corporate giving compounds the effect. The United Way of Chicago, for example, announced cutbacks of 19 percent. And in Atlanta, local United Way officials estimate a 2 percent shortfall.
Nationwide, total giving fell 2.3 percent last year according to the American Association of Fundraising Consultants (AAFRC). According to the group, this year marks the first slowdown in giving since 1993. In past years, donations grew as high as 10 percent annually.
Experts attribute this year's drop on rising unemployment and a tumbling stock market. Art and cultural programs have been hit particularly hard, especially in New York City, according to Diane Baillargeon an executive vice president with Seedco. To assist, her New York-based organization lends millions of dollars in no-interest loans to nonprofits. She's seen many groups abandon service programs, lay off staff, and turn away those needing help.
"We've seen a dramatic increase in the number of stressed nonprofits. It's a tough economy with government funds drying up and individuals reluctant to give," says Ms. Baillargeon. "Art programs have been truly hard hit, but even the direct human-services programs have seen dollars decrease."
At the center of the nonprofits' woes is the enduring economic uncertainty. Many experts attribute the stock market plunge to the downturn, making individual donors - including many who feel tapped out after post-Sept. 11 donations - reluctant to give. Corporate donors have scaled back giving by 14.5 percent, according to the AAFRC.
Atlanta, home to one of the nation's largest airports and travel industries, has felt the impact particularly hard. "Atlanta was used to significant growth in our economy and our fundraising always kept pace," says Mark Dvorak a vice president with United Way in that city. "After 9/11, the travel industry workers were without jobs for months,
and for some it just hasn't gotten any better."
Mr. Dvorak says many Atlanta nonprofits have struggled to keep up with the demand, and many are reluctantly contemplating staff and service cutbacks.
Nonprofits haven't been shy in stepping up their appeals, and some have taken lessons from their for-profit cousins as never before. "Nonprofits are seeing just how valuable their assets are and creating ‘social-purpose business program’ to earn income from them," says Baillargeon of Seedco. “More and more their treating services like businesses.”
Seedco has helped nonprofits create workforce development programs that place employees for a fee and even organized youth groups to create and sell greeting cards.
New York's Brooklyn Children's Museum created a one such program to find new revenue sources. The program, in its infancy, has already generated new revenue for the museum. The program works by employing inner-city youth to staff the museum’s gift shop.
New Haven and New York’s City Kids Foundation is another example of social-purpose business programs. Here the organization aims to develop and train young leaders. The group recently began marketing their instructional material and creating videos to generate additional funds. The products are peddled to other nonprofits.
City Kids president, Liz Sak, says many nonprofits got fat in the 1990s. “You have to build an economically stable program and some nonprofits created program after program to keep up with the flood of money. They never prepared for the any downturn on the economy.” Ms. Sak says her social-purpose business program is profitable and accounts for 10 percent of her organization’s revenue allowing her to weather the downturn relatively well.
Organizers say these for-profit programs further the nonprofit’s goals of involving and supporting the community.
Other organizations have stepped up their "in-kind donation" programs. These programs save money by receiving equipment and supplies from manufacturers at no or substantially reduced costs. Atlanta’s United Way recently started a program to collect and distribute these donated goods to nonprofits. The agency hopes that by offering nonprofits a range of free goods from - staplers to computers - it will lessen the impact of the fundraising shortfalls.
Still, some large nonprofits have actually weathered the economic storm well. Recently the American Red Cross closed its Colorado wildfire-disaster fund, saying it had received enough funds to support its relief operations – even before the fires abated.
That news sometimes disheartens smaller nonprofits, concerned that the public will perceive that their needs, too, have been met. But it doesn't distract them from their mission. "All I care about is stopping HIV," says Christen. "My community needs our
services and I'm focused on delivering [it]."
