Nonprofits Struggling to Ride It Out … But Then What?
Things really are tough all over. The lousy economy is kicking Wall Street’s ass and, in the process, abusing 401(k)s, mine included. We’re paying way more for gas and food than we did a year ago. The housing market has stalled. And on and on and on.
Getting squeezed from both sides are small nonprofits, whose funding is drying up as donors close their wallets and whose resources are being strained as those they serve need their help more than ever. All across the country, business writers are diving into their contact lists and writing stories that bear a strikingly similar theme:
- From an AP story out of Columbus, Ohio: "Ohio’s food pantries, community theaters and other local nonprofit groups are preparing for an expected decline in corporate donations as the economy slows and big businesses look to limit gifts."
- From the Virginian-Pilot of Hampton Roads, Virginia: "Local nonprofit agencies are grappling with a troubled economy that is hitting their bottom lines in both increased need and higher costs. And volunteers, often the backbone of these organizations, still have the time to give, but not the money for gas. It’s not just individuals. Local nonprofit leaders are reporting that big companies have tightened the reins on donations."
- From the Polk County Business Journal of Lakeland, Florida: "When times are tough all over, they’re especially tough on nonprofit organizations: more people need more help from agencies that are asked to provide more services with fewer resources. People who had been donors and volunteers find themselves needing to be at the other end of the process."
- From the Town Talk of Alexandria, Louisiana: "The economy’s downward dip and high prices are affecting local nonprofit organizations in nonpositive ways."
- From the Tennessean of Nashville: "Another tight budget year means more anxious waiting for a lot of small Nashville-area nonprofits that face rising operating costs and donations that are often flat at best. Many of those groups have historically leaned on county and city governments to pay for their services — everything from adult literacy training to youth sports leagues. But when government money is tight, they often get status-quo appropriations at best, or huge cuts at worst."
- And from the Pittsburgh Post-Gazette: "When the economy is hurting, when prices soar and incomes shrink, the pain gets passed along. Consumers have less to spend, and what they spend doesn’t go as far. So they cut back on spending … and often on donations to worthy causes."
You get the idea.
For corporations and individuals, the solution is to sock away some reserve cash when times are good so that they’re adequately prepared when things go sour. But for nonprofits — especially the smaller organizations described in the stories linked above — there are no reserves. They operate so close to the edge even during normal times that they simply have no extra resources to put away for a rainy day.
The sector isn’t used to saying "no." The natural inclination is to help when asked. But once the economy stabilizes, it will be time for a reconsidering of this notion. Nonprofits need to contemplate cutting back during good times so that when the inevitable downturn happens, they’re better prepared to ride it out than they are now. This will take some creative leadership and precise communication to donors, legislators, and others. But the alternative is continuing to read more stories about pinched organizations. | 501(c)
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