Economic Recovery Slow For U.S. Nonprofits
By Donna Gordon Blankinship
SEATTLE -- As the first signs of an economic recovery make the news, many of the nation's nonprofit organizations are digging in for another three to four years of financial distress, according to researchers who keep an eye on the charitable world.
Some larger nonprofits are seeing donations start to rise again, but most report their income is holding steady at lower, post-recession levels or is still going down, according to a new study from the Nonprofit Research Collaborative.
The collaborative found 59 percent of nonprofits report their donation income is flat or lower than in 2010, which was another down year for most charities. Among those that receive some government dollars - long considered a safety net for charitable organizations - more than half are reporting a decline in income for the year.
Forty-one percent of nonprofits have seen their donation income go up in 2011, but most of the nation's smaller charities with less than $3 million in total spending saw donations drop again this year.
Food pantries and homeless shelters across the country have reported funding crises this year because of an increase in need coupled with a drop in donations.
Siena House, a women's shelter in Waukesha, Wis., briefly shut down this past summer because it didn't have the money to continue operations. A fall fundraising drive brought in $60,000 and Siena House was able to reopen in December.
The First Baptist Church of Danville, Ky., in November closed its small food bank that fed up to 200 families a year because of volunteer and donation shortages. The food bank depended entirely on donations for its operation and volunteers to run it and just couldn't keep up with demand, said Tom Butler, a church volunteer.
About 8 percent of the charities included in the report say they are in danger of closing for financial reasons, while among smaller charities, that figure is 20 percent.
"Nonprofits are still facing very challenging circumstances," said Una Osili, director of research at The Center on Philanthropy at Indiana University, one of six organizations in the Nonprofit Research Collaborative.
Few will actually go out of business, Osili said, but cutting programs and laying off staff are a real possibility. Many are using volunteers to do jobs previously completed by staff.
"The good news is that nonprofits are starting to look ahead and think about ways to adjust to the new environment we're in," she said.
Because most nonprofits spend money the year after they earn it, or budget according to a three-year average, even when the economy does pick up, the recovery for charities will take longer, she said.
Osili said it could take donors as many as four years to return to pre-recession giving levels, in part because it takes a while for individuals and corporations to regain confidence in their own financial stability.
Jon Fine, CEO of the United Way of King County, Wash., said the nonprofit groups his organization supports through its fundraising have had at least three down years because of the recession.
In fiscal 2011, the Seattle-based United Way experienced its first up year since fiscal 2007, with donations of $119 million compared to $100 million in fiscal 2010. That's still below the $124 million total for 2007.
"I think it's less about a clear indication that the economy is improving, and it's more about individuals and corporations are willing to support proven programs that get results," Fine said.
His organization has had a lot of success attracting money for a relatively new program that helps kids from low-income families prepare for kindergarten, with donations of $10 million in fiscal 2011.
Other Seattle charities give a mixed report of their fundraising successes.
"Some are up and some are down," Fine said, adding that needs continue to be high and fundraising isn't enough to make up for government cutbacks.
The year isn't over, however, and some charities are still hoping for a holiday surprise. A recent random national survey of the general public found some potential for hope. Fifty-one percent of people questioned by Harris Interactive in a random telephone survey said they expected to give a charitable gift as a holiday present.
That survey, paid for by Federal Way, Wash., based nonprofit World Vision and conducted at the end of October, also found about seven in 10 adults plan to increase their charitable giving once the economy improves.
World Vision reports its own donation income is growing, with sales of its holiday gift catalog up every year of the recession, said Traci Coker, director of the holiday fundraiser at the religious nonprofit that focuses on international aid.
Corporate giving seems to be picking up a bit as well, said Jean Ellis, vice president for development and membership at the Denver Zoo. The zoo just received a $5.4 million gift from Toyota for naming rights to a new 10 acre elephant exhibit.
"We've had an enormously successful 2011," Coker said. "Hopefully that means things are turning around for everybody."
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