Nonprofits facing more demand, less funding for aid programs
The economy’s turmoil takes a different toll on service agencies, which rely these days on patrons who are already strapped for cash. Here’s how some are doing it.
If you’ve been tightening your belt as the economy sags, be thankful your business is a for-profit enterprise.
For nonprofits in the Rock River Valley, a slumping economy means only one thing: trouble.
“Whenever the economy starts to go in a negative direction, it’s always more difficult for nonprofits,” said Michael Call, president and CEO of the United Way of Rock River Valley. “The demand for services goes up and donations go down. It’s really a squeeze on human services.”
It’s not just a local trend. Nonprofits across the country are worried about current and future fundraising projects, according to data released last month by the Center on Philanthropy at Indiana University.
About 83 percent of fundraisers reported feeling a negative effect from the economy, compared with 48 percent six months ago. A majority of the groups also expressed concern that conditions would improve only slightly, if at all, in the next six months.
Call said the region’s demand for services is “starting to creep up,” but economic conditions haven’t hit major players dramatically, at least not yet. United Way hasn’t seen the requests for help from nonprofits that it saw during the 2001-02 recession.
That will change if the economy doesn’t improve.
“If the economy continues going south, we need to be more prepared for that eventual decrease in donations,” Call said.
United Way exceeded its 2007 fundraising goal by raising more than $6 million, and that money is still coming in this year through pledges collected during the past year.
The organization is gearing up for its 2008 campaign with a kickoff event Sept. 4, and the next six months to a year is when United Way will know the true economic effects on nonprofits. United Way is tweaking its message for the kickoff as a way to emphasize the community’s need for togetherness.
“We have to appeal to the community to dig a little deeper in the coming weeks. We’ll go out to our more committed donors who have been with us for many years to plow the ground before we make the request.”
New faces, fewer resources
Donations to the Rock River Valley Pantry were down 19 percent and food donations down by 300 pounds in June compared with the same time in 2007. But the biggest hit for the pantry was in state-issued food programs.
“The community has been great. We expected the numbers to be down because (donors) need to be concerned about taking care of their own families and needs first,” said Kim Bakke, the pantry’s executive director.
But emergency food donations were down drastically in July, Bakke said: The pantry received 4,501 pounds of food compared with 14,854 pounds in April.
The pantry, like other nonprofits, has been hit with increased need in a tight economy, all while making do with fewer donations. The pantry estimates it served 235 new families in July. Officials cut one full-time employee position to part time to relieve a budget shortfall; volunteers make up the bulk of the pantry’s work force.
Bakke said clients attribute their financial stress to increased prices for fuel, food and petroleum-based products, as well as back-to-school costs and increases in utility rates.
Costs are going up for the pantry, too. A plat of canned fruit increased by $7 during a three-month period recently.
“It’s heartbreaking to see so many new families. There are new faces every day,” Bakke said. “People are embarrassed, but many times they’re here through no fault of their own. It’s job loss and increased cost of living. I tell them, ‘You’re the reason I’m here. This is an emergency food pantry for you.’”
The pantry has a new fundraiser this fall — an affordable bowling event — that Bakke hopes will attract more families and new donors.
Waiting on the state
The Literacy Council gets $175,000, the bulk of its funding, from the Illinois Community College Board and the secretary of state’s office, meaning its future is tied up in the state’s budget quagmire.
Gov. Rod Blagojevich cut $1.4 billion of the new budget, and the House and Senate haven’t decided how or whether they’re going to restore some of those cuts to health care, addiction recovery and other services.
“We could face a real cash-flow situation because we won’t be getting state payments on time,” said John Hurley, executive director for the agency that provides literacy instruction to individuals and families.
The uncertainty means council officials have had to make contingency plans, such as approving lines of credit and deferring payments, to keep finances on track.
Hurley said there’s been a big increase in requests for English-language classes. The group always needs more volunteers — it has a waiting list of 100-plus adult learners waiting to be paired up with volunteers to learn to read.
The Literacy Council’s three big fundraisers — 100 Men Who Cook, the Literacy Run and the Three-Vehicle Raffle — did quite well this year, despite the economic downturn. The focus for next year will be planning the events sooner and being more aggressive with fundraising overall.
“No one wants to see any of the nonprofit agencies close their doors. We have to be resourceful, conscientious and diligent in making it through this crisis.”
‘Our future is less reliable’
The Northwest Community Center is holding its own for now, but it had to make some cuts recently to maintain a balanced budget.
Executive Director Jim Peterson said the center was able to keep all of its programs going, but it cut one case manager position from full time to part time and eliminated one full-time maintenance job and a support position through the Northwest Illinois Agency on Aging. He also presumes that the economy affected attendance this summer at camp.
“I think families are not putting kids in summer camp because their discretionary dollars are going somewhere else,” Peterson said.
The community center is in the same boat as The Literacy Council, in that officials are waiting for state contract money reserved for job training, after-school programs and similar projects. Further delays will mean the center will need to “borrow money to keep the place going,” Peterson said.
He thinks the biggest challenge is fundraising and what will be an even bigger competition for necessary money during the next year.
The community center operates on a budget of about $800,000. About half comes from the state, about $100,000 is from the United Way, and the other chunk comes from fundraisers, which include weekly bingo, rental and concession income, and interest from investments.
And while bingo is a regular moneymaker for many community centers and churches, it’s a source that Peterson said has seen a slight downturn in recent years. That’s likely the fault of the economy, competition from the lottery and casinos, and not as many young people taking to the game.
“We’re still doing OK, not losing money on bingo, and it’s still a major fundraiser for us,” he said. “But I also think bingo is probably one of those cultural institutions that might be starting to fade away. A lot of younger people are not taking up bingo the way their parents did. It’s a shift in generations.”
Creative fundraising is key, although Northwest Community and other nonprofits have been hit hard as large manufacturing companies have left town. The nearby Amerock Corp. was a big supporter of the center, Peterson said, and a lot of employees used it before the company started major layoffs in 2003.
“If, for the next six months, the economy is in the doldrums, our future is less reliable. A good, sound economy is good for everyone. Unfortunately, in tough times, donations are the first thing to go.”
Melissa Westphal can be reached at (815) 987-1341 firstname.lastname@example.org.
On the right path: Helping workers regain wholeness
Nonprofit groups indirectly experience the results of national financial crises as people reduce their discretionary spending. Some of those people, however, are in the middle of their own financial crisis, which is where the Pathways Employee Assistance Program and similar ventures come in.
Government agencies, health-care organizations, and manufacturing and other local companies hire Pathways to offer a confidential outlet for employees and their families to discuss problems in their personal lives, from elder care to financial distress.
Last summer, Pathways contracted with a national firm to offer more financial and legal services.
Lately, Pathways has seen an increase in clients with financial problems and job insecurity.
The cost for Pathways’ services translates to a couple of dollars per employee each month, Director Mary Ann Norwood said, and companies turn to the organization because getting too involved in the personal matters of employees can “become very messy.”
“Other employees resent it because they see employers spending too much time with one person. There are issues of favoritism and making it difficult to be objective during an evaluation.”
Norwood said Pathways trains employers to refer their workers to the assistance program when they see a person’s job performance declining.
Pathways reports back to a company twice a year with a general problem list so employers know how the services are being used. Names and other details remain confidential.
Norwood’s biggest piece of advice during stressful times? “Go back to the basics.”
“It’s about taking good care of yourself — eating right, getting enough sleep, taking time to exercise and look inward. You have to be in top shape to take on those stresses. People get worried and stop taking care of themselves, and that’s when everything falls apart.”
— Melissa Westphal