Economy impacts non-profit organizations
March 25, 2009
What flowers will bloom in this desert?
Just over a year ago on February 7, 2008 the Journal of Philanthropy published an ominous article by Holly Hall and Sam Keane titled: “Bracing for Tough Times: Many charities feel vulnerable as economy slips.” Now, a little more than a year later, the economy has slipped. Some might even say it has picked up speed and careened dangerously down a slippery slope. (Just google faster and faster, references to the economy make the first page search results…) Many businesses are threatened or failing. According to recent Bureau of Labor Statistic News Releases (http://tinyurl.com/dje47 and http://tinyurl.com/t68g), unemployment has more than doubled since 2008, with the number of unemployed increasing by over 5 million in the past year. As if the job market isn’t enough of a threat, the housing market is also suffering woes of deferred maintenance in a big way. One CBS article published in the past few months notes that foreclosures are up about 30%. (http://tinyurl.com/c3d28g)
While politicians debate with Wall Street about taxing bonuses greater than $250,000- as much as or more than the annual operating budget of many non-profits, those caught up by the economic debris flock to non-profits for services. Many, many of these non-profits are themselves strapped for cash now more than ever. With federal, state, and local government budgets in the red, those that rely primarily on government funds are especially at risk. But that’s not all. Non-profits also rely on small donations from individuals, individuals who may be struggling to stay in their homes. Non-profits rely on the support of foundations and endowments; many foundations anticipate decreasing giving. Some, such as the Picower Foundation, have been caught in the fallout of the Madoff Scandall, and as a consequence have halted grant making, some closing shop. Even the Bill and Melinda Gates Foundation which has assets valued over 38 billion is planning on “Scaling back planned growth. Planning to increase payout by about 10 percent in 2009.” (Foundation Center Focus on the Economic Crises: http://tinyurl.com/aoja9c) The list goes on. See Non-Profits Pinched in Changing Economic Landscape (http://tinyurl.com/d87dqj) for more ways non-profits are feeling the squeeze.
That said, if history repeats itself, many enduring new businesses will sprout and thrive despite the arid financial climate. “Some people getting pink slips might have ideas that could become entire new industries. Indeed, some of America’s largest and most successful firms were started in recessions or bear markets or both — including General Electric (founded in the wake of the Panic of 1873), IBM (started in the last year of the recession that followed the Panic of 1893), United Technologies (same year as the 1929 crash), Microsoft (1975 depth of “stagflation”) and Guess (1981, worst post-World War II recession to date).” (http://blog.nj.com/njv_guest_blog/2009/03/entrepreneurs_are_best_stimulu.html)
Likewise, I ask, what NPOs will be born and how will some be reborn in this environment? What will be the opportunities in this current economic “crisis”? What can and will non-profits, communities, families, and individuals do to survive, to thrive? What other flowers will bloom in this desert?
