IMPACT
03/22/2011 09:47 pm ET Updated Dec 06, 2017

Economic Recession Continues To Hit Nonprofits Hard

It's late in the evening when Gordon Gibbs receives a call. The police have once again been called by a senior citizen who claims there are men outside his apartment waiting to kill him. The police, who arrived to find nothing -- for the ninth time -- are becoming impatient. They threaten that the next time they come out will be to arrest this man. But, the fear in his voice is real. The claim he is making is true -- at least in his own mind.

Gibbs is the Social Director for Senior Services at St. Barnabas Senior Services, a nonprofit agency based in Los Angeles that provides direly needed assistance to low-income seniors. He is used to taking late-night calls as many calls for help come in during, what he refers to as, the "11th hour."

St. Barnabas, and other nonprofit agencies like it, provide a safety net for America's most needy individuals and families. The nonprofit sector, however, is facing a crisis and has no safety net of its own. Many organizations continue to experience the effects of the recession, which has resulted in the reduction of badly needed resources.

In a new study released by the Nonprofit Finance Fund (NFF), an organization that surveyed nearly 2,000 nonprofit organizations, 87 percent report the decline in the U.S. economy continues to impact their operations.

This figure is largely attributed to the increase in demand for nonprofit services, as an upswing in unemployment, poverty, and government budget cuts, resulting from the recession, have put added pressure on nonprofits.

According to Rebecca Benard, St. Barnabas' Vice President of Development & Strategic Initiatives, the organization has witnessed a 10 percent increase in demand in just the past year. The recession has hit hard, as those who seek services are often seniors living solely on Social Security benefits -- a meager $10,000 a year, Gibbs reports. Just a small change in their finances, stemming from increased medical costs or a raise in rent, could easily render them homeless and in need of help. Governmental budget cuts, like those to social security benefits, have had a big impact on those St. Barnabas serves.

Eighty-five percent of organizations surveyed by NFF anticipate that demand will continue to increase in 2011. Only 46 percent of these expect to have the ability to accommodate these increases.

A separate study, released in November 2010 by Guidestar and a coalition of other agencies analyzing nonprofit financial trends, also cites concerns over increased demand. For the eighth consecutive year, a majority of nonprofits surveyed report increases in demand for their services. This could result in more needy people being turned away as the effects of the recession continue.

"It's not easy right now. Sometimes, when we talk to others in the field, we look across the room at each other and share just how challenging it is," Gibbs says of the current economic landscape. He goes on to describe how agencies have begun to work together in order to be able to continue to help those in need.

According to the Guidestar report, nonprofits facing limited resources to meet looming increases in demand have had to find new strategies, like partnership, to increase efficiency. St. Barnabas has begun to diversify funding streams, focusing on outcome based programs that are more attractive to foundations.

When these measures aren't enough, however, the organization relies on the sacrifices of its own staff to stay afloat. The team, including their CEO, voted to accept furloughs rather than face potential layoffs.

One employee, because his position was financed by a grant that limited his ability to accept furloughs, invested the additional payment into a fund for colleagues in need of extra assistance. "We look out for each other," Gordon says, "and all of us need to make sacrifices so we can come through this together."

St Barnabas is one of many organizations that have made sacrifices, and still face tough decisions, to remain in service. There may, however, be a silver lining to the somber statistics.

Strapped nonprofits have seen increased civic engagement, as volunteers have helped fill the gaps when budgets are tight. They have also employed online strategies to open new revenue models and resources.

The 2010 Blackbaud online giving report, an annual analysis of the nonprofit industry, indicates that the importance of online fundraising continues to grow.

Led by the influx in online contributions for natural disasters, like the Haiti earthquake that occurred last year and the current disaster affecting Japan, online giving has increased by 77 percent over the past year.

The study showed that peer-to-peer fundraising and social media shaped this growth, in addition to increases in online response for disaster relief.

Though utilization of the internet and greater civic engagement will help, nonprofits must still find the means to meet growing demands, with shrinking budgets.

There is hope, however. Another new study, this one from the Nonprofit Research Collaborative, shows that nonprofits aren't letting the slower trickle of donations get them down, and 63 percent of organizations surveyed anticipate contributions to them will increase in 2011.

Kerry Sullivan, president of the Bank of America Charitable Foundation insists, "in this economic environment, it's imperative to do what you can to help nonprofits keep the lights on while they are supporting such an increased demand for the most essential, basic services."

Gordon Gibbs believes people will step up and work together to fight for those in need. "We are their last line of support," he says, "We need to work with each other."

He advises that there are ways people can make a difference. "Be civil to each other, be compassionate. Volunteer in a nursing home or a senior center. If a senior lives near you, knock on the door to check on them, or help an old woman off the bus -- just let them know they aren't alone."