Tennessean Examines Area Nonprofit Challenges
Charities expect drop in donations next year
By Bob Smietana
THE TENNESSEANLewis Lavine has some good news and some bad news for local charities.
The good news is that most of them will make it through the end of the year without much trouble. The bad news? Next year is going to be a bear.
“We believe 2009 will be a very difficult year,” said Lavine, director of the Center for Nonprofit Management in Nashville.
Despite the economic turmoil, local charities say they are holding their own right now. While demand for their services is up, donations have yet to drop dramatically. But some charities fear that donations may fall next year while the need for help grows.
Jaynee Day, of Second Harvest Food Bank of Middle Tennessee, says requests for food boxes are up almost 10 percent over last year, and most of those requests have come from people who have not needed help until now.
“It’s a tough time for families, who are having to decide between putting food on the table or paying the light bills or the health insurance,” Day said.
Second Harvest, which distributes food in 46 counties, is in the middle of its biggest fundraising campaign of the year.
Now’s the time to prepare for the gathering storm of need, experts say.
John J. Havens, senior associate director of Boston College’s Center on Wealth and Philanthropy, says charitable donation declines won’t show up until 2009.
For one thing, most major financial donations have been in the works and locked down for months or years, Havens said. They are unlikely to disappear, even during an economic downturn. Secondly, small donors, who make half of all charitable donations, probably didn’t lose as much in the stock market as big donors. So, they remain likely to give.
“Just because the market is in the tank, that does not mean that giving will tank,” he said.
Requests for help rise
Many nonprofit leaders say it’s too early to tell whether reduced giving will meet the demand.
Kathy Ford, a volunteer with St. Luke’s Community House, says that organization usually distributes 20 food boxes a day from its pantry. Last Friday, the group gave out 49 boxes.
“It’s been very busy lately the last few weeks,” said Ford, who packs up the food boxes. “It hasn’t always been like that.”
Meg Nugent, director of the Nashville Adult Literacy Council, says her agency is also seeing an increase in needs. The council, which matches adult learners with tutors, can’t find enough volunteers.
Nugent says the economic crisis has prompted more people to visit her office asking for help. By improving their reading skills, she says, the adult learners hope they can find better jobs. Right now, the council has a waiting list of 60 people who need tutors.
“It’s a lot harder to manage a waiting list of 60 people than a list of 10,” she said.
In 2001, not long after the 9/11 attacks and the dot-com bust on Wall Street, Nugent saw a similar pattern - lots of need, not enough volunteers. But the center made it through then, and she believes it can do so again.
“We are optimistic but watchful,” Nugent said. “That’s the best way to put it.”
Lani Rossmann, vice president of the Community Foundation of Middle Tennessee, says she doesn’t expect to see any drops in grants this year. Next year’s grants will depend on how the economy performs.
“We are watching and hopeful that things will rebound,” she said. “It’s too early to tell.”
Planning recommended
Some nonprofits aren’t waiting until next year to shore up their resources.
The Southern Baptist International Mission Board, for example, has already made contingency plans for 2009. The board cut $3 million from the budget of its U.S. offices, and reallocated the money toward new missionaries, directing its funding to support its core mission.
“That $3 million will support 90 missionaries,” said David Steverson, the board’s vice president for finance.
Lavine, from the Center for Nonprofit Management, is advising other agencies to do likewise.
“We are not suggesting that anyone panics,” he said. “We are suggesting that they plan ahead.”
In planning for next year, Lavine suggest that nonprofits create two budgets, one based on donations’ remaining flat or increasing slightly, the other a contingency plan to use if the economy doesn’t improve.
“What happens if we don’t get 25 (percent) or 30 percent of our contributions?” he said. “What do we do then? The idea is to build a budget and have a game plan.”
Hal Cato, president of the Oasis Center, says planning is crucial.
His agency is already planning to cut expenses by partnering with other charities. Oasis is in the process of moving into a new building, along with eight other charities. Those groups had already planned to share receptions staff and utilities.
Now they plan to share even more staff, in areas such as accounting and human resources.
“The economy has pushed us to go ahead with those plans,” Cato said.
He said that despite the un certain economic climate, nonprofits can’t be afraid to ask for donations.
“If you don’t ask,” he said, “then you definitely won’t get donations.”
