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delivered a staggering one- two punch. Sharp drops in donations and
investment income have been coupled by soaring demand for their
services. The casualties so far include countless needy clients
losing assistance and thousands of nonprofit workers who've been laid
off. Some local charities have shut down; even many of the largest
nationwide operations have made painful cutbacks in staff, spending
and programs. "Nonprofits are generally at the whim of the economy
... but we've never seen anything like this," says the Rev. Larry
Snyder, president of Catholic Charities USA. "Increasing numbers of
our own volunteers and employees have been forced to become clients
of our services." The cutbacks are forcing charities to rethink how
they operate and make changes that are likely to outlive the
recession. Nonprofits, like regular businesses, are learning to do
more with less. Those that survive will emerge more efficient. "It
gives you a mindset to be more creative," American Heart Association
CEO Nancy Brown says. "We're thinking even better and more
innovatively than we were 10 months ago." Numbers help illustrate the
magnitude of the challenges. Giving to social-service charities fell
by 12.7 percent in 2008 , according to the Giving USA Foundation,
and there's been little evidence of a resurgence so far this year.
Simultaneously, many state and local governments are cutting back on
funding for nonprofits or delaying payments as they struggle to
assemble their budgets. That double hit to charities' revenue comes
at a time when the national poverty rate has reached an 11- year
high of 13.2 percent. Nonprofit officials hope giving levels will
rise once the recession ends, but for now many are thinking hard
about how to use their dwindling resources. "We can't be in recession
- there are too many people relying on us," Brown says. Brown's
organization laid off 371 staff members across its national
affiliates - 10.5 percent of its work force - and chose not to fill
more than 200 vacant positions. To save money, it's cut travel costs
and promoted resource-sharing among its affiliates. World Vision,
which aids disadvantaged children and families worldwide, has
intensified efforts to thank donors and enable them, through high-
tech improvements, to keep track of how their donations are used. And
some local Salvation Army branches resorted to deploying their red
kettles - normally reserved for the Christmas season - to raise
money in July. "This is the most financially challenging period of
time we've had," says Major George Hood of the Salvation Army, who
was among the national officials who opposed that move yet
understood it because of the branches' desperate financial situation.
"We're committed to doing whatever it takes to get the job done." The
American Red Cross in Greater New York cut its staff from 186 to 145
earlier this year as private donations fell by 25 percent. Leaders
of the chapter insist that emergency response operations will not be
affected, but say they will spend fewer resources on planning for
future disasters. The chapter, like many across the Red Cross system,
has always made extensive use of volunteers, and is now relying on
them even more, spokeswoman Marianne Darlak says. Nationally, the
picture regarding volunteering is mixed. Many nonprofits report a
surge of volunteers, including recently laid-off people looking for
meaningful tasks. Yet according to a report last month by the
National Conference on Citizenship, based on surveys of 3 ,889
people, 72 percent of Americans have cut back the time they spend
volunteering and performing other civic activities - largely because
of the recession. Some charities are examining their priorities and
scaling back. CARE, one of the biggest U.S.- based international aid
organizations, is now focusing on empowering impoverished women. Its
headquarters staff has been reduced by 43 , and the remaining 255
employees saw their pay cut. "Absolutely, it's a very useful process
- to rethink and prioritize," says Kymberly Wolff, CARE's senior
vice president for resource development. "What many nonprofits do is
become very scattered, trying to do all things for all people. This
crisis has forced us to become very strategic, and concentrate on
serving those who need us the most." Some once-flourishing local
charities have been unable to survive. Family Services of the Mid-
South, a 115- year-old nonprofit, is closing this week after
transferring a few of its programs to other agencies. The Destiny
Foundation of Central Florida, which ran a children's clinic, thrift
store and food pantry in Orlando, has suspended its operations and
may close. A recent survey by the Human Services Council of New York
City, encompassing 244 local nonprofits, found that 60 percent had
seen some decrease in public funding and 73 percent reported
reductions in private donations. More than half had laid off staff in
the past year, and 35 percent had eliminated programs. One of the
city's oldest and largest charities - the Brooklyn Bureau of
Community Service - has laid off about 50 of its 550 employees. It's
also eliminated a program that helped disabled people make the
transition from welfare to work, and scaled down a program that's
helping kids from troubled homes avoid foster care. Reductions in
both donations and city funding were to blame, says executive
director Alan Goodman. "It's like being nibbled to death by ducks - a
little here, a little there," he says. "The end result is we have
less money and fewer staff." Goodman says becoming "leaner and meaner"
is of limited consolation when he looks at the big picture - and
wonders if more government support is needed to rescue the charitable
sector. "You'll find a whole lot of smaller nonprofits will just go
out of business - totally wiped off the face of the map," he says.
"Some of the most robust ones will weather the storm, but I don't
think anyone will come through it unscathed."
