One so far relatively undiscussed aspect of the downturn is the effect on America’s nonprofits, sometimes called the third sector. I spent this weekend with a friend who’s a retired corporate CEO, has a personal foundation that supports local and international projects, and is very savvy in business, finance, and nonprofits. He said he’s heard that as many as half of U.S. nonprofits (charities) will go out of business during the current downturn, which he expects to last a couple of years.
Here are a few observations I can make from what’s happening in Oregon, and in the grants world.
- Many foundations, having seen their endowments dive with the stock market, are cutting back on large grants. In addition, they’re moving from longer-range capacity-building grants to meeting people’s immediate needs (as one foundation director put it, from philanthropy to charity).
- Arts organizations are seeing their donations and audiences shrinking. Seasons are being cut back, shows canceled. Some of the weaker players are seeking mergers or takeovers by larger organizations.
- Safety net organizations like free clinics and food banks are flooded with not only the poor but the formerly middle class.
- Capital building campaigns are dead in the water.
Nobody knows yet whether or how the stimulus money will affect nonprofits. If the federal government decides to fund projects through grants it may save or even enlarge some nonprofits. To the extent money flows through the states or direct federal spending it will probably have little effect.
A story in today’s New York Times says nonprofits are being flooded with high-level formerly employed volunteers. As anyone who’s worked in nonprofits can tell you, this can be more of a headache than a blessing.
There have been numerous stories in Oregon about how various nonprofits are faring. What are others finding in your communities?