Economic woes hit hard at charities

NEW YORK (AP) — For many social-service charities across America, the recession has 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,” said 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 mind-set 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.

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.

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.