Slow-pay state starves charities
Area donors manage to tackle tough economy
Valerie Lies, the president and CEO of Donors Forum, says that the state’s inability to pay its bills is “wreaking havoc on the fiscal health of nonprofit organizations.” Foundations are also struggling to raise funds and can’t fill the state’s gaps, she adds, forcing nonprofits to limit or terminate programs.
“For them, it’s a triple whammy,” Lies says. “Foundation and corporation support is going down, individual support is barely holding even, and the state is not holding up its commitments. 2010 is likely to be a difficult year for the nonprofit sector.”
Donors Forum, a Chicago-based membership association of 1,000 grant-makers and nonprofit organizations in Illinois, recently released its annual economic outlook report, which further illustrates the poor economy’s effect on community giving across the state.
Seven in 10 nonprofits reported trimming their budgets in 2009. According to the report, these cuts were largely due to losses in funding. Sixty-eight percent of nonprofits reported a reduction in foundation giving, while 62 percent reported decreases in government funding and 40 percent reported delays in government reimbursement for services.
The report states that these delays caused cash flow problems, leading to short-term borrowing, delays in vendor payments and cuts to staff and services. More than 40 percent of nonprofits reported waiting two to five months for state government reimbursement, while nearly 36 percent reported waiting six to 12 months.
Despite fiscal trouble, the report also finds that 67 percent of nonprofits reported an increased demand for services.
Dave MacDonna, the capital campaign and development director at the Salvation Army, says that 2009 was the first year in at least six years that the organization did not meet its Tree of Lights goal. The campaign, which represents half of the Salvation Army’s operating budget, fell short by $15,000.
“We feel it’s because of the economy,” MacDonna says. “We were doing okay — it didn’t seem to affect us until that campaign started.”
Staff hasn’t made any changes in services and hopes to make up for the loss between now and Sept. 30, when the organization’s fiscal year ends, MacDonna adds.
According to the Donors Forum economic outlook report, grant-makers also face a difficult year ahead. More than one-third of the state’s grant-makers plan further decreases in donations.
John Stremsterfer, the executive director of the Sangamon County Community Foundation, an organization that transfers charitable funds from local donors to nonprofits, schools and groups that address community concerns, says that larger contributors have “hit the pause button” in the past two years. In 2009, the community foundation, which sets up long-term scholarships and grants, saw a decrease in the number of new funds established.
However, the Sangamon County Community Foundation still plans to increase support to social service agencies and community groups.
This week the foundation gave 27 area nonprofits and groups more than $38,000 in community grants, which Stremsterfer says, was double the amount that the foundation initially intended to allocate.
“We understood it was a tough time for a lot of charities, so we invited more to partake,” Stremsterfer says. “For us, it’s a success story — connecting donors with causes.”
The United Way of Central Illinois, another major donor in Springfield, has also increased its funding to social service agencies. John Kelker, the president of United Way, says that in 2009, his organization distributed more than $1.7 million — a 2 percent jump over the previous year.
“We are bucking the trend a little bit,” Kelker says, “and we are a big piece of the nonprofit picture in our community.”
The Donors Forum report finds that more than four in 10 grant-makers indicated that they had increased their efforts to support nonprofits’ sustainability in the past year.
Contact Amanda Robert at firstname.lastname@example.org.