“Helpers Need Help”; Study Paints Bleak Picture for NYC Nonprofits

Throughout all the difficulties and the logistical nightmare that the NYC dotOrg-athon had to battle through to realize even the modified event that will comprise round 1, people kept shaking their head, wondering why we were trying so hard to do an 8 month project in 4 months. Despite repeated requests for help through various agencies, government sources said, repeatedly, to our faces and behind our backs, that no accommodations needed to be made for this project because the issue wasn't "critical." Certain event participants seemed to think that the project wasn't worth trying unless everything could run as smoothly as the March of Dimes.

I was going through the back issues of NYNP today, and ran across an article (Sept. 9, 2009 issue) about the recently released report on the current situation faced by NYC nonprofits, conducted by our friends over at HSC and Baruch College:

New York City nonprofits are facing staggering financial challenges as they lose both public and private funding due to the economic recession. It is a crisis both broad and deep, impacting a majority of local human service agencies, often to very severe degrees. And, it is far from over in the view of many nonprofit leaders who struggle to plan for an even more uncertain future.

Those are the findings of a new study released today by the Human Services Council of New York City and conducted by the School of Public Affairs at Baruch College (CUNY). The detailed analysis of survey responses from 244 local nonprofits reveals the following:

--The majority of organizations (62%) have had a decrease in public funding with more than 1 in 5 (22%) having seen cuts of 20% or more.

--Three quarters of all organizations (73%) have experienced reductions in their private funding with close to half (44%) have seen drops of 20% or more.

--Most organizations (60%) are having difficulty managing their cash flow. Two-thirds of the nonprofits have no endowments; 30% have no lines of credit.

“We feel abandoned by both government and private funding…” said one executive. “We expect the crisis to increase during the next two years with further reduction in services,” said another.

“On a broad level, this is the worst scenario for human services organizations,” said Michael Stoller, Executive Director of the Human Services Council. “There’s less government money because there are less taxes and there’s less foundation and personal giving because of the uncertainty in the market. Yet, the number of human service clients keeps increasing as poverty levels go up and these organizations are trying their best to help those who have nowhere else to turn.”

Download the report.

From City Limits on the report:

But if 2009 has been rough, the outlook for nonprofits in 2010 and beyond is even worse. Foundations are expected to reduce grantmaking even further, and drastic cuts to city- and state-funded human services programs are widely expected.

“We have a perfect storm,” said Michael Clark, executive director of the Nonprofit Coordinating Committee of New York. “We have shrinking revenues and then we have rising demand, so it’s about as bad a bind as you can be in.”

The new normal, part one: Lower funding

When the markets crashed in the fall of 2008, U.S. foundations lost about one-quarter of their assets, on average. In response, roughly two-thirds of all foundations nationwide cut their charitable giving in 2009. According to the Foundation Center – a New York City-based philanthropy hub with international reach – overall foundation grantmaking will decline by as much as 13 percent this year. ...

The new normal, part two: Spiking demand

As unemployment in New York City continued to increase into the first half of 2009, nonprofits throughout the city – especially those providing emergency food assistance, foreclosure and eviction counseling, and workforce development – saw demand for their services grow by leaps and bounds. ...

But Paul Light, a professor of public service at NYU’s Wagner School – who has predicted a “withering” or “winnowing” of the city’s nonprofit sector, offered another explanation for the seeming lack of closures, so far. “The data just isn’t very good,” Light said. “The top-line story is we don’t know much…. If a nonprofit fails in the forest, does anybody hear it? We may have a lot of smaller nonprofits closing, but nobody knows it.” ...

There are, of course, some dire predictions.

“Something really serious needs to change right away, or we’re going to see half of the [city’s] small arts organizations die in the next twenty-four months or less,” said Kevin Cunningham, executive artistic director of 3-Legged Dog, a nonprofit theater group in lower Manhattan. “If we don’t want New York City to turn into a northeastern version of Houston, Texas, we need to take some kind of action.”

So, when you're wondering why we're fighting to make the NYC dotOrg-athon a meaningful vehicle to support mission-based work in the city; why we keep pressing on despite various setbacks; why our vision is expansive despite operating on a shoestring and with little support -- remember that the need is great, and that a small group of people decided to spend their entire summer trying to find a way to meet that need.