This morning’s New York Times brought a depressing tale: “Blacks in Memphis Lose Decades of Economic Gains.” No matter what macro economic metrics indicate, it is clear that the Great Recession continues to rage across America and, as Van Morrison put it, it remains Hard Nose the Highway in the hardscrabble neighborhoods where Seliger + Associates usually works.
While the situation is dire for folks who are unemployed, losing their homes and perhaps losing their hope, it is even worse for the nonprofits that provide human services, particularly United Way agencies and other organizations that depend directly or indirectly on donations. This is because service demands are up and donations are down. Although recessions always make it harder to do fund raising, the sad truth is that donations lag economic improvement.
This means that it will likely take two to three years from when the Great Recession really ends for nonprofits to get back to donation levels of 2007. The same thing happened following the last major recession in the early 1990s. It took until the late 1990s for donations to recover—just in time for the busting of the dot.com bubble, which drove donations down again, and the September 11 attacks, which diverted donations from around the country to NYC.
While you’re waiting for donations to pick up with rising economic conditions, it is always possible that some other crisis, natural or manmade, will screw up your plans. How about a huge hurricane in the Gulf this summer, slamming millions of barrels of crude oil from the seemingly never ending Deep Horizon spill into New Orleans, just as donations are beginning to rise?
What should a nonprofit do? Well, you can cut staff and services, try to squeeze more donations out of your exhausted supporters, provide third-party payer services (e.g., foster care, substance abuse treatment, etc.), try to setup a quasi-business, or re-double your grant writing efforts. That’s pretty much it.
It’s difficult to cut staff and services with double-digit unemployment and your service population hurting, so most nonprofits will eat into reserves before doing so. Many organizations lack the certifications and licenses necessary to offer third-party payer services, making this a tough path. And, while some nonprofits generate revenue through such businesses as landscaping, moving services, affordable housing rehab/resale (HUD’s 203k program, for example), and the like, these usually depend on using clients as essentially slave labor to perform the work without much compensation. Doing so impedes building client self-sufficiency and raises ethical issues; I’ve never been a fan of nonprofits running businesses.
These problems take us back to grant writing as the most plausible alternative for struggling nonprofits. You don’t want to hear it, but this is the reality of Life During Wartime. The good news, as I pointed out in Where Have All the RFPs Gone?, is that the feds are slow in releasing RFPs this year. The June to September period will be much better for seeking federal grants than usual, as lots of RFPs will have to be released before the start of the next federal fiscal year on October 1. This is not the summer to take off for that long planned trip to Kafiristan.* Instead, find a grant writer and start applying for any grant programs that are remotely appropriate for your agency. There will be plenty of competition, but some organization is going to get funded. But you are more likely to get a grant than to get results from the sixth donor letter sent this year.
* Kafiristan is the setting for one of my ten favorite movies of all time, John Huston’s The Man Who Would Be King. Faithful readers will know that I have about 100 top ten movies, but this is one of the best.