The Philanthropic Gap and Nonprofit Landscape in New Mexico

Nonprofit organizations in New Mexico have always faced challenges, with fewer in-state funding sources than most states. Over the last three years, challenges to both New Mexico nonprofits and nonprofits nationwide have intensified, as many have been hit by decreases in funding sources and increases in demand for services. The Grant Plant has witnessed this first-hand. To keep abreast during these unpredictable times, we worked with our clients to counter sudden dissolution of significant committed funds by identifying and securing new funding.

When I started this article, I was planning to solely target New Mexico nonprofits. As I became immersed in research, I realized that the available comprehensive data was published prior to the recent economic downturn. To accommodate, I expanded the topic to include the impact of the recession on foundations at a national level. As such, this article explores the historical philanthropic background of New Mexico and the current standing of philanthropy and nonprofits on a national-level.

The Philanthropic Background of New Mexico

New Mexico has historically been in the bottom 20% of states overall in terms of philanthropic investment. According to the Big Sky Institute, the gap between foundation assets in these ten lowest states has increased dramatically in the last decade, from $9.2 billion in 1988, to $26.17 billion in 1998, to more than $36 billion in 2005.[1] Specifically, in 2006 New Mexico foundation assets totaled just under $1.3 billion, representing a mere 0.2% of total foundation assets nationally.[2] Most recent data reveals a total of 245 foundations in New Mexico in 2008.[3] Independent foundations were the primary asset holders at 84% and had the largest total giving at 79%.

What do foundation assets indicate for nonprofits? Foundation assets per state have proved to be an indicator of nonprofit revenue (nonprofits in states with higher foundation assets typically fare better). Greater assets per state means that there is more money and generally more sources to tap into for funding. As a state with small foundation assets, New Mexico receives less foundation support per capita than most states. The NCRP reports that the average per capita grantmaking for the bottom ten states, which include New Mexico, was $34, compared to an average of $171 for the top ten states and $117 nationally.

How do New Mexico nonprofits compensate? In 2009, there were 10,608 nonprofits on record in New Mexico.[4] With limited state foundations, these New Mexico nonprofits have responded by seeking funds from external sources. In fact, New Mexico has earned the unwanted distinction as a “philanthropic divide” state, or a state with few internal private funding resources in comparison to out-of-state resources. For example, in 2005 three out of every four philanthropic dollars awarded to nonprofits in New Mexico came from national or out-of-state funders.[5]

What do nonprofits contribute to New Mexico? New Mexico nonprofits have proved resourceful and their beneficial impacts to the state cannot be denied. The nonprofit sector is a major economic force in New Mexico, employing more than 1 out of every 20 paid workers, attracting out of state funds that create 16,984 jobs and $468 million in wages and salary payments annually that would otherwise not exist in New Mexico.[6] Further, the least documented fact about these nonprofits is that they are channeling volunteer work, or uncompensated labor that benefits our communities. The economic impact of this additional volunteer labor is not included in the job, wage, and salary figures summarized above.

How have New Mexico nonprofits fared since the recession? This is a good question. No data was found to assess the current nonprofit landscape in New Mexico. National data was reviewed to determine where we are at as a nation. This data is provided below.

Philanthropy After the Recession

The foundation angle: The Great Recession officially ended in June of 2009, but its effects continue to impact millions of nonprofits with reduced income and few new prospects for support. The recession caused more than 75 thousand grantmaking foundations to cut their 2009 giving by an estimated 8.4%, by far the largest decline ever tracked by Foundation Center.[7] In 2009 foundation assets fell by 8%, an improvement over the 2008 drop of 17%.

Today, indicators suggest a return to modest growth in foundation giving in 2011, although it will probably be several years before giving matches the peak levels recorded in 2008.[8] According to a Foundation Center 2010 survey of leading funders, the following trends have emerged:

• Foundations surveyed have identified longer-term changes in grantmaking strategies: A large number citing increased grantmaking for operational support, and/or providing either more grants in smaller amounts or making fewer grants in larger amounts.
• The majority of foundations surveyed (57%) have made operational changes due to economic crisis: A motivation for reducing expenses to preserve their endowments. Cuts include fewer site visits, reduced printing of publications, and increased efficiency through technology (e.g. online applications).
• Many (41%) foundations surveyed responded to the crisis: Providing support specifically to address issues related to the economic crisis.
• Foundations generally survived the economic crisis: There was minimal impact on foundations’ decisions to close operations.

The nonprofit angle: Nonprofits nationwide have been put to the test for the past three years, as they try to cope with increased service demands and decreased sources of funding. They have done so by developing strategic collaborations in their communities, cutting costs, or recruiting and utilizing more volunteers. Many have been forced to take more drastic measures, including laying off employees or decreasing their services.

The Nonprofit Research Collaborative’s 2010 survey of 2,500 nonprofits indicates:[9]

• Giving was variable: 36% of organizations reported increases, 37% reported drops, and 26% reported no change in giving.
• Size matters: The larger the annual expenditures, the more likely the organization was to report an increase in charitable receipts.
• Volunteer usage was increased: Approximately 22% used volunteers that were formerly paid positions in 2010.
• Demand for services was increased: Of respondents, 68% reported increased demand for services, compared with 62% in 2009.
• More applications were received: Of all grantmakers, not just foundations, 52% reported an increase in applications in 2010 compared to the same period in 2009.
• Organizations were hopeful about 2011: About 47% planned budget increases, 33% expected to maintain current grantmaking, and 20% expected a lower budget.

Conclusive data analyses, conducted after the economic recession, targeting New Mexico foundations and/or nonprofits was not found. When foundation giving across the country was booming, in New Mexico it was increasing only modestly. Further, New Mexico’s rank in comparison to other states was consistently declining before the economic downturn. The challenging “philanthropic divide” status of New Mexico indicates that our nonprofit organizations were likely one of the hardest hit, as out-of-state funds are more difficult to secure and in-state funding is more limited than the years before the economic turmoil. It is expected that these reports will become available in due time. I think those results will be an interesting read.

Contacts: Wendy McCoy, Resource Development Officer / wendy@thegrantplantNM.com

---

[1] The Philanthropic Divide, 2007. Big Sky Institute.

[2] Fiscal Data of Grantmaking Foundations by Region and State, 2006. The Foundation Center.

[3] Aggregate Financial Data for Foundations in the State of New Mexico, Circa 2008. Foundation Center Statistical Information Service, 2010.

[4] National Center for Charitable Statistics of the Urban Institute. 2010. Accessed at: http://nccsdataweb.urban.org/PubApps/profile1.php?state=NM

[5] New Mexico Association of Grantmakers, 2005

[6] Economic Impact of Nonprofit Organizations in New Mexico, 2006. University of New Mexico Bureau of Business and Economic Research.

[7] 2009 Saw Record Decline in Foundation Giving, Press Release. April, 2010. Foundation Center.

[8] Moving Beyond the Economic Crisis. 2011. Foundation Center.

[9] Fundraising Survey. November, 2010. The Nonprofit Research Collaborative.