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NM Nonprofit Sector Braces for Battle With the Economy

March 20, 2009

Part III: Individual Donor Giving

Nonprofit organizations across the board are said to have been hit with a “triple whammy,” according to Civic Enterprises, a public policy firm. This triple whammy has come in the form of decreased grantmaking by foundations and corporations, decreased individual giving, and increased demand for social services in this time of an economic recession. Previous articles in grassroots. Planted. discussed New Mexico’s outlook on foundation grantmaking and the Federal stimulus package in light of the economy. In this article you will read about what direction individual donor giving has taken, how individual donors can affect your grant funding bottom line, and how you can make the most of individual generosity and volunteerism through newly funded American Recovery and Reinvestment Act programs.

The Current Landscape for Individual Giving
So what does the individual donor landscape look like in this economic downturn? Unfortunately, analyses across the board indicate that donor giving will decrease in 2009, as it appears to have done according to preliminary reports from 2008. The Center on Philanthropy at Indiana University analyzed trends over the last 40 years, which demonstrated that for years with eight or more months of recession, giving declined at an average rate of 2.7% each year.

Many things have changed since the early ’70’s – the most recent time when a recession of this magnitude affected the country. One thing that stands out is that the nonprofit sector has grown significantly, accounting for a full 11% of the nation’s jobs. In New Mexico, over 44,000 individuals were employed in the nonprofit sector in 2006, or more than 1 in 20 workers. A hard hit to this sector has the potential to affect millions of Americans – in terms of lost jobs, reduced services, and decreased spending by non-profits.

While the implications of a decline in donor giving will be felt across operations, the news is not all bleak. Monday’s issue of The Chronicle of Philanthropy reported that 52% of people who supported charities in 2008 expect to give the same amount in 2009, while only 17% plan to give less. Where does that leave the other 31%? Undecided – and that is where an effective donor appeal can make a difference for your organization. Donors want to give, but with the economy as it is, they are focusing their donations sharply on those they perceive to make a critical difference, be it in social services, education, the arts, or any other field. Consider focusing your donor appeal on the issues that your organization can help with in this economic time. Your case needs to be logical, urgent, and made in the context of what is happening locally, statewide, or nationally.

Dovetailing Stimulus Funding and Volunteerism

While our focus above is on monetary donations, non-profit leaders should also consider labor that is a donated or underwritten resource. When increasing numbers of Americans are out of work and non-profits are facing budget reductions, a beneficial synergy can form. This can be an area of individual giving that holds steady or increases during tough times, providing organizations with manpower and volunteers with an opportunity to use their time helping others. Programs underwriting community service from the American Recovery and Reinvestment Act of 2009 (ARRA) can help.  While most non-profits will not want to serve as workforce training coordinators, many can benefit from acting as a placement business for agencies providing the workforce coordination.

  • AmeriCorps: Existing grantees for the Corporation for National and Community Service are eligible to receive further support through the AmeriCorps program. Eligible activities include “providing job counseling and skills training to the unemployed, constructing or rehabilitating housing, assisting nonprofits facing increased need and decreased resources, recruiting volunteers, making housing resource referrals for and providing legal services to those experiencing eviction or foreclosure, connecting children and families to health care, and allowing after-school centers that have lost funding to stay open.”
  • Youth Employment Training: New Mexico will receive $6.3 million in formula funding for the Dislocated Workers State Grants for youth employment training.  Grantees creates summer and/or year-round employment opportunities for youth. Provisions also raise the maximum age of eligibility to age 24 to allow local programs to reach young adults who have become disconnected from both education and the labor market. Funding will be administered by the New Mexico Department of Workforce Solutions.
  • Senior Service: The Senior Community Service Employment Program (SCSEP) is a community service and work-based training program for older workers. It provides subsidized, part-time, community service work based training for low-income persons age 55 or older who have poor employment prospects. Through this program, older workers have access to the SCSEP services as well as other employment assistance available through the One-Stop Career Centers of the workforce investment system.

In short, tough economies often increase the need for nonprofit support services while individual donations decrease. Nonprofits need to clearly state their focus, make a case for how donations help with critical needs, and be creative about non-monetary donations. Developing a reliable individual donor giving base can often provide you a head start in preparing a strong proposal for grant funding. Consider ways that you can apply this to your own organization as part of your overall fundraising strategy and succeed in securing more grants and contracts, while winning individuals to your mission.

Contact: Erin Hielkema, Editor & Research Director at erin@thegrantplantnm.com.

Sources:

[1] Civic Enterprises, March 2009. The Impact of the Economic Downturn on the Nonprofit Sector. http://civicenterprises.net/pdfs/quietcrisis.pdf

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

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