December 2008/
January 2009
No bail-outs for nonprofits

By Cindy Illig Lum

Tough times mean that the United Way of Lake County must work year 'round to raise enough money for the agencies it supports. David Munson, vice president of resource development, packs supplies for employee campaigns at local companies. Photo by Rick McPeak

Nonprofit agencies can't rely on Congress to bail them out during tough times so how will they survive this economic downturn?

Calls for help to Lake County's nonprofit agencies began increasing along with food and fuel prices in July, said Sue Mize, director of community resources at the United Way of Lake County. Mize manages the 24-hour information and referral telephone line, 2-1-1.

"Our small office handles about 100 calls a day during the average week day. Now the number of calls is approaching 200," Mize said.

What she finds most surprising is that calls for help with rent and mortgage payments have doubled since this time last year, as did the number of first-time callers.

"A lot more people are new to the system this year," Mize said.

She is worried because some agencies have already expended emergency assistance funds and food pantries are so busy they are low on food. The Madison Food Center, for example, reported a record number of new families during October.

"Thirty-nine new families received food in one day," said volunteer co-director Chris Van Dusen, a significant jump for a food pantry that serves an average of 200 families in an entire month.

"We're seeing a lot more seniors and working people than we used to," Van Dusen said. While the Madison pantry has not run out of food, they have had to double their orders to keep up with demand.

Renee Berry, chief executive officer of the Lake County Council on Aging in Mentor, says seniors have been especially hard hit this year.

"The number of seniors requesting meals on wheels and coming to congregate lunch sites has been increasing since July," Berry said. "With this spike in requests, our expenses have increased and so has our need for volunteers."

As for the overall impact of the economic downturn on seniors, Berry foresees a steep drop in quality of living.

"People who thought they had a middle-class income or pension are watching it slip away," Berry said. "We as a community are going to have to address this issue."

The impact on nonprofit fundraising

For nonprofits, the increased need for services translates directly into increased expenses and in the short term, the need for increased donations. According to a 2007 Holiday Survey conducted by the Association of Fundraising Professionals, more than 40 percent of charities raise at least one third to one-half of their donations from October through December.

How is the major fundraising season being affected by the belt tightening? David Munson, vice present of resource development for the United Way of Lake County, says fundraising has gotten tougher since this summer.

"These are the times that you can really tell the character of your neighbors," Munson said. "There are many companies that say these are tough times, I am going to step up and help. And then there are some who use it as an excuse not to get involved."

The United Way's annual fundraising campaign was underway before the stock market plummeted but when it did, Munson said the impact was clear.

"There was erosion in what were good early results while at the same time, many companies stepped up to the plate and gave the United Way a greater audience with their employees."

The United Way has been campaigning face-to-face on the campuses of many of Lake County's major employers for a number of years. Munson believes their strategy will keep donors giving through tough financial times.

"Our long-term strategy has helped with this short-term bump in the road," he said

Bob Cahen, executive director of the Lakeland Foundation in Kirtland, has also seen the impact on donations.

"What we're finding over the last month or two is that the donors we consider to be our best supporters are continuing to give at roughly the same levels they did before," Cahen said. "The change is with donors we aren't as close to -- some are outright saying no or donating at significantly lower levels."

Despite the mixed reaction, Cahen is gearing up for a $1.5 million scholarship campaign.

"When the economy gets bad we see the numbers of people coming to Lakeland increase," he said. "People are out of jobs, they are retooling and we need to find more dollars to help them."

Cahen has kept communication open with donors and is empathetic to their plight.

They're in a very difficult situation too," Cahen said. "They want to help but their assets are shrinking."

One such donor is Debra Hershey Guren, president and CEO of the Hershey Foundation in Concord Township.

"We are a family foundation and our assets have been hit," Guren said, "but I won't know the results until the end of the quarter."

Guren said many of the grants they provide are multiyear and won't be affected. She does foresee less money and a more competitive grant-making process in the near future. "I don't think it will be drastic but you will see the impact over several years."

Surviving tough times

Nonprofits have weathered many changes in the economy over time and, in fact, help people do just that.

"We certainly know that in a recession, human needs are likely to increase," said Dr. Carol Willen, manager of Lakeland Community College's Nonprofit and Public Service Center in Kirtland, "yet nonprofits might be forced to cut back on services in times like these."

To avoid major cutbacks, Willen advises nonprofits to collaborate.

"Organizations whose missions are compatible and that have overlapping client populations should be looking at ways to work together to efficiently utilize the resources they have," she said.

She believes Lake County is ahead of the game, having established a number of coordinating bodies in the arena of housing and other services.

As for reaching out to donors, Willen recommends using more cost-effective electronic methods.

"Using social media is an extremely cost-effective way of maintaining your presence," Willen said. ÒWe saw it with the recent presidential campaign."

Connie Sipple, CFRE and president of Profile Solutions Inc., a consulting firm in Cleveland, advises nonprofits to get back to basics.

"Treat your donors as potential investors, be transparent and explain exactly what you are going to do with their money," Sipple said. "If there is any good that is going to come from this, it is that fundraisers are going to have to go back to basics, renew their commitment to ethics, accountability and transparency, and start pursuing collaboration to more efficiently meet the needs of their clients."

Some experts believe it is too soon to tell how the economic downturn will affect fundraising. The outcome could be more favorable than we think.

"There are donors who give out of wealth and donors who give out of income," according to Dr. Barbara Clemenson, CPA, CFRE, an adjunct instructor at Case Western Reserve University in Cleveland. "In the past, we actually saw a large group of small- to medium-size donors, people who are closer to the need, give more."

Clemenson, like others, recommends collaboration.

Cut out the services you are providing that aren't germane to your core mission or that others are doing better than you are and collaborate to provide holistic services. Make sure you are making a difference."

Cindy Illig Lum is a Madison Township freelance writer.