Last December, there was an informal gathering of local executive directors working in the San Francisco Chinatown area. They shared their successes and challenges for the year and everyone was optimistic but realistic at the same time. They did not see a drop in their fundraising then and some even spoke of capital campaigns. In several weeks, we will be gathering again and I anticipate that the picture will be somewhat different.
The San Francisco Chronicle published an article last week that started with this summary: Nonprofits are seeing an alarming drop in funding and increased demand for help this year, setting the stage for a complete shakeup of the sector in 2010. Here are some interesting things to note about the article:
* There are 25,000 nonprofits in the region, 7,000 in San Francisco alone. 10,000 of these nonprofits have a budget above $25,000. The combined budget of all these nonprofits account for 14% of the Bay Area's gross national product (twice the national average).
* Funding is drying up on all fronts. Individual donors, dealing with their own financial woes, are not giving. Governments, socked by property tax losses, have eliminated funding. Large philanthropic foundations have scaled back as the stock market has eroded an average 30 percent of their endowments.
Similarly, the Chronicle of Philanthropy surveyed 73 of the nation's largest foundations in December about their 2009 grantmaking plans and found that 39% of them expect to decrese their funding.
A joint survey by Citi Institutional Consulting and the Association of Small Foundations also found that more than 60% of the 350 foundations surveyed plan to reduce their grant budgets between 10% to 50%. Some say they will no longer accept new grant applications or designate new grantees and will avoid making multi-year commitments.
The San Francisco Foundation has taken the position of giving just as much as they did last year despite their shrinking endowment. But of course, to do this, they had to cut their own staffing.
With all the bad news, most nonprofits are forced to find more creative solutions to sustain themselves. Many have cut programs in times when the demand for them is even greater. Others are looking at combining their resources; whether it is through mergers or joint ventures. Rick Cohen of Nonprofit Quarterly has some great advice for foundation folks for what needs to be done.
For the 300+ self-identified Asian American nonprofits in the Bay Area, I assume the same difficulty in locating funds will be similar to their regional and national counterparts. If this is the case then surely we need a way to document this and track what the ramifications are. Perhaps, it is during these times that small non-profits, serving local needs and are locally led, will survive the economic meltdown better than their large counterparts. After all -- there really wasn't that much to cut to begin with and they have always relied on niche funders anyways.
See Rick Cohen of Nonprofit Quarterly's detailed breakdown of increase/same/decrease listing by geographic area. See also: Foundations to Cut Grants in '09, Financial Advisor magazine; Bay Area Nonprofits Brace for 2010 Shakeout
The reporting in this article reminded me of the vital role local newspapers can play in reporting on matters of community interest. But newspapers around the country are struggling to survive - the Chronicle among them. Here's a link to an article about how Mother Jones, a San Francisco-based magazine, is thriving in this environment as a nonprofit.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/24/DDUV16LGPC.DTL&type=entertainment
For all the questions being asked about capitalism and market-based economies, it will be interesting to see how local charities and nonprofits respond to an historic financial crisis, more people than ever requiring assistance, and competition for a shrinking pool of funding.
Am I the only one who finds it ironic that financial institutions - some of the area's largest nonprofit funders - played a direct role in creating the situation we find ourselves in?
Posted by: Don | March 28, 2009 at 02:28 PM