What Will be the Impact of the "Non-Profit Bubble"?

For years, not-for-profit agencies were relied upon to cover social and housing services formerly provided by governments. Now that municipal and state budgets are drying up along with foundation grants, NGOs are losing their funding sources.

"From the arts to education, soup kitchens to housing organizations, nonprofits perform an array of functions that shape the texture of daily life in communities across the country, often by helping people whose situations were precarious even before the economy crashed. Now, with foundations watching their endowments shrivel, many individual donors maxed out and states across the country staring at massive budget deficits, nonprofits are scaling back their services at the very moment when the need for them is escalating.

Community Service Society (CSS) of New York, [is] a 160-year-old advocacy and direct service organization for low-income residents. Its president, David Jones, describes the forces that are making the work of charitable groups like his seem like an increasingly Sisyphean task: on the one hand, cash-strapped cities and states slashing programs; on the other, private foundations reducing outlays by as much or more. Jones's colleague Frank Kortright works with a network of nonprofits that help tenants in New York City avoid eviction. The network has been fielding more and more calls lately from high-income residents it rarely heard from in the past. Yet CSS recently had its city funding sliced in half.

Some of the losses that soup kitchens, homeless shelters and job training centers are experiencing may soon be offset as money from the stimulus bill trickles down from Washington to agencies that contract with state and local government, says Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University. But the relief won't spread to everyone: cultural institutions such as museums and orchestras rely mainly on charitable donations and the sale of tickets and subscriptions. Many are canceling exhibits and shows. The situation is similarly dire for advocacy organizations that don't take government money and are now competing for a limited--in some cases, nonexistent--pool of funds."

Full Story: The Perfect Storm



Funding in a bubble is bound to burst.

We need a steady social services infrastructure in this country rather than the charity du jour or charity come lately insular approach to funding social services that creates the bubble in the first place.

For example, lately, there has been a mattress company advertising on tv they donate to foster children. Having been in foster care as a youth it particularly annoys me that the long-term stable government infrastructure (social services) designed to protect and serve foster children is operating on a frayed shoestring budget while a mattress company uses tax dollars that should be going to social services to get their brand recognized as a feel good experience. They can donate rather than pay their taxes and they get a PR bonus. Win-win? Not so.

Those tax dollars are needed for long term commitments to community care.
Social infrastructure funding is too often reliant on corporate special interests - they 'donate' and it is tax deductible. Next year or next month their 'program' is gone, replaced by some other ad campaign. Churches and wealthy donors are also who we depend on rather than accepting the general populations' universal need for support.

Not only are erratic funding strategies inherently unstable, as noted in your article, but their splintered nature means that the cost of doing business even in the best of times is also high and the efficacy of the invested dollars less than it could be. For those working in the non-profits and for those using the services there is a dizzying array of charities come lately that are nearly impossible to be consistently aware of, access and integrate into something useful. More money is spent on bureaucratic costs of creating then recreating and integrating and reintegrating many small social support organizations than on the 'big' government option that we American's attach so much fear too.

We are the government, the government has the most open books of any organization (partly why it makes for a convenient scapegoat), government is here for the long term not just for the duration of some benefactor who left funds for a year or two to their pet cause.

A safe society takes long term committed investment, pretending otherwise is a bubble that may also be bursting.

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