Nonprofits learn to stretch a buck

Elkhart, Ind. - As the economic downturn began to take its toll in Elkhart, demand for help from the Salvation Army soared.

People who needed aid for utility bills formed lines that snaked out the entryway and onto the street. Demand for free meals and rental assistance skyrocketed.

Meanwhile, local service groups that donated reliably for years were sending smaller contributions — with apologies. The single biggest blow came when the United Way in Elkhart — after suffering a dismal workplace fundraising campaign — slashed its annual allotment to Salvation Army from $90,000 to $40,000.

Salvation Army Captain Steven Woodard, faced with dwindling funds and a dramatic increase in need, realized he needed to tear up his playbook. Determined not to cut services in the face of increased need, he sat his staff down to strategize about how to fill a growing budget deficit.

“I said ‘We have to do something… People are coming from all over the place. People are coming saying they were the ones who gave last year or adopted a family (for Christmas). Now they are coming to us for help.’ ”

The Salvation Army’s problem in Elkhart — where unemployment is nearing 20 percent — is reflected nationally among nonprofits that provide human services. These groups, which help fill the gaps in large public assistance programs, are swamped by need amid ongoing layoffs and foreclosures, while individual, foundation and corporate donations falter.

The scramble to cover costs has prompted organizations big and small to consider new ideas — from different ways of approaching deep-pocketed donors, to marshalling volunteers, or creating alliances with groups that in some ways may have been rivals.

“Many nonprofits are faced with a terrible situation,” says Bob Ottenhoff, president and chief executive of GuideStar, a national organization that monitors nonprofits and private foundations. “As in every sector of our economy, nonprofits are going to think about whether there are better ways to provide their services — more efficiently and more effectively.”

The data for charitable giving in 2008 are not complete, but the evidence so far indicates giving declined, or at best, stayed flat. And prospects for 2009 look worse.

Hunkering down in 2009
Private foundations that initially bumped up their contributions to nonprofits providing essential services in early 2008 when the recession first became official, now are scaling back, after the value of their endowments plummeted with the stock market — which lost 38.5 percent of its value in 2008. About three-fourths of 430 foundations responding to a survey by the Council on Foundations in March reported that the value of their endowments had declined more than 25 percent last year, and more than 60 percent said they would reduce grants this year.

“In ‘08, foundations said ‘We know it’s going to be a tough year — let’s do a little more,’ ” says Ottenhoff. “Since then their endowments have deteriorated even more, and they have realized that this recession is going to last longer than they first did. …If you’ve lost 40 percent of your endowment, it will take a long time to rebuild it.”

At the same time, individuals giving around the $100 level — collectively a substantial source of funding force for many nonprofits — have shrunk their donations, and winnowed the number of groups they support.

And while some organizations saw giving spike during the holiday season, the surge did not last into the New Year.

“Once the credit card bills come due, and people get the sense of the long haul, they are more cautious again with their giving,” says Melissa Temme, national spokesperson for the Salvation Army. “And that’s what we are hearing… is that the fundraising for the first quarter of 2009 is just not keeping pace.”

The funding crisis takes on different shapes across the nation and in different organizations.

For instance, United Way expects total fundraising from its workplace giving program in 2008 to be down between 4 and 6 percent nationwide, with more than half of its local branches expecting a decline, according to United Way spokeswoman Sally Fabens.

But in Elkhart, with the mainstay recreational vehicle manufacturing industry in free fall, the decline in workplace giving to United Way is far more dramatic. In March, the local United Way said contributions to its 2008 workplace giving campaign dropped by a third. That translated into large cuts in funding for 17 local agencies that United Way considers critical to its mission — including a 45 percent cut to the Salvation Army in Elkhart.

Nine other groups — including Big Brothers, Big Sisters  and a swimming program for disabled kids — lost United Way funding altogether, and the United Way cut its own staff in half, paring down to five full-time employees working on reduced salaries and benefits.

“These were not easy decisions…  It was personally gut-wrenching,” says Jerry Quatram, president of Elkhart County United Way. Even though some of the cuts fit into the organization’s longer-term plan to focus on three core areas, the economic crisis forced the issue. “We were hoping that we would have a couple of years to migrate funding, but when the economic crisis hit, we had to do it more quickly.”

Thus in his January meeting with staff at Elkhart Salvation Army, Capt. Woodard moved into emergency mode. Some of what they decided, in an effort to cover a $60,000 to $80,000 shortfall, was conventional — stepping up mail campaigns and getting board members to work the phones with their contacts in the community.

The staff also dreamed up a new fundraising plan: The “No Bells” auction launched in mid-May lists several hundred items online, everything from pizzas and autographed baseballs to cars and teeth-whitening service. The idea is to drum up cash through the auction for the Salvation Army while also creating some foot traffic for struggling local businesses.

“Say you want to donate a set of tires, you leave them at your business, you put them in the window, and put a sign on them,” says Woodard. “Then people will go into the business to look, and at the same time maybe they will pick up a set of windshield wipers.”

The pain is being felt elsewhere, too.

At the Church Without Walls, a small Mennonite parish in a low-income area of Elkhart, the Revs. Jonathon and Cora Brown have had to scramble just to keep the lights on and the doors open.

As Sunday collections declined 30 percent over the last year, the Browns gave up their own small stipend. When demand at the church’s small food pantry doubled, they had to change the way they ran it.

“We had to cut back on the amount of food we purchased from the food bank,” says John Brown.” To make up the difference, they connected with the Mennonite Central Committee for donations of canned meat, which the MCC produces for emergency operations around the world, and began to rely more heavily on surplus provisions from the U.S. Department of Agriculture.

“When the money slowed, we had to look at the other resources that were out there,” says John Brown, who also works full-time for the city. They also called on churches in the community that typically minister more to the soul than the stomach. “The pressure was on to touch base with other congregations to make donations for the food pantry.”

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