Facing hard times
08/05/19 04:20
I have lived my life in the world of nonprofit corporations. In addition to the church, I’ve sat on the boards of community service organizations, foundations and trusts and many other corporations that are not geared towards making money, but rather towards providing service. So, I know that there are many different kinds of nonprofits. They don’t all fit neatly into one category.
Right now, in the arenas where I operate, trusts and foundations are cautiously optimistic. The market has been volatile, but there are ways to make money. The more cautious trusts have larger percentages of their portfolios in cash at the moment as they look for opportunities to buy. The market seems to be over valued and some are focusing more on short-term gains than the quest for dividends and long-term gains. But there are ways to make money if you have money to invest and finding ways to fund their programs and projects continues.
Many other nonprofits are experiencing cutbacks and hard economic times. Changes in US tax law have produced dramatic decreases in charitable donations across the board. Smaller non-profits, who are dependent upon small donations seem to be hit the hardest. Donors who give less than $25,000 no longer are able to deduct their donations from their taxes. While there are plenty of good people who are not motivated by the tax advantage, experts have predicted that approximately 30% of charitable donations were driven by tax advantages. Removing the tax incentive means that churches and community service organizations experienced dramatic decreases in giving in 2018 compared with 2019.
In the past few months, I’ve sat in on quite a few meetings where directors are scratching their heads, cutting expenses, and strategizing new fund-raising opportunities. Balancing budgets without laying off staff is a genuine challenge for many service-based non profits, where the largest part of expenses is payroll.
Last night was no exception. Frustration was displayed as a board on which I sit struggled to deal with rapidly depleting savings and financial challenges. A quick survey of the financial report demonstrates that the problem is not excessive spending. Spending has been kept at or below budget levels. The problem is decreased revenues. Despite a recent fundraising event that was very successful, year to date income is substantially below budget projections. Leading the decline is corporate sponsorships and donations. Decreases in individual donations is slightly lower as well.
I’m starting to recognize that I am repeating myself in these meetings. What I have to say sounds to me like something that I’ve said before. The realities of this world and the politics of our time means that these organizations that we love are being forced to retreat and become smaller than was the case a few years ago. Hard times force prioritization and we don’t all see eye to eye when it comes to making cuts that none of us want to make, but that we feel forced to make in the light of our circumstances.
From the perspective of the directors, it is especially painful because we all believe that the mission of the organization is essential. We are convinced that a cut back in services means that more people will die. It is that serious for us.
I am not ready to give up. I know that our organizations are going to have to operate with fewer paid staff persons as we go forward. We are going to struggle because recruiting, training and retaining volunteers is difficult work. There are specialized skills that paid staff bring to an organization that are well worth the price when the organization can afford to pay. Hard times invite innovation and fresh ideas. Starting over with an examination of the purpose of the organization and forging new partnerships takes a huge amount of effort. Some of us can remember enough of the past to know that many of our organizations have faced and survived hard times before. Some of us remember humble beginnings. It is a huge challenge, but it is possible to operate a nonprofit without office space, without paid staff and without tools such as computers and copy machines. We invested in those things because they made the work of the organization more efficient. We were able to expand the amount of work we accomplished. Going back to those levels of organization definitely means that we will have to decrease the level of services that we provide. It also means that we will have to work harder and learn to trust one another more than was the case in recent years. And most of us don’t have more volunteer hours to give. We run fairly close to the limits of human endurance in our lives already. Even the longer meetings required by our financial challenges put a strain on already overtaxed people. We spoke frankly about our need to recruit additional directors with specific skills at our meeting last night.
The work of nonprofits, however, is essential hopeful work. The organizations were formed in a vision of changing the world and making things better for others. We know that we are small and that our impact is limited, but we believe in the work that we do.
The United States may be experiencing a decline in nonprofit corporations, but the work that they do remains undone. The need continues. And as long as there is a need, there are people of good will who are dedicated to meeting that need regardless of the state of tax laws and incentives.
We may not look back of these times as the “glory days” of our organizations, but experience has taught us that hard times are not necessarily bad times. Rising to meet significant challenges is one of the deep joys of being human. Serving others without reward is rewarding work. Purpose trumps profits in the long run. We know the slogans. We’ve given the pep talks enough to have the memorized. Now is the time to roll up our sleeves and go to work.
Right now, in the arenas where I operate, trusts and foundations are cautiously optimistic. The market has been volatile, but there are ways to make money. The more cautious trusts have larger percentages of their portfolios in cash at the moment as they look for opportunities to buy. The market seems to be over valued and some are focusing more on short-term gains than the quest for dividends and long-term gains. But there are ways to make money if you have money to invest and finding ways to fund their programs and projects continues.
Many other nonprofits are experiencing cutbacks and hard economic times. Changes in US tax law have produced dramatic decreases in charitable donations across the board. Smaller non-profits, who are dependent upon small donations seem to be hit the hardest. Donors who give less than $25,000 no longer are able to deduct their donations from their taxes. While there are plenty of good people who are not motivated by the tax advantage, experts have predicted that approximately 30% of charitable donations were driven by tax advantages. Removing the tax incentive means that churches and community service organizations experienced dramatic decreases in giving in 2018 compared with 2019.
In the past few months, I’ve sat in on quite a few meetings where directors are scratching their heads, cutting expenses, and strategizing new fund-raising opportunities. Balancing budgets without laying off staff is a genuine challenge for many service-based non profits, where the largest part of expenses is payroll.
Last night was no exception. Frustration was displayed as a board on which I sit struggled to deal with rapidly depleting savings and financial challenges. A quick survey of the financial report demonstrates that the problem is not excessive spending. Spending has been kept at or below budget levels. The problem is decreased revenues. Despite a recent fundraising event that was very successful, year to date income is substantially below budget projections. Leading the decline is corporate sponsorships and donations. Decreases in individual donations is slightly lower as well.
I’m starting to recognize that I am repeating myself in these meetings. What I have to say sounds to me like something that I’ve said before. The realities of this world and the politics of our time means that these organizations that we love are being forced to retreat and become smaller than was the case a few years ago. Hard times force prioritization and we don’t all see eye to eye when it comes to making cuts that none of us want to make, but that we feel forced to make in the light of our circumstances.
From the perspective of the directors, it is especially painful because we all believe that the mission of the organization is essential. We are convinced that a cut back in services means that more people will die. It is that serious for us.
I am not ready to give up. I know that our organizations are going to have to operate with fewer paid staff persons as we go forward. We are going to struggle because recruiting, training and retaining volunteers is difficult work. There are specialized skills that paid staff bring to an organization that are well worth the price when the organization can afford to pay. Hard times invite innovation and fresh ideas. Starting over with an examination of the purpose of the organization and forging new partnerships takes a huge amount of effort. Some of us can remember enough of the past to know that many of our organizations have faced and survived hard times before. Some of us remember humble beginnings. It is a huge challenge, but it is possible to operate a nonprofit without office space, without paid staff and without tools such as computers and copy machines. We invested in those things because they made the work of the organization more efficient. We were able to expand the amount of work we accomplished. Going back to those levels of organization definitely means that we will have to decrease the level of services that we provide. It also means that we will have to work harder and learn to trust one another more than was the case in recent years. And most of us don’t have more volunteer hours to give. We run fairly close to the limits of human endurance in our lives already. Even the longer meetings required by our financial challenges put a strain on already overtaxed people. We spoke frankly about our need to recruit additional directors with specific skills at our meeting last night.
The work of nonprofits, however, is essential hopeful work. The organizations were formed in a vision of changing the world and making things better for others. We know that we are small and that our impact is limited, but we believe in the work that we do.
The United States may be experiencing a decline in nonprofit corporations, but the work that they do remains undone. The need continues. And as long as there is a need, there are people of good will who are dedicated to meeting that need regardless of the state of tax laws and incentives.
We may not look back of these times as the “glory days” of our organizations, but experience has taught us that hard times are not necessarily bad times. Rising to meet significant challenges is one of the deep joys of being human. Serving others without reward is rewarding work. Purpose trumps profits in the long run. We know the slogans. We’ve given the pep talks enough to have the memorized. Now is the time to roll up our sleeves and go to work.