Fewer Donations, Shrinking Assets Force Nonprofits to Get Fiscally Creative 

Facing cuts in government aid, investment losses, and a decline in donations, nonprofit organizations are experimenting with new ways to stay afloat beyond cutting costs and eliminating waste, the Wall Street Journal reports.

Nonprofits may be able to rely more on volunteers now because many people who have been laid off, some with lucrative severance packages, are seeking new opportunities to give back, said Garvester Kelley, a vice president at the Nonprofit Finance Fund. Charities also can reach out to businesses for help in the form of goods and services, rather than cash. When the organizing committee for the 2009 Special Olympics World Winter Games in Idaho was faced with a $33.5 million budget shortfall, it replaced a costly two-week, on-site program to train volunteers with an online training program designed free of charge by Massachusetts-based Brainshark Inc. The committee then recruited volunteers from local nonprofits, the National Guard, the Defense Department, and AmeriCorps, and found companies and governmental agencies to provide the information-technology staff, computers, and food and beverages.

The uncertain economy has made many donors more focused in their giving, so it is critical for organizations to strengthen connections with current donors. When the New York division of Covenant House saw donations through its direct-mail campaign decline 20 percent in 2008 from 2007, it shored up relationships by enlisting and training some of the homeless, runaway, and at-risk youth it serves to call past donors, thank them for their gifts, and explain the impact the donations had made on their lives. After receiving a call, a donor typically increased a gift by 50 percent from the year before, said Jerome Kilbane, the organization's executive director.

Meanwhile, some nonprofits hard-pressed for funding have opted to create projects that will generate income. Facing a 40 percent decline in ticket sales and a reduction in corporate sponsorships resulting in a $300,000 budget shortfall, the Joffrey Ballet in Chicago decided in August 2008 to offer dance classes to the public. Since January, the classes have generated $200,000 in revenue, and the company is expecting to earn another $300,000 by June. An added benefit: Ticket sales have picked up because people who take a class are buying tickets to see their teachers perform.

"Necessity is the mother of invention," said Rockefeller Philanthropy Advisors president Melissa Berman. "As financial resources dry up, people have the impetus they need to be creative about where to get help and how to keep their mission going."

Banjo, Shelly. “Helping Themselves.” Wall Street Journal 4/22/09.

Primary Subject: Philanthropy and Voluntarism
Secondary Subject(s): Arts and Culture, Human Services, Economic Crisis