Living in the Past For the Foreseeable Future

According to the people who know, the economy is entering into a period of sustained recovery. This is good news for the country, and heck, probably the world. But it is a mixed blessing for those of us living in the Non-Profit sector, or at the very least my little corner of it. For us, this recession and the long-fall that precipitated it is something we will be living with for at least the next year to 18 months.

They always say that jobs are a lagging indicator of a recovering economy. Bullshit. If you want yourself a lagging indicator, look no further than the non-profit world. So many of us have seen drastic budget cuts, reductions-in-force, scaled-back or shelved programs because of the economic downturn — not to mention furloughs, the elimination of employer contributions to our pensions and the increased pressures to do more with less (and in less time). And the reality is that we will be the last to shed these hardships as the economy returns to more solid footing.

Why? Well, for those non-profits (like my own) that depend on a large amount of funding from foundations and endowments, the available pot of cash available is usually determined by how much came into the coffers last year, not what is expected to come in this year. For some of these funding entities the awards pool is based on the average return on investment for the last three years. So it takes extra time to climb out from the extra-deep hole this financial crisis has created. (Don’t even get me started on the foundations and individual donors that were wrecked by Bernie Madoff. It just makes me want to get arrested, go to prison, get sent to Madoff’s prison just so I can be there when someone sticks him with a shiv.) So while 2010 may very well be a fine and dandy year for the economy, we’ll still be living in 2009–or worse, the aggregate of 2007, 2008 and 2009. For those of us in management, as we begin to budget another year without raises for our staff, we become acutely aware that we risk a brain-drain to the private sector as our workers continue to lose ground in real wages (when you factor in inflation and annual hikes in health care costs in the neighborhood of 15-17%, our staff has seen their real earnings decline). My staff is incredibly devoted and dedicated to their work, but there is a limit to what they can be expected to endure. (I’m already seeing this in positions that can easily move to the private sector like IT and accounting.)

It’s not all bad news. At least where I work our programs have been doing incredibly well. Our earned income is exceeding expectations in many areas. And for the moment, staff-turnover has been incredibly low and as such everything has been running incredibly efficiently. We’ve even seen individual donations begin to rise again, although not to the extent that they can cover the losses in grants and endowments.

We know we can get through this. The question is how to preserve that which we do best and to continue doing it the best way possible, until the time comes when we can begin to grow again.

I apologize if this is a little cryptic. It’s not appropriate for me to get into the specifics of my own organization in this forum, but I think the broad outlines of this reality will be recognizable to many out there. In more ways than one, this post is just as much about convincing myself that this period we are going through is just that– a period that will at some point transition into another (and hopefully more prosperous) period.

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2 Comments

Filed under Non-Profit

2 responses to “Living in the Past For the Foreseeable Future

  1. Beri Kravitz

    Not only has the economic downturn had a negative effect, but there are those who think the recent Supreme Court ruling will hurt non-profits. Why give your money to a non-profit, which is legally barred from endorsing a candidate, when you can give it to a for-profit with unlimited influence?

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  2. I work for a small nonprofit and I work with even smaller orgs who are definitely hurting from the decrease in funding. endowments and foundations are generally down by at least one third so programs are being cut and orgs are folding left and right. for others, it just means no raises or 403b contributions. our own budget is bare bones this year, scaled way back from years past. fun times.

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