Recession Delivers a Double Blow to Many Charities

In this photo made Thursday, Sept. 17, 2009, Crystal Patton, front, works on folding plastic bags at the Brooklyn Bureau of Community Service in New York. The social services agency provides jobs to adults with disabilities. (AP Photo/Mark Lennihan)

(AP)

For many social-service charities across America, the recession has delivered a staggering one-two punch. Sharp drops in donations and investment income have been coupled by soaring demand for their services.

The casualties so far include countless needy clients losing assistance and thousands of nonprofit workers who've been laid off. Some local charities have shut down; even many of the largest nationwide operations have made painful cutbacks in staff, spending and programs.

"Nonprofits are generally at the whim of the economy ... but we've never seen anything like this," says the Rev. Larry Snyder, president of Catholic Charities USA. "Increasing numbers of our own volunteers and employees have been forced to become clients of our services."

The cutbacks are forcing charities to rethink how they operate and make changes that are likely to outlive the recession. Nonprofits, like regular businesses, are learning to do more with less. Those that survive will emerge more efficient.

"It gives you a mindset to be more creative," American Heart Association CEO Nancy Brown says. "We're thinking even better and more innovatively than we were 10 months ago."

Numbers help illustrate the magnitude of the challenges.

Giving to social-service charities fell by 12.7 percent in 2008, according to the Giving USA Foundation, and there's been little evidence of a resurgence so far this year. Simultaneously, many state and local governments are cutting back on funding for nonprofits or delaying payments as they struggle to assemble their budgets.

That double hit to charities' revenue comes at a time when the national poverty rate has reached an 11-year high of 13.2 percent.

Nonprofit officials hope giving levels will rise once the recession ends, but for now many are thinking hard about how to use their dwindling resources.

"We can't be in recession — there are too many people relying on us," Brown says.