Charitable Giving: At Nonprofits, Need is Still Up and Funding is Still Down

As the year draws to a close, I have been reflecting upon the accomplishments of, and challenges for, the Maryland philanthropic community over the past 12 months. We continue to be in challenging times, both as citizens and as players in the philanthropic landscape.

While the economy may be improving for some, those of us in the nonprofit arena recognize that many of our citizens continue to struggle.

Today's challenges are hitting a much larger segment of our community. And, unlike past downturns, the descent was faster, affecting people and organizations in more unexpected ways. More people need assistance, and we aren't seeing signs that this will decline soon.

The irony is that as more individuals and families experience financial and associated social difficulties, the charities whose missions are to offer assistance are financially challenged themselves.

Long story short, the need is up and the funding is still down — there has been a rebound in the market, but foundation assets aren't back to the pre-recession figures. Government funding and contracts, actually one of the largest sources of funding for social services, has declined, again, showing no signs of changing any time soon.

In previous downturns, I had predicted that we would see nonprofits merging with others, or closing their doors. Overall, I was proven wrong. I have come to realize that by nature, nonprofits are often scrappy organizations, with resiliency that we often underestimate. While we have seen a few organizations shut down, along with an occasional merger, we have not seen major disruption yet. I do fear that we have a number of fragile organizations that are just barely surviving.

How have philanthropies responded?

Funders are looking carefully at how their grantees manage and plan for difficult times. Some have offered technical assistance training for organizations on steps they can take to better position themselves to make it through these tough times.

And, funders are placing an increased emphasis on reviewing the financial stability of an organization and understanding what impact particular projects are having on an organization's financial health. Having a reserve fund has allowed some organizations to weather the downturn.

For some funders, the response to having less money to distribute has been to winnow the group of organizations they are supporting. Over the past year, many boards engaged in thoughtful, challenging conversations around priorities, expectations for their grants, and how best to respond to the current situation.

Finally, I have observed that more funders are looking at funding basic human needs, knowing that the recession is making life more difficult for more people in our community.

While some recent surveys indicate there may be a beginning of an economic recovery in the nonprofit sector, many are still hurting. My hope is that this holiday season our community continues the great spirit of generosity so tied to this time of year. Happy Holidays to all.