Economic Downturn Forces Harsh Realities upon Nonprofit Sector
A well-researched piece in today’s Wall Street Journal – “Once-Robust Charity Sector Hit With Mergers, Closings” – examines the hardships confronted by nonprofits large and small in the wake of the recession.
The once-booming nonprofit sector is in the midst of a shakeout, leaving many Americans without services and culling weak groups from the strong. Hit by a drop in donations and government funding in the wake of a deep recession, nonprofits—from arts councils to food banks—are undergoing a painful restructuring, including mergers, acquisitions, collaborations, cutbacks and closings.
Some key revelations:
- Charitable donations in the U.S., which had been on a 20-year uptick until 2007, fell by 6% in 2008 and are expected to have further declined last year. At the same time, government grant funding available to nonprofits has depleted.
- Well respected nonprofits have been forced to cut their programming or in some cases forced out of existence altogether.
- The clients served by human services organizations need more and more help, but funding for this segment of the larger nonprofit sector has taken a profound hit.
- The recession’s impact on the sector has “reawaken[ed] a touchy debate among some leaders in the nonprofit world over whether the economic prosperity of the past few decades has spawned an excess of nonprofits.” Some in the industry argue that now is the time for nonprofits to explore mergers and other ways to ensure more efficient delivery of services.