No matter where you live, your state is likely facing a budget shortfall this year. According to a November 2009 Pew Center on the States report, 35 states are projecting shortfalls for the current fiscal year, and 10 states (Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin) face budget deficits so severe that they are now considered to be in fiscal peril. As a result, it is estimated that states have already delayed or will likely delay a total of $15 billion in payments to nonprofit organizations. The situation will likely be exacerbated as governors scramble to close budget gaps in the coming fiscal year by slashing funding for the very nonprofits they rely on to deliver critical services to the neediest populations.
The implications of delayed payments and funding cuts for nonprofits--already reeling from cutbacks in private donations and an increased demand for services--will be devastating. In my home state of Illinois, Gov. Pat Quinn has proposed a $276 million reduction for health and human services, putting thousands of the state’s most vulnerable residents--including the disabled, elderly, single mothers and victims of sexual violence--at risk of losing the programs and services on which they rely. In other states, millions have been eliminated from state budgets for anti-hunger programs. In places like New York City, where the recession has led to a 21% increase in demand for food assistance, these cuts mean that food banks will be unable to meet the growing needs of their communities.
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While private philanthropy cannot replace the state funds that support necessary human and community services, there are steps that donors can take to help the organizations they support to stay afloat in these rocky financial times.
Many recipients of your charitable dollars--such as domestic violence shelters and soup kitchens--likely rely on government grants to deliver services. Check in with these organizations and find out how they’re being affected by delayed payments and budget cuts. Ask about the cost-cutting measures they are taking to adjust their organizational budgets and what this means for their programming. If you are confident that the organization is handling the funding cuts realistically and responsibly, ask them how you can best support their work. In order to address their areas of greatest need, you may need to rethink your giving strategies.
For example, rather than supporting the specific programs of a social service agency, you might choose to provide more flexible, general operating support that the agency can then apply towards basic infrastructure expenses that state funding will not cover. You might also consider funding an organization’s capacity building efforts by targeting your gift for evaluation or strategic planning. Any time your gift to an organization builds its capacity to obtain additional funds, you leverage your own investment and help to ensure the sustainability of the organization.
Find out if the organizations you support are engaged in advocacy efforts to fight against proposed budget cuts and promote alternative cost-saving solutions. At the federal level, for example, coalitions of nonprofits are urging Congress to allow banks that received federal bailout money to make bridge loans to organizations with government grant commitments that would be repaid when governments resume their normal payment schedules. If the organizations you support are involved in these kinds of advocacy activities, you might consider targeting your charitable dollars toward these efforts.
You may even consider first-hand involvement in advocacy activities organized by your area’s regional association of grantmakers (or RAG)--a network that brings donors together to improve the quality of life in their communities. Through RAG involvement, you can not only gain expertise in how private philanthropy can mitigate the effects of state budget cuts, but you can also take part in educating your elected officials on the fundamental role that nonprofit service providers play in helping the state meet its obligations to the neediest residents.
For example, through its Public/Nonprofit Partnership Initiative, the Donors Forum of Illinois involves its members in promoting public policies that simultaneously secure adequate public resources for critical nonprofit programs and encourage fiscal responsibility. By reaching out to policymakers in your state, you not only protect charities from further funding cuts, but you can also propose effective policy solutions to chronic budget shortfalls. In Illinois, Donors Forum members are calling on elected officials to increase revenues and engage in fiscal reform to ensure adequate funding levels for the social service programs that are vital to the health, well-being and productivity of state residents.
One way to make a longer-term impact is to provide dollars to organizations that are working to ensure an accurate 2010 Census count. The census data will be used to distribute about $4 trillion for education, health care, and other critical social services over the next decade. If households are not counted accurately, federal funds tied to population-based distribution formulas won’t go to the communities where they are most needed. Because budget crises mean state and local governments don’t have the resources necessary to publicize the census, foundations and nonprofits will be more engaged than ever in public education and outreach. Donors interested in supporting these efforts should look for nonprofits with on-the-ground programs and staff in hard-to-reach communities that are working to help residents be counted.
Our society depends on the effective interaction of government funding and private philanthropy to ensure that no one’s basic human needs go unmet. Unfortunately the current state budget crises pose serious threats to the viability of the local charities we support. By becoming involved in both charitable and policy-related efforts to end across-the-board budget slashing, donors can help to ensure that a robust and effective nonprofit service sector remains in place both now and for the next generation.
Betsy Brill is founder and president of Strategic Philanthropy, Ltd., a philanthropic advisory firm based in Chicago serving clients worldwide.
