Less funding, increased operational costs and a growing demand for services continue to beleaguer the Mid-South’s nonprofit sector, according to a new report from the Alliance for Nonprofit Excellence.
The Memphis-based Alliance, 5100 Poplar Ave., serves nonprofits in more than 30 counties in Eastern Arkansas, Northern Mississippi and Western Tennessee.
“Downstream & In Demand III: Another Look at Mid-South Nonprofits and the Economic Crisis” is the third report on the state of the region’s nonprofit sector released by the Alliance since the Great Recession began in 2008.
This year’s report was based on a 44-question survey and in-depth interviews with nonprofit leaders during the summer and fall. More than 100 survey participants represented a sampling of the region’s more than 3,000 nonprofits, as well as more than 30 fields of work, with the most respondents working in arts and culture, children and youth, health, education and social services.
Seventy-two percent of respondents reported increased demands in services, up from 71 percent in fiscal year 2010 and 60 percent in 2009. And 80 percent saw more clients and 58 percent said clients’ needs had increased.
According to the latest U.S. Census data, the eight-county Memphis Metropolitan Statistical Area is the poorest large metro area in the nation, with more than 19 percent of the population living in poverty.
Job loss, prolonged unemployment, health insurance loss and foreclosures have contributed to increased numbers of individuals seeking help from nonprofit organizations. Ninety-six percent of safety net organizations, which meet critical needs of people who have little or no ability to pay for services, reported increased service demands in 2011.
At the same time, 71 percent of respondents reported their cost of doing business had increased. Sixty percent said they had lost a major funding source in FY 2011 and 50 percent said funding from a longtime source had been reduced. The largest funding cuts were from United Way and federal programs.
More than 80 percent of respondents with government contracts reported not being fully reimbursed for the cost of services they provided.
“Organizations receiving government funding at all levels are seeing more challenges – cutbacks or the government being slower than usual in reimbursing contracts,” said Nancy McGee, executive director of the Alliance for Nonprofit Excellence. “They reported some mid-stream service cuts, so survey participants whose budgets come largely from government contracts are concerned about the prospect of further government cuts, particularly at the federal level. It’s seeping down, and the federal cuts are going to affect the state and local situation.”
Cost-cutting measures included employee layoffs, a recurring theme this year. Thirty-two percent of respondents reported layoffs, on par with 2010. Other measures included reduced hours, pay and benefits, and shifting to more part-time employees and lower-paid, less-skilled workers.
“A lot of organizations have had employees who’ve really pitched in and been willing to do more with less and have had to take on a lot of added responsibility,” McGee said. “I guess the concern is how long you can do that without burning out your workforce because they’re just really stretched. It doesn’t create a good climate.”
There was, however, some good news. Although many respondents reported a decline in corporate donors and sponsors, corporate giving increased overall in FY 2011. Respondents also reported slight increases in individual donations.
McGee said a trend of organizations returning to their roots was another positive to come out of a generally gloomy situation these past few years.
“A lot of organizations did report getting back in touch with their missions,” she said. “They began to recognize that there were some things that really weren’t contributing to their missions that could be cut. That helped them figure out what they really needed to be doing – focusing on their niche. I thought that was very good news.”
Many organizations began targeting individuals beyond their traditional donor base and developing different strategies for attracting donors of different ages.
“Older generations would be more likely to just write a check and send it off, whereas your younger generation wants to be hands-on and really be involved in some way, knowing their contribution is going to something that’s effective,” McGee said. “Everybody has to get in tune with that, and you can’t just continue to depend on the same donor base that you have year after year because it’s changing.”
Collaboration also continued to be a key trend, with organizations recognizing the cost-saving benefits of leveraging each other’s resources and strengths.