November 11, 2013
Troubles Revisited

Government disarray undermines nonprofits’ recovery hopes

Photo | Pablo Robles
Photo | Pablo Robles
Robin Sharp of the YWCA in New Britain has helped her nonprofit deal with state and federal funding uncertainty by increasing participation in the YWCA’s paid services.
The YWCA uses its paid services like fitness classes to cover the costs of its free community programs like (above) sexual assualt crisis and (right) educational services.
Photos | Pablo Robles

With increased volatility in government support and fundraising becoming more difficult, nonprofit organizations are less optimistic about their future, according to a United Way survey of the region.

In the survey, 67.1 percent of respondents said they were optimistic about their ability to operate in the Greater Hartford region. That percentage is down from the 71.4 percent who were optimistic in 2012, according to the United Way of Central and Northeastern Connecticut.

"It somewhat reflects our limping economy," said Susan Dunn, president of UWCNCT. "You keep hoping we are going to come out of it with a robust recovery, but year after year, it is more of the same."

The demand for nonprofit services is growing; the people served by the nonprofits still are struggling; and fundraising remains flat, Dunn said. All of that impacts the optimism of the nonprofit community.

Despite the year-over-year decrease, the 67.1 percent optimism rate was the second highest in the region since 2007, when the Great Recession sent donations plummeting and demand for services soaring.

The 40-town UWCNCT service area includes 1,572 of the 5,611 charities in the state, according to the Attorney General's office. United Way sent out 307 surveys to its partner agencies and other nonprofits and received 82 completed surveys in return.

Of those respondents, 95 percent said the demand for their services had either increased or stayed the same in the previous year; and 98 percent expected demand to increase or stay the same in the immediate future.

"Where is the money going to come from to support this demand?" Dunn said.

Over the next 10 years, only 36 percent of the survey respondents expected their revenue to increase. From corporate and foundation giving, 68 percent expected it to decrease or stay the same; and 55 percent expected individual giving to decrease or remain the same.

On top of those revenue issues, 54 percent expected the volatility in the federal, state, and local government budgets to impact their ability to operate as nonprofits.

"The fact that we have to do fundraising to plug these holes in the state budget is absolutely unacceptable," said Stephen Becker, the recently retired president and CEO of Hartford disability nonprofit HARC. "We are bound to provide these services to take care of these people."

The YWCA of New Britain was able to increase its revenue this year by increasing its pay-for-service business lines.

YWCA offers pay-services for all genders like personal training, fitness classes, and gymnastics classes, and then uses that money for its community programs like sexual assault and domestic violence crisis services.

"Our revenue is looking pretty positive," said Robin Sharp, executive director of the YWCA of New Britain. "We also are very fortunate that our individual donations are staying very consistent."

Foundation money is harder to come by, and the problems with the federal and state governments are frustrating, Sharp said. Much of the federal funding for YWCA is funneled through the state, so if either is in financial crisis — or both, as is the case now — that is disconcerting to the nonprofit's long-term confidence.

"The federal government not having a budget causes a lot of discomfort," Sharp said.

There is a failure in the business model between government funding and nonprofit services, Becker said.

Organizations like HARC took over some of government's roles — in HARC's case, care of the intellectually disabled — because a private organization could operate more efficiently and be more market-responsive, Becker said.

However, when the government starts to erode the funding levels promised to make these nonprofits possible, those who are served by the organizations suffer, Becker said.

"This kind of handout approach is not a way to do business," Becker said. "Now we have a fragile organization to take care of fragile people."

Despite all the struggles, 83 percent of the survey respondents said they were not concerned at all that they would need to cease operations within the next year. That's the highest level of confidence since that question was introduced in the survey in 2009.

Overall, the nonprofits felt the top way to improve the community and better their goals was to have increased workforce development and training in order to get the people they serve back into jobs and steady financial situations. Of the respondents, 31 percent said this was the top issue, up from 20 percent giving voice to this issue in 2012.

"The best anti-poverty program is a job," Dunn said.

At the YWCA, the demand for its crisis services is growing. Sharp said it could be because of the nonprofit's increased outreach about sexual assault and domestic violence, but it might also be an increase in the number of incidents.

With the poor economy and more people without a job, stress on families increases, which leads to more incidents, Sharp said.

To counteract this, the YWCA seeks to get victims and families out of the cycle that puts them in a downward spiral, Sharp said.

"Our mission is to really help women and families become financially stable," Sharp said. "We are trying to help the economy as a whole recovery by helping families one at a time."

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