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Foreword
– Putting the Findings into Context Many have expressed concern about how this extraordinary outpouring of private philanthropic support would affect the ability of nonprofit organizations to raise sufficient funds to carry on other vital community services. While recognizing the enormous need for support as a result of the terrorist attacks, there is widespread recognition that other demands are also expanding with the recent economic decline—demands for other human services, for medical research and treatment, for creative outlets and spiritual healing. Prior to September 11, a number of philanthropic foundations had announced that the value of their assets had dropped significantly due to the declining stock market and they would therefore be forced to reduce their grantmaking activities. Corporations, another key source of support for many nonprofit organizations, were experiencing similar economic challenges and were reducing the dollars they could devote to supporting charitable nonprofits. INDEPENDENT SECTOR commissioned this poll by Wirthlin Worldwide to help nonprofit organizations, the public, and elected officials assess Americans’ response to the events of September 11 and how that response, coupled with an economic downturn, might affect support for the services provided by nonprofits in the coming months. This poll examines only philanthropic contributions by individuals—a key part, but only a part, of the overall support nonprofits depend upon to fund their community services and programs. In many ways, the portrait of American giving provided by this poll offers much encouragement. Seven in ten Americans contributed money, blood, or time to support the disaster relief and recovery effort, and three-quarters of those who contributed financially say they will contribute as much or more money as they normally do to other charities. Conversely, the other one-quarter reports that they will have to reduce or even eliminate the amount they contribute to other charitable nonprofits. The outlook becomes more serious when Americans are asked about the effect an economic slowdown will have on their charitable giving. Almost half of Americans interviewed say they would at least somewhat reduce their charitable giving in the next six months if the economic slowdown worsens; one in ten indicate they will completely stop their charitable giving in the event of an economic downturn. It is a testament to American generosity that the other half of Americans interviewed indicated that economic conditions would have virtually no impact on their giving, but it would be unrealistic to expect their donations to make up for any shortfalls in contributions from other individuals. America’s 1.23 million charitable nonprofits derive about 20 percent of their support from private contributions from individuals, corporations, and philanthropic foundations, according to INDEPENDENT SECTOR’s The New Nonprofit Almanac In Brief. For some nonprofits, particularly for arts organizations, human service agencies, and religious congregations, private contributions account for a significantly higher portion of their overall support. The remaining 80 percent of funding support comes from dues and fees (37.5%), government contracts and grants (31%), and other revenue such as investment income (11%). The downturn in the economy is already affecting many nonprofits beyond the outlook for private individual contributions. Museums across the country are reporting significant reductions in revenues they receive from admissions fees and museum shop sales as a result of declining travel and tourism, while at the same time, they must invest in increased security measures. Food banks have experienced significant drops in corporate food contributions since mid-summer when the first impacts of an economic slowdown were being felt—and at the same time they are experiencing a rapid increase in demand for food supplies. Other smaller nonprofits that rely on volunteers to implement key components of their adult literacy and youth mentoring programs have found that their regular volunteers who have recently been laid off from their jobs are unable to donate as much, or even any, time to their volunteer service because of the need to focus on job searching and family needs. Nonprofit organizations that rely on funding from local and state governments to support substantial portions of their program services are also facing the possibility of cutbacks in government spending. Declines in the travel and tourism industry have already caused significant reductions in revenues collected by state and local governments for hotel, restaurant and sales taxes. Many anticipate that lower individual and corporate income will further reduce local and state government revenues. As a result, many local and state government agencies have already announced they will need to cut spending budgets due to anticipated revenue shortfalls, and some social service programs may suffer.
The impact of possible reductions in private contributions from individuals will vary significantly among nonprofit organizations. Smaller, community-based nonprofits that have few, if any, reserve funds and are more likely to rely on private contributions to support their service programs may be forced to cut back, or even eliminate some services, at a time when many report that demand for services is increasing. Nonprofits that are heavily dependent on corporate and foundation grant support are also projecting smaller budgets for 2002 and a need to scale back some of their community services.
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Copyright ©
2004 Independent Sector. All Rights Reserved.
