As nonprofits recover their footing coming off a strong year in the stock market, the head of the Fairfield County Community Foundation warned that the sector faces renewed challenges next year due to pressures on lawmakers to cut local, state and federal budgets.
Nonprofits in Fairfield County and throughout the tri-state region faced severe budget pressure themselves as the recession took root, even as demands on some organization”™s services increased, particularly those providing social services.
At the same time, states themselves fell delinquent in their payments to nonprofits. Connecticut posted the third worst record in the nation in paying its 500 contractor nonprofits on time, according to a study published in October by the Urban Institute.
Two-thirds of Connecticut nonprofits froze or reduced salaries in 2009, the Urban Institute found, and more than half cut the size of their staff.
A separate study examining giving by wealthy individuals nationally between 2007 and 2009, however, shows the extent to which the recession impacted giving by the private sector. Gifts dropped 35 percent in size between 2009 and 2007, according to Bank of America Merrill Lynch and the Center on Philanthropy at Indiana University, and more than a third of wealthy donors stopped giving to at least one charitable cause.
From her vantage point at the crossroads of charitable gift collections and nonprofit grants, Fairfield County Community Foundation CEO Susan Ross said she saw many instances of increased donations during the recession, as nonprofit benefactors and board members worked to keep their pet projects solvent. Ross said her organization increased grants by more than a quarter in the fiscal year ending last June, adding the Fairfield County Community Foundation took a similar tack following the 2001 terrorist attacks.
“I think our situation may have been different, because our ”¦ donor-advised funds are set up initially and then added to over time, allowing them to give more in times of need,” Ross said. “We did the same thing after 9/11. In a way, it”™s disconcerting to see so much money flow out, because you plan a budget. ”¦ But in the end, all the money all came back to us from donors making it up on the back end.”
According to the Indiana University report, in many cases this past year organizations found themselves cut off from some donors for holding out the hat one too many times, or in asking for an amount the donor deemed inappropriately excessive. Ross said the Fairfield County Community Foundation gave advice to its nonprofits to call on tried-and-true donors for additional contributions during the crisis.
“You know that Jack Mitchell book Hug Your Customers?” she said. “We were practically telling (our nonprofits), ”˜kiss your donor on the lips.”™”
The donor count increased significantly in Fairfield County at their apex of the last business cycle ”“ in part due to a sharp increase in nonprofits organizing within the county”™s borders. In a biennial report released last August examining the two year interval between 2006 and 2008, the Connecticut Council for Philanthropy recorded a 23 percent increase in the number of foundations active in Connecticut, to nearly 2,400 in all. Part of the increase was due to a number of bank charitable trusts that became private foundations as a result of the Pension Protection Act of 2006.
Despite the increase in organizations, overall assets held by Connecticut foundations declined 1 percent over the two-year period studied by the Connecticut Council for Philanthropy. Still, those organizations made grants totaling more than $900 million, up 22 percent from 2006 at the height of the last economic cycle. The nearly 1,000 foundations in Fairfield County accounted for 42 percent of the state”™s total.
Ross said she believes many of those organizations will successfully bridge the troubled waters roiling the sector, but said many that have counted on revenue from state or federal sources may have to find new donors.
For many, that will mean getting creative ”“ and drawing on perhaps Fairfield County”™s most precious resource in the eyes of many nonprofits ”“ its constellation of famous residents, many of them with a long history of philanthropic contributions.
At Stamford Hospital”™s sixth annual Dream Ball in early November, some 900 people showed up to hear music legend Paul Simon perform an acoustic session. In addition to the annual “giving tree” and silent auction, attendees got the opportunity to bid for a pair of autographed.
