Story and photos by BROOKE MANGUM
With the downturn in the economy many businesses are losing their shirts, but what is seldom thought about is how nonprofits are impacted during these times.
According to the National Center for Charitable Statistics (NCCS) the U.S. is home to more than 1.5 million nonprofit organizations. There are nearly 10,000 registered nonprofits in Utah alone.
Although nonprofits may not be the first type of corporation that comes to mind when thinking about big business, it is still a moneymaking entity that relies on a healthy economy. Many Utah nonprofits are struggling to survive and are looking for strategies and ways to stay in business.
“Obliviously in this economy everybody suffers,” said Nancy Basinger, Ph.D., the Lowell Bennion Community Service Center assistant director. “Nonprofits maybe suffer more because there is more demand and there are fewer dollars coming in the door.”
Nonprofits have been an area of research for Basinger for about eight years. She received her master’s degree in nonprofit organizations and her doctorate studying the interactions between government and nonprofits. Basinger has also worked in the nonprofit sector as a bookkeeper and financial director.
Basinger said the main problem facing Utah nonprofits is that community needs are up but the revenues are down. Organizations are being forced to lay off staff members and downsize services even though the demand is still rising. This makes fulfilling the needs of the community extremely difficult, if not impossible.
The Community Foundation of Utah reported that in 2010, 77 percent of reporting nonprofits in Utah saw an increase in demands for their services. Subsequently, organizations are looking for funding any way they can, since much of their savings have been depleted.
“Organizations that used to keep six months’ worth of expenses in the bank for a rainy day have now spent it all. This is the rainy day and now we have to figure out what to do,” Basinger said.
Nonprofits are tightening their belts and are working to become as cost efficient as possible. This means organizations are finding new ways to deliver their services as well as making changes in funding sources.
One organization that is doing this is the west-side nonprofit Discovery Gateway. Discovery Gateway specializes in children’s education through interactive exhibits, and like many nonprofits has experienced a drop in funds to the organization.
Steven Suite, chairman of the board of directors of Discovery Gateway, says the museum has been hit hardest by the decrease in donations given by foundations. Many foundations base their donation amount upon the interest they make on their investments. If the foundation’s investments do poorly, the donations to nonprofits suffer.
“Our strategy has been to put more focus on corporate sponsorship, more importantly, finding new donors to help fill the pot,” Suite said.
Discovery Gateway children’s museum is a 501 (c)(3) public charity. This type of nonprofit is tax exempt, benefits the community and derives at least one-third of its revenue support from the public.
“Discovery Gateway gets its funding from two places, the ZAP tax, which comes from the government and private donations and fundraising events,” Suite said. “Donations and fundraisers account for more than half of the museum’s yearly income. Without it the museum would cease to exist.”
According to the Community Foundation of Utah, 35 percent of Utah nonprofits have experienced a significant decrease in end-of-year giving. Twenty-eight percent reported a decrease in overall contributions and foundation, and corporate giving is down by nearly 50 percent. Overall, 64 percent of Utah nonprofits have seen donations decrease since the beginning of 2010.
Historically, Utah residents have given a great deal of support and funding to charitable organizations such as nonprofits. In fact, according to a report by the Community Foundation of Utah, the average charitable contribution per tax return in Utah is 4.9 percent while the national average is only half of that at 2.2 percent.
“Luckily, we have not had to go as far as raising our admission prices, or cutting down our hours but we did reorganize,” said Lindsie Smith, Discovery Gateway development and marketing director in a phone interview. “We have made changes in our staff and board of directors, and consolidated. To keep overhead costs down we have not rehired or filled any open positions.”