Recession still taking toll on nonprofits
Published 1:05 am, Thursday, December 24, 2009
The economic recession has created an unstable climate of increased service needs and decreased donations for many New Canaan nonprofits, according to a recent study by the Fairfield County Community Foundation.
The foundation surveyed 208 of the Fairfield County's 1,340 non-profits, including 79 that service New Canaan, in April and May of this year in an effort to diagnose the effect of the recession on these organizations and the steps needed to improve and strengthen the local communities they serve.
"More than one nonprofit director has told us that `last year's donors are now our clients,' and this survey has helped quantify this and other major shifts," said Foundation President and CEO Susan Ross.
The report concluded that about 80 percent of Fairfield County non-profits are experiencing a plunge in net donation dollars and more than half are faced with the arduous task of spreading thin those decreased funds to service a growing body of clients.
Since the recession began, Fairfield County non-profits have reported accounts of increased stress on an already lean industry. Nonprofits equipped with operating reserves have drawn on those funds as decreasing donations compound with increasing need, the study determined. Local nonprofits are increasingly working together to share services and curb expenses, and many donors have shifted their giving to focus on the nonprofits providing essential services such as food, housing and health care.
Sherry Perlstein is the executive director of the Child Guidance Center of Southern Connecticut, an outpatient mental health center for children and adolescents who experience psychological, behavioral, developmental, social or family problems. The center's client base ranges from teenagers threatening suicide to children who struggle with attention deficit disorder and have difficulty learning in school. The nonprofit services New Canaan, Darien, Greenwich and Stamford youths through individual, group or family therapy and prevention programs.
"It's interesting because I think that people would anticipate the increased need for services like housing and shelter in the time of a recession, but what I don't think people realize is the increase in need for mental health services," Perlstein said.
The adolescent mental health center received a 38 percent spike in referrals in New Canaan during the 2009 fiscal year, Perlstein said. Agency wide, the uptick rounded out at nearly 20 percent. About 30 percent of these referrals pertained to youths who indicated job loss or the threat job loss of a family member as a stressor, she said.
Youths are dramatically affected by parents who are struggling with actual or perceived threats of foreclosure, job instability or other family finance issues, Perlstein said.
"We've been struggling not to cut our staff size because we're trying to meet the needs of our growing [client base]," Perlstein said.
The center has avoided layoffs by instituting a salary freeze and reduced pension and health care coverage, Perlstein said.
"When you skim that much off the top you run the rick of losing some of your best people and we have lost a few," she said.
Jane Nyce is the executive director of Staying Put in New Canaan, a two-year-old corporation that aids aging New Canaanites in securing the means and confidence to live in their own homes through health and safety, housing, finance, socialization, transportation and communication education and services.
Staying Put began soliciting memberships to New Canaan seniors in autumn of 2007, a economically healthy year. By fall of 2008, the fledgling organization faced a drastically different fiscal climate that dragged down raised funds and membership loyalty.
"We had some people who were not able to renew membership with us because they were concerned about the expense," Nyce said. "When I started hearing people refer to us as an expense, I knew they were stressed about the economy."
Annual memberships cost $360 per individual. Currently, 199 New Canaan households contain at least one member, Nyce said.
Staying Put maintained an 85 percent membership retention rate this year, Nyce said, which is 5 percent short of the rate assumed in the organization's operating expenses.
This year Staying Put has 19 special memberships, which are reduced or pre-paid memberships for interested seniors who simply cannot cover the program cost.
"We did cover operating expenses for 2009, but we had no cushion," Nyce said.
According Fairfield County Community Foundation Vice President of Programs Karen Brown, one of the most striking findings in the study is that nearly one-third of the nonprofits surveyed lack an operating reserve, which Brown defines as a "rainy day fund" of sorts. More than half of the participants lack an endowment fund, she said.
To cope with a lack of security cash, Brown said, nearly 20 percent of surveyed organizations responded to the recession by making tough management decisions to cut staff and reduce staff hours.
As a follow up, Brown said the Center for Nonprofit Excellence plans to host a series of open workshops to educated local non-profits about how to build an operating reserve.
"It is going to continue to be a tough time for nonprofits in the new year ... things are still in flux," Brown said.