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Government work tough on N.C. nonprofits

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PJ staff report

Nonprofits across North Carolina are struggling to keep, manage and cover the costs of contracts they receive from federal, state and local governments, a new study says.

Four in 10 of the 972 North Carolina nonprofits surveyed say working with governments in 2009 was more difficult than in previous years, and 64 percent say the payments they received did not cover all the costs of providing the contracted services.

The 2009 statistics for the state are part of a comprehensive national study conducted by the Urban Institute, which examined contracts awarded by governments to nonprofits to provide a range of services, including housing and shelter, economic development, youth development, crime-related services and disaster relief. [See related story.]

Almost three-quarters of nonprofits say applying for government funding takes too much time, or is too complex a process, and about the same number say they have to spend too much time on reporting related to contracts, or that reporting requirements are too complex.

The changes governments make to contracts mid-stream are problematic for about 62 percent of nonprofits, the report says, and 41 percent say their government funders are too often late in paying for services performed.

The funding that contracts provide often is too little, with 59 percent of nonprofits reporting only limited funding for administrative or overhead costs for programs, and 46 percent saying contracts do not include enough funding for the organization’s administrative and overhead costs.

And almost 60 percent of government contracts require nonprofits to either provide matching funding or cover a portion of the costs required to provide a service.

The economic crisis of the past two years has forced many governments to cut back on contracts to nonprofits, exacerbating already tenuous financial positions for many agencies.

More than 80 percent of North Carolina nonprofits have seen investment income drop, 64 percent are receiving fewer corporate donations, grants from foundations are down for 58 percent, and contributions from individuals have fallen for almost half.

On top of that, 70 percent of nonprofits are receiving fewer dollars from state government, 52 percent are getting less from local governments and revenues from federal contracts are down for 35 percent.

To adjust to the drop in funding, 60 percent of North Carolina nonprofits have frozen or cut employee salaries, 44 percent have laid off employees, 40 percent have had to dip into their reserves and 23 percent have cut benefits.

At the same time, nonprofits are finding ways to meet growing needs with dwindling resources, as only 13 percent have made cuts to their programs or services since the onset of the recession.

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