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Government funding changes loom

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Ret Boney

RALEIGH, N.C. – With both the state and federal governments facing massive shortfalls, nonprofits need to gear up for changes and cutbacks in public funding, experts say.

And with fiscally-conservative lawmakers now in control in both Raleigh and Washington D.C., the funding changes facing nonprofits could be dramatic.

“There is a push by the new majority to cut non-discretionary funding by 5 percent and that will disproportionately affect funding for social services,” Ryan Hedgepeth, chief of staff for Democratic U.S. Rep. Brad Miller of Raleigh, told attendees of the 2011 Philanthropy Forecast on Jan. 17.

At the same time, there will be an even greater need for the critical services nonprofits provide, he said.

“There’s a lot of worthy work you do every day that you shouldn’t have to do by yourselves,” said Hedgepeth.

Alexandra Sirota of the N.C. Budget & Tax Center, agreed.

“The role of nonprofits is going to be critical,” she told attendees of the event, which was organized by the Triangle Chapter of the Association for Fundraising Professionals. “There is increasing demand for human services at the same time there is a decline in government and private funding.”

Fiscal 2008 and 2009 saw funding declines to nonprofits of about 25 percent, Sirota says, and nonprofit contracts remain on the chopping block given that North Carolina lawmakers are facing a $3.7 billion budget gap as they prepare to start a new legislative session on Jan. 26.

In this new environment, developing relationships with lawmakers and staying in touch will be important, said Sirota.

“This year it will be essential that you communicate the needs you see, gaps you fill and innovative ways you do that,” she said. “We all know that ‘doing more with less’ means doing less. Our challenge in nonprofit community is to explain the long-term vision we all share for North Carolina.”

But the challenges facing the state and the nation also present an occasion for all players to reassess their role, Sirota said.

“There’s a tremendous opportunity to think about recovery and the role of government, the private sector and nonprofits,” she said.

To receive funding from the new majorities, the state’s nonprofits must focus on transparency, openness and accountability, while thinking strategically about how they can align themselves with federal and state government goals, said Becki Gray, vice president for outreach for the John Locke Foundation, a think-tank that espouses conservative economic and government principals.

“Lawmakers are looking for ways nonprofits can provide a core function of government better and cheaper than they can,” Gray said of federal and state Republican leaders.

Proposals for such core services, including child care for poor children, will receive a “warm reception,” she said, while other proposals from nonprofits “will be directed to the private sector for funding.”

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