[Editor’s note: This is the first of two stories about how North Carolina nonprofits are coping with the economic crisis.]
North Carolina’s nonprofit sector, having endured the one-two punch of a stock-market rollercoaster and a marathon recession, remains a bit dizzy and weak.
The stronger, better-prepared organizations survived, the weakest did not, and the struggle continues for rest, experts say.
And while the recession technically may be over, nonprofits are fighting off a serious recession hangover.
“My worry is that the nonprofit sector is very fatigued from these tight budgets, from difficult fundraising and from doing the same amount of work with fewer people,” says Leslie Winner, executive director of the Z. Smith Reynolds Foundation in Winston-Salem.
In that weakened state, nonprofits remain vulnerable.
“The downside is we’re still hearing that nonprofits need to do more with less,” says Jennifer Tolle Whiteside, president and CEO of the North Carolina Community Foundation. “We’ve always done that and we’re now reaching a critical point where that’s no longer being effective.”
And into this precarious setting comes a new threat.
With the state staring down a $2.4 billion budget deficit, and lawmakers digging through chamber sofas for loose change, North Carolina nonprofits now could lose valuable government contracts.
While that clearly will hurt the organizations doing business with the state, the pain will spread throughout the sector, says Jane Kendall, president of the N.C. Center for Nonprofits, an association of about 1,500 nonprofits across the state.
“The state budget cuts also affect those that don’t receive state money,” she says. “Those losing money will be looking to other donors, companies and foundations for support, creating more competition.”
Now, as nonprofits proceed in the wake of the recession, while dodging government funding cuts, the task is to learn from what worked, what didn’t, and to craft a plan for moving forward, better prepared for whatever the future brings.
Refocus on mission
The financial tremors of the past few years have brought into sharp relief any challenges or weaknesses nonprofits face, forcing them to take a close look at how they are, or are not, working toward their missions.
“They mostly have survived, but they have done it by really paring back,” says Winner. “They have laid off people, they haven’t replaced people, and they really have focused on their core mission.”
That’s both good and bad, she says.
Getting back to the core can reduce a nonprofit’s “mission creep,” reining in new, add-on programs that can lead to redundancy or even fall outside the organization’s true expertise.
“On the other hand, there’s creativity and innovation that’s lost when you feel like you don’t have the capacity to address additional challenges,” Winner says.
To make sure they are cutting the fat and not the muscle, nonprofits need to know what’s working and what isn’t.
Kendall says that means identifying the results they want to achieve, then putting in place systems to evaluate programs and track progress.
“Those I observe doing better now are those that both track their results and have learned how to communicate their results,” she says.
That can be difficult for some nonprofits, she says, particularly those whose efforts can takes years or even decades to fully pay off, or those with goals that are difficult to measure.
But every nonprofit should look for some way, either qualitative or quantitative, to gauge its effectiveness.
Recently, nonprofits have been forced to cut budgets and staff, in many cases without eliminating programs, a dynamic that can lead to fewer people doing the same amount of work.
“Underneath all of this is a movement to ensure the integrity of their purpose and mission, so that it guides their hard decisions,” says Kendall. “Those who have not been able to do that are going out of business, limping along or cutting their capacity to deliver what they do, and there are a number of nonprofits on the ropes.”
In some cases, she says, “the one thing that can get them off the ropes is revisiting their core mission.”
Given the host of challenges nonprofits face, particularly looming government cuts, coming together as a sector to give voice to unmet needs is paramount.
Nonprofits are stepping up, says Kendall, advocating not only for their individual organizations and the communities they serve, but joining forces to create a stronger, more united voice for the sector as a whole.
By reaching out to their legislators to give a face to people and communities in need, and to talk about the impact nonprofits have, nonprofits can cement their role as valuable government partners.
“It’s not us against them,” says Kendall. “It’s the role of nonprofits as resources.”
Nonprofits are “the most grounded entities in terms of knowing what’s really going on in communities,” she says. “They’re often an early-warning system for the problems, and they know the effects of cuts on people’s lives.”
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