Charities hit by economic downturn

SEATTLE (AP):

As the first signs of an economic recovery make the news, many of the non-profit organisations in the United States are digging in for another three to four years of financial distress, according to researchers who keep an eye on the charitable world.

Some larger non-profits are seeing donations start to rise again, but most report their income is holding steady at lower, post-recession levels or is still going down, according to a new study from the Non-profit Research Collaborative.

The collaborative found that 59 per cent of non-profits report their donation income is flat or lower than in 2010, which was another down year for most charities. Among those that receive some government dollars - long considered a safety net for charitable organisations - more than half are reporting a decline in income for the year.

Forty-one per cent of non-profits have seen their donation income go up in 2011, but most of the nation's smaller charities with less than US$3 million in total spending saw donations drop again this year.

Food pantries and homeless shelters across the country have reported funding crises this year because of an increase in need coupled with a drop in donations.

Siena House, a women's shelter, briefly shut down this past summer because it didn't have the money to continue operations. A fall fund-raising drive brought in US$60,000 and Siena House was able to reopen in December.

The First Baptist Church of Danville in November closed its small food bank that fed up to 200 families a year because of volunteer and donation shortages. The food bank depended entirely on donations for its operation and volunteers to run it and just couldn't keep up with demand, said Tom Butler, a church volunteer.

About eight per cent of the charities included in the report say they are in danger of closing for financial reasons, while among smaller charities, that figure is 20 per cent.

"Non-profits are still facing very challenging circumstances," said Una Osili, director of research at The Center on Philanthropy at Indiana University, one of six organisations in the Non-profit Research Collaborative.

Out of business

Few will actually go out of business, Osili said, but cutting programmes and laying off staff are a real possibility. Many are using volunteers to do jobs previously completed by staff.

"The good news is that non-profits are starting to look ahead and think about ways to adjust to the new environment we're in," she said.

Because most non-profits spend money the year after they earn it, or budget according to a three-year average, even when the economy does pick up, the recovery for charities will take longer, she said.

Osili said it could take donors as many as four years to return to pre-recession giving levels, in part because it takes a while for individuals and corporations to regain confidence in their own financial stability.

The year isn't over, however, and some charities are still hoping for a holiday surprise. A recent random national survey of the general public found some potential for hope. Fifty-one per cent of people questioned by Harris Interactive in a random telephone survey said they expected to give a charitable gift as a holiday present.