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Charities Are Hurting in The State; They Are Reorganizing To Survive

Susan Campbell

October 27, 2010

While state unemployment hovers just under the national average of 9.6 percent, state charities are reorganizing, and sometimes closing altogether.

Call it the New Lean.

Locally, according to its seventh annual survey of area nonprofit organizations, the United Way of Central and Northeastern Connecticut's campaign was down by 8 percent — or $2 million — from 2008 to 2009.

That is at least better than the national average.

The same day that United Way released those figures (in partnership with Hartford Business Journal), The Chronicle of Philanthropy reported that the top 400 charities in the country are operating with an average of 11 percent less donations. That's the biggest drop in two decades, and charity officials say they don't expect things to improve next year.

The economic downturn puts twin burdens on charities: When people tighten their budgets, charities feel the pinch. Meanwhile, people in serious financial stress rely more on charities operating with reduced coffers.

A third of the nonprofit organizations surveyed by the local United Way (whose area encompasses roughly a quarter of the state's nonprofits) said they worried whether they'd be able to keep their doors open in the next year, and for the second year in a row, almost a third said they've tapped into reserves to keep their organizations going.

Meanwhile — and this is a silver lining on which organizers stay focused — individual and corporate giving is up some. Organizers predicted that for 2010, overall revenue will stay flat or decrease for 58 percent of nonprofits.

"That means we have to take money we give to community investments," said Susan B. Dunn, president and CEO of the United Way of Central and Northeastern Connecticut. "We've tried to maintain those that were providing basic human needs." For efforts that aren't directly tied to that, Dunn said, there's some Solomon-like decisions to be made, which is frustrating, she said. How do you choose?

Dunn cites as an example of the New Lean the closing of Hartford's Trust House, a neighborhood nonprofit that ceased operations in 2008 for lack of funds, but also because organizers felt the mission of serving the Dutch Point neighborhood had been met.

"I've got to commend them for that," she said. "The neighborhood has turned around, and they did a really great job putting the folks they were serving with other organizations. That is great, when an organization can do that."

Given the comparative lack of resources, Dunn said that funders now must ask if there is repetition of services among organizations, and whether programs can be combined.

"I think we're not the only funders asking this," said Dunn. "Every funder is starting to ask for more accountablility. You can't just have that warm, fuzzy feeling anymore. We're nonprofits, but we're also businesses."