Mounting evidence is pointing to a recession and nonprofit groups could start feeling the effects.
Among the various possible scenarios:
- Corporate giving will fall as profits tumble
- Foundations will cut back on grant making as returns on endowments decline
- Individuals will reduce their donations as unemployment and economic insecurity rises
- Governments will cut social services, spending on health and education as tax revenue falls
And in our Jewish world, according to an article in today’s Jewish Week,
“Leaders of Jewish foundations and nonprofits are bracing for slashes in available funding this week as global and domestic markets tumble and fears of a recession loom. And some are already starting to feel the pinch as anxiety mounts among philanthropists and leaders of the groups they fund.
Some groups, mindful of the economic jitters that have been destabilizing the national economy for several months, have been tweaking their development strategy.”
New Innovators Face Greatest Threat
The many creative, innovative Jewish nonprofits that have sprung up in the last decade or so face a different picture. They have small staffs, small budgets, no endowment and little ability to invest in the kind of long-term planning that can help non-profits ride out turbulent times.
“In an economic downturn, innovation is the first thing to go. Tried and true will edge their way up,” said Aliza Mazor, program director for Bikkurim, an incubator for creative new groups.
But, she said, those that are already established will probably ride out the storm. “Those that are up and running may have to retool but probably not a lot would go out of business”.
The ones most at risk are in the start-up phase. “It may be an inhospitable market for that. Nobody will take a risk on funding them, and they may go out of business,” Mazor said. “Starting in an economic downturn is not good for an unproven young enterprise.”
Nigel Savage is executive director of the environmental organization Hazon, whose programs are expanding, and has budgeted this year $2.2 million, up from $1.4 million last year.
“I’m nervous in the short term” about the impact the economy will have on his group, he said. “All of the legacy Jewish organizations have substantial reserves and endowments, and none of the new Jewish nonprofits do. It is incredibly vital that people who have been funding the young nonprofits continue to do so over the next few months. Whereas the mature organization can go into deficit when current donations drop, young nonprofits don’t have that luxury.”