Utah nonprofits fighting to stay afloat in a rough economy

Story and photos by BROOKE MANGUM

With the downturn in the economy many businesses are losing their shirts, but what is seldom thought about is how nonprofits are impacted during these times.

According to the National Center for Charitable Statistics (NCCS) the U.S. is home to more than 1.5 million nonprofit organizations. There are nearly 10,000 registered nonprofits in Utah alone.

Although nonprofits may not be the first type of corporation that comes to mind when thinking about big business, it is still a moneymaking entity that relies on a healthy economy. Many Utah nonprofits are struggling to survive and are looking for strategies and ways to stay in business.

“Obliviously in this economy everybody suffers,” said Nancy Basinger, Ph.D., the Lowell Bennion Community Service Center assistant director. “Nonprofits maybe suffer more because there is more demand and there are fewer dollars coming in the door.”

Nonprofits have been an area of research for Basinger for about eight years. She received her master’s degree in nonprofit organizations and her doctorate studying the interactions between government and nonprofits. Basinger has also worked in the nonprofit sector as a bookkeeper and financial director.

Basinger said the main problem facing Utah nonprofits is that community needs are up but the revenues are down. Organizations are being forced to lay off staff members and downsize services even though the demand is still rising. This makes fulfilling the needs of the community extremely difficult, if not impossible.

The Community Foundation of Utah  reported that in 2010, 77 percent of reporting nonprofits in Utah saw an increase in demands for their services. Subsequently, organizations are looking for funding any way they can, since much of their savings have been depleted.

“Organizations that used to keep six months’ worth of expenses in the bank for a rainy day have now spent it all. This is the rainy day and now we have to figure out what to do,” Basinger said.

Nonprofits are tightening their belts and are working to become as cost efficient as possible. This means organizations are finding new ways to deliver their services as well as making changes in funding sources.

Discovery Gateway has fun interactive exhibits suitable for children of all ages

One organization that is doing this is the west-side nonprofit Discovery Gateway. Discovery Gateway specializes in children’s education through interactive exhibits, and like many nonprofits has experienced a drop in funds to the organization.

Steven Suite, chairman of the board of directors of Discovery Gateway, says the museum has been hit hardest by the decrease in donations given by foundations. Many foundations base their donation amount upon the interest they make on their investments. If the foundation’s investments do poorly, the donations to nonprofits suffer.

“Our strategy has been to put more focus on corporate sponsorship, more importantly, finding new donors to help fill the pot,” Suite said.

All donations to Discovery Gateway are tax-deductible

Discovery Gateway children’s museum is a 501 (c)(3) public charity. This type of nonprofit is tax exempt, benefits the community and derives at least one-third of its revenue support from the public.

“Discovery Gateway gets its funding from two places, the ZAP tax, which comes from the government and private donations and fundraising events,” Suite said. “Donations and fundraisers account for more than half of the museum’s yearly income. Without it the museum would cease to exist.”

According to the Community Foundation of Utah, 35 percent of Utah nonprofits have experienced a significant decrease in end-of-year giving. Twenty-eight percent reported a decrease in overall contributions and foundation, and corporate giving is down by nearly 50 percent. Overall, 64 percent of Utah nonprofits have seen donations decrease since the beginning of 2010.

Historically, Utah residents have given a great deal of support and funding to charitable organizations such as nonprofits. In fact, according to a report by the Community Foundation of Utah, the average charitable contribution per tax return in Utah is 4.9 percent while the national average is only half of that at 2.2 percent.

“Luckily, we have not had to go as far as raising our admission prices, or cutting down our hours but we did reorganize,” said Lindsie Smith, Discovery Gateway development and marketing director in a phone interview. “We have made changes in our staff and board of directors, and consolidated. To keep overhead costs down we have not rehired or filled any open positions.”

Utah nonprofits, Sorenson Unity Center roll with recession

Story and photo by DEREK SIDDOWAY

In the midst of numerous stock market plummets, layoffs and home foreclosures, many people have come to rely on soup kitchens, housing services, welfare entities and charities such as the Salvation Army and Deseret Industries for basic necessities.

According to the Bureau of Labor Statistics, Salt Lake City’s unemployment rate was at 7.4 percent in August 2011. Online real-estate marketing company RealtyTrac reported 560 housing foreclosures in the city throughout September 2011.

With no economic relief in sight, nonprofit organizations in Utah are working tirelessly to meet an increased demand for their service. A 2011 report prepared by the Community Foundation of Utah and Wells Fargo paints a vivid picture.

According to the report, “The New Normal, Changes to Utah’s Nonprofit Economy in the Great Recession”: “Utah nonprofits are, like the families they serve, stretched to the limit,” In addition, “As many as 14 percent have no cash on hand, and are living paycheck to paycheck, much like many of the people who come to them for assistance.”

The report, presented to the Utah State Legislature in February 2011, indicates demand is continuing to increase. In 2009 and 2010, nearly 80 percent of Utah nonprofits saw an increased need for service. These findings hint that up to one-third of Utah nonprofits could be out of business if there is no relief in the immediate future. When the report was published, 70 percent relied on deficit spending or were operating on less than three months of reserve funding.

“There is basically no reserve fund left in the state of Utah for nonprofits,” said Nancy Basinger, assistant director and service-learning manager of the Lowell Bennion Community Service Center. She studied nonprofit interactions with the government for her doctorate research at the University of Georgia in 2003 and is a member of the advisory board at the Nonprofit Academy for Excellence in Professional Education at the University of Utah.

Basinger, who has published various reports and research projects concerning the nonprofit sector in Utah, said nonprofits suffer more in a down economy when demand rises and funding bottoms out. She is concerned over how nonprofits will continue to meet their obligations and serve the community if they are unable to make payroll.

“This is the rainy day and now we’ve got to really figure out what to do,” Basinger said. “The pot is smaller and the (number of) people donating is smaller.”

The pot may be shrinking while demand has done anything but. In addition to providing for the physical needs of their patrons, nonprofits have experienced an increased need for social and mental programs as well.

“Behaviors supported by social services are more in need because of job loss, at-home abuse, substance abuse and no health insurance,” Basinger said.

The Sorenson Unity Center houses a variety of nonprofit organizations selected through its Programming Partnership.

Some nonprofits have responded to these diverse needs by joining forces. For example, the Sorenson Unity Center has found that this strategy benefits patrons in addition to decreasing operational costs. The operation came about in 2008 when the Sorenson Multicultural Center and Salt Lake County approached the city government with a plan to run the center for a reduced cost. Located at 900 W. 1383 South, the Sorenson Unity Center provides services for the Glendale and Poplar Grove neighborhoods.

“Sorenson Unity Center is a way to bring organizations under one roof so that it’s not so difficult to have a million nonprofit organizations competing for the same dollars,” Basinger said. “(Salt Lake City) has decided that it is in its interest as a supporter of society to support the work of those nonprofit organizations. They are working together and accomplishing twice and much with the same dollars.”

Angela Romero, Sorenson Unity Center’s program director, is responsible for the selection of nonprofit organizations through its Programming Partnership. She describes her job supervising the partnership as a way to provide opportunities for the community that would be otherwise unavailable. Nonprofits seeking to use the Sorenson Unity Center’s resources must show Romero the services they will provide to the community before they are approved.

“We want to be a resource through the programs we provide,” Romero said. “We hope individuals can take away something that will help them in dealing with the current economic environment.”

According to its annual report, the Sorenson Unity Center had a total of 8,334 participants in programming activities for the 2010-2011 fiscal year. Overall, the center and its affiliates served more than 18,000 patrons during the past fiscal year. These affiliates — Unity Computer Center, Computer Clubhouse, Donated Dental, Fitness Center, Child Care and general events and meetings — saw a total of 74,283 visitors during the same period.

However, the Sorenson Center and its affiliates receive financing through city funding. This steady source of revenue allows the center to maintain its facilities for the community’s use without wondering where the next check is coming from.

“I think what the recession has done is (create) a greater need for us to provide quality services for individuals that are in our community,” Romero said. “Hopefully more people are able to access the programs we have here.”