One of my first assignments at Columbia, for University Writing, was to sit in Bryant Park for an afternoon and write about my experience there. I hopped on the subway and headed downtown excited, eager to discover some wonderful secret of New York City. However, when I arrived at the park, I was immediately taken aback by the scene of poverty before my eyes. Instead of glamorous fashion or an urban oasis, I found a sick, elderly woman digging for food in a garbage bin, and, underneath a tree, an old veteran desperately shaking a cup in hopes of a few coins. A wonderful secret, indeed.
I tried to sit in the park and observe other sights, but these images of destitution were everywhere. About an hour after I arrived, a middle-aged woman approached me with a note card. She did not speak, but she pleaded for my sympathy through a few written words and her needy eyes. The note card said that she had four children, and that she had recently lost her job. Her babies were starving, and she begged for means to support them. I sat there wondering why this woman did not take her card to the government or to a charitable organization. Why was she not seeking help from a more sustainable source?
The answer, I discovered, is a complicated one. Far more than bank CEOs or holders of bad mortgages, the economic recession has dealt a severe blow to the poor of New York City. In addition to federal aid program cuts, the non-profit sector – a traditional safety net for those who are most economically vulnerable – is being forced to cut back as well. In a kind of “perfect storm,” non-profits are experiencing a sharp decrease in financial support at a time when there is an ever-increasing need for their services.
The situation in New York is bleak. According to an article published in August 2009 by the Robin Hood Foundation, fifty-five percent of babies born in this city are born into poverty and 1.9 million New Yorkers are currently living below the poverty line. In 2008, more than 90 percent of emergency food sites in New York experienced an increase in demand. 1.3 million New Yorkers now rely on emergency food. Last year, the New York metropolitan area experienced 15,000 home foreclosures, leaving a record 9,720 homeless families sleeping in the city’s municipal shelter system, writes Julie Bosman in the New York Times. Charitable organizations are overwhelmed with new crises, but they lack the resources necessary to provide relief.
Moreover, the non-profit crisis is not limited to institutions that serve the homeless. The United Way of New York is reducing funding to non-profit agencies by 7 percent in 2009, cutting funding for programs that provide AIDS relief, child services, ESL classes, and conflict resolution workshops. While the major CEOs of our nation are receiving bonuses for their failures, our charitable non-profits are being completely undermined. Programs that help the sick, immigrants, the uneducated, and the poor are all under immediate threat.
The woman with the note card in Bryant Park was just one person, but she represented thousands. An increasing number of New Yorkers are walking the streets with invisible cards that detail their struggles, pleading for help. How is our government responding? When will these metaphorical slips of paper begin to truly disappear? It is a social and economic imperative that we begin to tackle this issue and restore the programs that aid the poor in our society.
At the most basic level, non-profits are organizations that seek ends other than generating profit. These organizations do not distribute their income to shareholders or owners, but rather use it to pursue the group’s goals. While there are many different types of non-profits (such as the government, some corporations, and religious organizations), the most commonly known—and the largest part of the sector—are public benefit corporations. These philanthropic groups provide invaluable services not only to the city, but to the world as a whole. From creating art programs for low-income students in inner-city elementary schools to providing emergency aid to victims of natural disasters, millions of people benefit from and depend on charitable non-profits.
In New York, there are hundreds of powerful charities who have historically provided a range of programs to help the struggling. The Clinton Global Fund, the Robin Hood Foundation, the Salvation Army, and the United Way are only a few of the thousands of groups that tackle major issues facing those living below the poverty line. There are also smaller philanthropic groups; some focus on tutoring programs, while others sponsor soup kitchens or other similar programs.
All of these non-profits, both large and small, are funded by revenue (earned income), individual donations, and grants from the government, foundations, and for-profit corporations. Since these groups survive almost entirely by the generosity of donors (both individual and corporate) and the help of government, non-profits are crushed in times of economic distress.
Non-profits not only help the city’s poor (which benefits the city as a whole); they also provide thousands of jobs to the people of New York. The non-profit sector is the city’s largest private employer. By providing work in city hospitals, social service organizations, and public arts programs, among many other areas, according to United Way, non-profits are responsible for about 500,000 jobs—more than 15 percent of the total workforce.
Historically, the sector has also been an engine of job creation. United Way also reports that from 2000 to 2007, before the recession hit, the local nonprofit sector added more than 50,000 jobs, while the rest of the city’s private economy declined. Non-profits are also unique in their support of minority groups. The number of minority workers employed by non-profits increased by nearly one-third from 2000 to 2007. Elsewhere in the city economy, minority employment grew by less than 3 percent.
While non-profits help the poor, immigrants, and the uneducated find employment, they are simultaneously providing thousands of jobs, especially to the socially marginalized. From a financial perspective, non-profits are crucial to the success of our city and nation’s economy. From a social and moral perspective, non-profits promote human rights and facilitate workplace environments that close the gap between different groups of people. In many ways, non-profits are the glue that holds our city together. They are irreplaceable.
A CASE STUDY
In an economic recession, the strength of non-profits deteriorates. I spoke with the Katherine Walling of the United Way of New York City to get perspective on the situation.
“Unlike other industries, when the economy falters, demand for our services goes up rather than down,” she explained, adding that, “For most private businesses rising demand is a good thing. Not so for human services non-profits. Rising demand indicates a greater level of human suffering. Economic contraction also means shrinking revenues to support the delivery of services at the very moment when the demand for them is peaking. It’s quite a wrenching countercyclical phenomenon.”
The United Way of New York supports other non-profit organizations in the city through partnerships, grants, and administration of government services. With other non-profits, they work toward income stabilization in communities, more educational opportunities, and an increase in health services. The organization and the non-profits it supports have been devastated by the state of the economy. In general, estimates predict that foundations like the United Way have experienced a decrease in assets of 30 percent or more, in conjunction with a record-number of layoffs.
And the situation in New York is not unique. After the markets crashed last year, the non-profit sector experienced its first drop in charitable giving since 1987, the last serious recession, with overall giving down almost 6 percent. In response, roughly two-thirds of all foundations nationwide found it necessary to cut their grant-making to lower-rung organizations in 2009.
Walling explained that the decrease in funds has been detrimental to providing services.
“All you have to do is to look at the increased volume of calls to 311 to get an idea of the increase in demand of services,” she said, referring to the New York City government’s social services hotline. “Calls for food stamp assistance are up 41 percent, and requests for public assistance and welfare information have increased by 43 percent.”
The demand is still rising, but the resources just aren’t there.
The United Way and other organizations are restructuring to cope with the flood of need. In order to survive, they must eliminate waste, change governance, and alter investments.
“Foundations will be giving less than they expected at the beginning of the year,” said Bradford Smith, president of the Foundation Center, an organization that keeps data and statistics on the state of the non-profit industry. He concluded on a more hopeful note however, saying that “many are rethinking their grant-making so that fewer dollars will not necessarily mean less impact.” In such a challenging climate, non-profits must become more strategic and creative.
“We are placing a greater emphasis than ever on keeping our current donors close by communicating with them regularly and offering them opportunities to volunteer and get involved,” Walling explained. “Over the next year we are planning a number of online giving campaigns, which we hope will reach a greater number of New Yorkers and offer them opportunities to support our work in education, income and health.”
These plans, however, may not be innovative enough. In this market, non-profits must be completely original to endure and persevere. Many organizations are holding innovation workshops and setting up meetings with the sole purpose of generating unique ideas, and even the Obama administration is getting into the act. Over the summer, the President created the White House Office of Social Innovation and Civic Participation, which will work with non-profits to tackle social problems and provide seed money for the most innovative proposals.
The Chronicle of Philanthropy published an article in early November, explaining that experts believe that the best non-profit leaders will “change the rules of the game, restructure parts of their operations, and redefine the way people work”. In the current economic climate, however, they must also work quickly. To hold on to their donators, organizations must come up with new plans, and fast. Radical thinking is desperately needed, but non-profits may be moving too slow in the face of the current challenges.
While non-profits must do their best to adjust to the current situation, we, as a society, also need to do more to help. Although the federal economic stimulus package contains programs to support non-profits, the funds are minuscule compared to the money needed, and the funding mechanisms provided by the White House are complex and convoluted. In the midst of expensive bailouts for banks and the automobile industry receiving billions, non-profits seem to have been forgotten.
Our economic focus is misplaced. The stimulus bill allocated only 50 million dollars for the creation of a program to help nonprofits provide aid to those severely affected by the economic crisis. When millions are struggling, this program is, at best, completely inadequate. Non-profits provide services that keep our economy alive. They support the poor, which sustains consumption and prevents our industries from collapsing, while providing many jobs to New Yorkers. Supporting non-profits is an economic imperative, not just a moral responsibility.
In writing this article, I spoke with employees of several major New York City nonprofits to ask them about their anxieties for the future. Although each was concerned about the recent decrease in donations, they were, collectively, very optimistic. The representatives from the groups told me that they will stand strong by their missions to support the struggling, and that they will simply need to be more creative and careful to handle these tough times.
I believe their confidence, however, is just a façade. The facts speak for themselves. Nonprofits are closing, downsizing staff, and cutting hours and wages. Seventy-three percent of organizations have no financial reserves, and 80 percent have seen major decreases in private funding. They remain optimistic simply because appearing so is an economic imperative. For donors to give money, they need to feel as though their donation will make a difference, and individual contributors are what these non-profits need most now. Non-profits must appear optimistic and stable in order for people to continue their philanthropy. Appearance is everything; no one wants to throw his money onto a sinking ship. I do not doubt that these charities are hoping for a brighter future, but their current level of positivity is unwarranted; it is only a mirage of strength.
The situation non-profits currently face is bleak. In times of economic turmoil, donors are skeptical and the government is overwhelmed. As men, women and children in the city carry their invisible note cards, organizations can no longer respond with aid to their requests. The number of note-cards keeps growing, and people who may have once been donors are now the receivers. Eventually, however, there will be nothing to receive. The note cards will multiply, but resources will dry up.
We will not truly recover financially until the government and the people of our city and nation recognize the urgency of this crisis. To really rehabilitate our economy, we must find effective means to save the organizations that work tirelessly to better our world. Non-profits need to discard their positive fronts. The note cards of Bryant Park and the rest of the city need to be revealed. Once we see the truth, then we, as a society, must commit to progressive action.