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On Wednesday November 19, 2008, Associated Grant Makers (AGM) convened representatives from the nonprofit community at the Joe Moakley Courthouse in downtown Boston to have an open dialogue regarding the current economic downturn.  Approximately 30 people were in attendance. This session provided an opportunity for AGM to ask the questions posed by funders during the November 6 convening of funders hosted by AGM.  The participants were asked to break up into groups and discuss a list of these questions. After the groups discussed and reported out on their findings, participants were asked to record their individual answers on note cards. This summary is based on that feedback. Please note that comments included in this report are a small sample of the total 79 comments collected.  The entire listing of comments is available upon request by contacting clavoieschuster@agmconnect.org. Please note that any comment cited in this report was recorded as written (including misspellings and improper grammar). 

This report is designed to help inform members of the nonprofit and foundation communities during this time.  It is an opportunity for nonprofits to hear from one another, for funders to address specific questions and for nonprofits to address specific concerns to the funding community.

We will use this report to inform our next session, Funder-Grantee discussion on the economic situation and moving forward, on January 8, 2009, where we will convene both the funding and nonprofit communities to discuss our findings.  The session is from 8:30 – 11:30 am and will be held at the Joe Moakley Courthouse at 1 Courthouse Way in Boston. This is a free event. Please register in advance at www.agmconnect.org/events

The questions asked were:             

• What impact are you already seeing from the 9C* and other cuts?
• What impact on services and in funding are you experiencing? Are you seeing an increase in demand for services?
• Do you anticipate that you’ll have to decrease your budget? What efficiencies are you currently implementing?  For example, are you looking for less expensive office supplies?
• What areas of technical assistance would you like to implement that would make you more efficient?

If you have questions about this summary, please contact Carol Lavoie Schuster at or 617.426.2606 x15.

What impact are you already seeing from the 9C and other cuts?

Based on our findings, and due in part to the organizations represented on November 19, we found that many organizations in the room have not been directly affected by 9C to date.  The few organizations that have been affected by the 9C cuts are seeing substantial impacts.  The impact they are seeing is substantial.  Another interesting observation made was that many organizations are currently being hit indirectly by 9C cuts, either through an increase in demand or increase in costs on their services due to other agencies closing (because of 9C). As many have suspected, the result has been a ripple effect with many organizations bracing for the worst due to many unknown factors.  Many organizations anticipate being further affected and in a more direct fashion, in the second round.  As a result of this, many forsee having to close programs or lay off staff in 2009.

There were a few organizations that have seen direct impact from 9C. Of those in attendance, some of the feedback includes (Please note that any comment cited in this report was recorded as written (including misspellings and improper grammar) :

• We have had one state contract cut by 75% - essentially 0 funding for the remaining fiscal year
• Our organization lost $125,000 so far & has been forced to lay off a few employees & employ less youth in leadership jobs this year.  other contracts have been held up too & could be cut. Also, there are other orgs we work with that are closing, etc.

Of the organizations that have not seen direct impacts yet, some comments include:

• We receive little state funding directly, but our Head Start program had and increase in its state supplement in July – that has been received.  Other groups that send students to Head Start w/vouchers or scholarships have been hard hit, so we will get less support from them. In January, we expect we’ll close the afternoon portion of the program – This will be a grave hardship for working parents).
  
  
• A very small % of annual budget comes from the state.  So far, the 9C cuts have not had major impact, only 5% our FY if from July – June + will see the brunt of the cuts by mid 2009.
  
  
• No cuts yet, mainly due to timing.  We received state funding for summer programs, but are unsure how to budget for next summer.
  
  

What impact on services and in funding are you experiencing? Are you seeing an increase in demand for services?

Of the 30 nonprofits in attendance, the group represented organizations that range from environmental organizations, homeless shelters, art organizations and educational programs.   Nearly 80% of the participants answered that they are seeing an impact in services, albeit indirectly at this point in time. There was only one organization, an art organization, that has yet to see any changes whatsoever.  Many of the organizations stated that funders have already communicated that funding will decrease in the coming fund cycle, while others have been impacted more indirectly. For example, a number of organizations have programs geared toward public schools.  Because many of the schools have had funding reduced, they are not buying programs; therefore the organizations in attendance are suffering because revenue is down.  In addition, many organizations have seen an increase in demand for services such as homeless shelters or soup kitchens.

Comments include:

• Services So far, we are not seeing an increase in demand, mainly because of timing. We serve schools through free programs, but they applied last spring.  We expect an increase in demand next year. Cuts will affect services needed by out clients. Also expect increased demand of summer intern (paid) program for teens.  Funding.  Grants received since September have all been reduced – these are regular donors who have said that they are already making cuts
• We’re already seeing a tightening in the private/corporate foundation world. We’re getting rejections from groups who have funded us consistently for years, and in talking to groups, all are talking about shrinking endowments tighter budget and tightening focus both geographically and programmatically We work in the Public schools, so we’re not seeing an increase in demand for services
• Impact on services: Funding from foundation has not changed so far, but towns + schools are not buying programs. Sales represent 70% of our budget.  Cash flow is at a n alltime low.
• Impact: we work with high school and middle schools, and most schools don’t have discretionary $ to fund our substance abuse prevention programs.  Our marketing hasn’t changed, the need has not changed, but sales are down 50%.  Our company has been able to provide this service for 25 years.

Do you anticipate that you’ll have to decrease your budget? What efficiencies are you currently implementing?  For example, are you looking for less expensive office supplies?

The organizations in attendance overwhelmingly noted that they anticipate a decrease in their budget in the coming year.  A number of organizations indicated that they have implemented more cost effective health insurance as a savings, reduced their own salary or plan to move to lower-cost office space (or even to share office space with other organizations).  The important thing to note is that many voiced a concern as to where the cuts would come from, as many are already operating extremely lean.  Many noted that the only possible areas to cut back upon would be salary and programming. 

Comments include:

• Probably – program budget already very lean/may have to reduce cut staff. Most of our budget is salary.
• It’s hard to be more efficient since 75-80 % of budget is salary, fringe and rent.  We have eliminated one staff position. Yes our budget will decrease next year. Efficiencies – 1 publishing annual report online; no print version. 2 moving to cheaper office space
• We began significantly curtailing spending as early as last spring. We have already eliminated all discretionary spending + will end the year with much lower expenses than budgeted.  We are currently planning for next year when we will be reducing staff cost by some combination of - Salary cuts - Not hiring seasonal program staff - Changing positions from full to part-time

What areas of technical assistance would you like to implement that would make you more efficient?

Participants felt as if administrative support such as financial or human resources would possibly provide some relief.  Others commented that opportunities to collaborate with other organizations in terms of ‘back office support’ would be beneficial while others noted that access to individual funding or capacity building funding would be helpful.  The majority of the attendees, however, stated that technical assistance would not be beneficial.  The area of most interest to attendees was for funders to shift from programmatic support to operational support. 

Comments of those who felt administrative support would be helpful stated:

• We need help with increasing our capacity to manage individual donors we need more financial expertise
• A way to share services such as HR and bookkeeping with other nonprofits (e.g., an HR consultant works 1 day per week for a nonprofit, 2 day for another etc.)
• Ways to collaborate to save funds & realize efficiency. We’re hearing from funders that there are too many non-profits and so we need to merge and collaborate. And while a strategic collaboration w/ another organization to share back office of other systems sounds good + make sense, we don’t even know where to start. We also know it will take time to realize savings, and may actually cost more in the short run – and we obviously don’t have any ‘spare funds’!

To illustrate the point that many made regarding a need for operational support, comments included:

• The current challenges faced by the organization require additional sources of operating support. Technical assistance will not address the basic problem of decreased revenue when demand for services is higher. - Although most funders must remain true to their missions and charters, a broader view may be needed to align funders interests with the realities of an eroded service delivery capability among nonprofits.  Should we protect the social safety net for vulnerable populations during this difficult time by supporting the operating costs of struggling nonprofits in order to meet our larger goals as a foundation in the future? This is the question facing funders, I believe.
• Funders can help us by funding operations or current programs rather thank only looking for new programs.  Most non-profits are not starting new projects now, until the economy starts bouncing back.

 For the complete listing of comments, please contact Carol Lavoie Schuster.

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