Non-profits get creative with donations down, demand for services ups

By Steve Gravelle

Just when the African American Museum of Iowa is trying to extend its reach, Executive Director Tom Moore is cutting its staffer in charge of statewide programs. Moore said it’s a case of making the best of a bad economic climate.

“We’re trying to do it with the staff here at the museum, rather than have that person in Des Moines,” he said. “That way we get more from the person — when they’re not on the road, they’re here at the museum.”

The economic recession grinds on, taking its toll on charitable donations, endowment earnings, and operating costs even as many social service agencies see increased demand on their services.

“Almost all of our agencies are reporting increases or significant increases in requests for assistance,” said Christine Scheetz, president and CEO of the United Way of Johnson County. “That has been across the board, all age levels that are served by partner agencies, every demographic. The biggest challenges they’re having are trying to do even more with less.”

The downturn has also taken a toll on endowments, and a tight state budget means cuts in fees the government pays for services performed by non-profits,

“It was common in 2008 for people to see anywhere from 25 to 35 percent negative investment return,” wiping out years of endowment revenue, said Dan Baldwin, CEO and president of the Greater Cedar Rapids Community Foundation.

Endowment revenues have recovered with the stock market — the GCRCF’s was up 18 percent for the year through October — but the uncertainty persists, as it does for agencies that administer government programs at the local level.

Dan Strellner, executive director for Abbe Inc., said its affiliate Aging Services saw cuts in Medicaid reimbursements of 2.5 percent to 5 percent effective Dec. 1. Similar reductions are likely, and Abbe has frozen pay and put off major capital expenditures.

“We haven’t reduced the work force yet, and we hope not to,” he said.

“With the needs as great as they are, I think they are looking for services as the last area they want to see cut,” said Scheetz.

Cultural and arts groups like the African American Museum are doing what they can to seek larger audiences and wider donor bases.

“If they’re cultural organizations they’re going to work harder at marketing, and most organizations are going to burn through reserve funds for the next year, if they have that,” said Bob Untiedt, executive director of the Linn County Nonprofit Resource Center.

There are hopeful signs — only 9 percent of the nation’s non-profits expect to cut staff next year, compared to more than 50 percent between 2008 and 2009, according to a survey by the Chronicle of Philanthropy. But it may be difficult to apply national trends to a community still recovering from natural disaster.

“In Cedar Rapids it’s the same thing as Katrina in terms of impact per square inch,” said Willard “Sandy” Boyd, board chairman of the Larned A. Waterman Iowa Nonprofit Resource Center at the University of Iowa.

“It’s kind of hard to split what is flood-related” from the overall economy, observed Orchestra Iowa Executive Director Robert Massey.

The orchestra’s timing, at least, worked in its favor. “Recovery” planning began even before the flood, putting it in a better position to weather the recession.

“Our strategic plan the board developed in 2007 really saw the need for the orchestra to develop itself as a regional orchestra,” said Massey. “We’re trying to say, ‘We’re your orchestra’” to the entire state.

Formerly the Cedar Rapids Symphony, Orchestra Iowa adopted its current name in September 2008, to reflect an extended reach. The move was at least partly in response to “a tapped-out line of credit” Massey inherited when he took on his job the week before the flood hit.

“We didn’t have any reserves,” he said.

The orchestra subsequently lost three corporate sponsors, at $20,000 to $25,000 each, adding urgency to its re-branding. Revenue has been diversified with the help of a two-year Department of Education grant to fund performances, most often with smaller ensembles, across the state.

“This grant has helped to make up some of what we lost,” Massey said.

That’s especially important for arts and cultural organizations.

“Religion’s at the top of the donor’s totem pole and unfortunately cultural organizations are at the bottom,” said Boyd, noting a predicted 9-percent drop in overall charitable giving,

That’s why the African American Museum is also seeking to expand its reach. Moore said his staff is designing exhibits for easy travel to host organizations across the state.

“We’ve built relationships with people across the state before now, and that’s been very helpful,” he said. “We’re looking at the services we can possibly provide.”

In a few cases, agencies are consolidating “back office” services, most notably in the $15 million, 65,000-square-foot Human Services Campus in downtown Cedar Rapids. Announced in October, the project by the United Way of East Central Iowa will house the offices of the Girl Scouts of Eastern Iowa and Western Illinois, Four Oaks, Aging Services, Neighborhood Transit Services and Iowa Legal Aid.

The state I-JOBS-funded project provides new homes for agencies displaced by the flood, but further cost-saving benefits are likely, said Lois Buntz, executive director of the United Way.

“Co-locating them in one facility seemed to make a lot of sense,” said Buntz. “The development of a shared administrative services was kind of the second purpose.”

Buntz hopes to develop a program to offer administrative services to agencies that aren’t at the campus.

“We want to protect the services to people at all costs, because that’s the most important,” she said. “We hope there could be some cost savings also.”

Abbe Inc. already meets that need for its eight affiliates, providing payroll, human resources and financial services.

“I don’t know if more agencies will be looking at that kind of thing in the future,” said Strellner. “I think there’s some potential there — it takes the right agencies, the right size, and the right missions to make it work.”

Getting endowments healthy again will be a key to long-term stability. Baldwin noted the recession also took a toll on gifts through Endow Iowa, the six-year-old state program that encourages endowment development in estate planning.

“There was a period of time starting with the flood through about Labor Day of 2009 where we saw an enormous decrease in those gifts,” said Baldwin. “In order for people to make gifts they have to have confidence.”

Fortunately, “since Labor Day we’ve started to see a lot more confidence,” Baldwin said. “The last quarter of ‘09 should actually be very strong in terms of endowment giving.”

That’s a good omen for everyone, as skeptics dismiss non-profits’ role in their community at their peril, warns Boyd.

“The non-profit sector has to be there,” he said. “When a business is interested in coming into a community there’s concerns about the work force, but most of the questions are about, ‘What’s life like in the community?’ The non-profit sector is critical to that.”