Elkhart, Ind. — As the economic downturn began to take its toll in Elkhart, demand for help from the Salvation Army soared.
People who needed aid for utility bills formed lines that snaked out the entryway and onto the street. Demand for free meals and rental assistance skyrocketed.
Meanwhile, local service groups that donated reliably for years were sending smaller contributions — with apologies. The single biggest blow came when the United Way in Elkhart — after suffering a dismal workplace fundraising campaign — slashed its annual allotment to Salvation Army from $90,000 to $40,000.
Salvation Army Captain Steven Woodard, faced with dwindling funds and a dramatic increase in need, realized he needed to tear up his playbook. Determined not to cut services in the face of increased need, he sat his staff down to strategize about how to fill a growing budget deficit.
“I said ‘We have to do something… People are coming from all over the place. People are coming saying they were the ones who gave last year or adopted a family (for Christmas). Now they are coming to us for help.’ ”
The Salvation Army’s problem in Elkhart — where unemployment is nearing 20 percent — is reflected nationally among nonprofits that provide human services. These groups, which help fill the gaps in large public assistance programs, are swamped by need amid ongoing layoffs and foreclosures, while individual, foundation and corporate donations falter.
The scramble to cover costs has prompted organizations big and small to consider new ideas — from different ways of approaching deep-pocketed donors, to marshalling volunteers, or creating alliances with groups that in some ways may have been rivals.
“Many nonprofits are faced with a terrible situation,” says Bob Ottenhoff, president and chief executive of GuideStar, a national organization that monitors nonprofits and private foundations. “As in every sector of our economy, nonprofits are going to think about whether there are better ways to provide their services — more efficiently and more effectively.”
The data for charitable giving in 2008 are not complete, but the evidence so far indicates giving declined, or at best, stayed flat. And prospects for 2009 look worse.
Hunkering down in 2009
Private foundations that initially bumped up their contributions to nonprofits providing essential services in early 2008 when the recession first became official, now are scaling back, after the value of their endowments plummeted with the stock market — which lost 38.5 percent of its value in 2008. About three-fourths of 430 foundations responding to a survey by the Council on Foundations in March reported that the value of their endowments had declined more than 25 percent last year, and more than 60 percent said they would reduce grants this year.
“In ‘08, foundations said ‘We know it’s going to be a tough year — let’s do a little more,’ ” says Ottenhoff. “Since then their endowments have deteriorated even more, and they have realized that this recession is going to last longer than they first did. …If you’ve lost 40 percent of your endowment, it will take a long time to rebuild it.”
And while some organizations saw giving spike during the holiday season, the surge did not last into the New Year.
“Once the credit card bills come due, and people get the sense of the long haul, they are more cautious again with their giving,” says Melissa Temme, national spokesperson for the Salvation Army. “And that’s what we are hearing… is that the fundraising for the first quarter of 2009 is just not keeping pace.”
The funding crisis takes on different shapes across the nation and in different organizations.
For instance, United Way expects total fundraising from its workplace giving program in 2008 to be down between 4 and 6 percent nationwide, with more than half of its local branches expecting a decline, according to United Way spokeswoman Sally Fabens.
But in Elkhart, with the mainstay recreational vehicle manufacturing industry in free fall, the decline in workplace giving to United Way is far more dramatic. In March, the local United Way said contributions to its 2008 workplace giving campaign dropped by a third. That translated into large cuts in funding for 17 local agencies that United Way considers critical to its mission — including a 45 percent cut to the Salvation Army in Elkhart.
Nine other groups — including Big Brothers, Big Sisters and a swimming program for disabled kids — lost United Way funding altogether, and the United Way cut its own staff in half, paring down to five full-time employees working on reduced salaries and benefits.
“These were not easy decisions… It was personally gut-wrenching,” says Jerry Quatram, president of Elkhart County United Way. Even though some of the cuts fit into the organization’s longer-term plan to focus on three core areas, the economic crisis forced the issue. “We were hoping that we would have a couple of years to migrate funding, but when the economic crisis hit, we had to do it more quickly.”
Thus in his January meeting with staff at Elkhart Salvation Army, Capt. Woodard moved into emergency mode. Some of what they decided, in an effort to cover a $60,000 to $80,000 shortfall, was conventional — stepping up mail campaigns and getting board members to work the phones with their contacts in the community.
The staff also dreamed up a new fundraising plan: The “No Bells” auction launched in mid-May lists several hundred items online, everything from pizzas and autographed baseballs to cars and teeth-whitening service. The idea is to drum up cash through the auction for the Salvation Army while also creating some foot traffic for struggling local businesses.
“Say you want to donate a set of tires, you leave them at your business, you put them in the window, and put a sign on them,” says Woodard. “Then people will go into the business to look, and at the same time maybe they will pick up a set of windshield wipers.”
The pain is being felt elsewhere, too.
At the Church Without Walls, a small Mennonite parish in a low-income area of Elkhart, the Revs. Jonathon and Cora Brown have had to scramble just to keep the lights on and the doors open.
As Sunday collections declined 30 percent over the last year, the Browns gave up their own small stipend. When demand at the church’s small food pantry doubled, they had to change the way they ran it.
“We had to cut back on the amount of food we purchased from the food bank,” says John Brown.” To make up the difference, they connected with the Mennonite Central Committee for donations of canned meat, which the MCC produces for emergency operations around the world, and began to rely more heavily on surplus provisions from the U.S. Department of Agriculture.
“When the money slowed, we had to look at the other resources that were out there,” says John Brown, who also works full-time for the city. They also called on churches in the community that typically minister more to the soul than the stomach. “The pressure was on to touch base with other congregations to make donations for the food pantry.”
The Church Without Walls has plenty of company in their pursuit of donor dollars, begging the question of just how far local largesse will stretch.
Church Community Services, a nonprofit in Elkhart that provides emergency assistance and longer-term programs to alleviate poverty has been looking for ways to cope since last June, when donations ebbed. The agency started drawing on reserves to meet the rising need, including a marked increase in the need for rental assistance.
Holiday giving helped somewhat, but the 40-year-old nonprofit faces another major fundraising challenge: In mid-April, the agency moved into a new building — part of an expansion plan that was well under way before the economic crisis hit. But with factory closures and uncertainty mounting in Elkhart, Church Community Services’ capital campaign fell far behind what it anticipated — and $200,000 shy of what it needs to renovate the space.
So in April the agency kicked off a renewed capital campaign, which involves taking to the pulpit at churches that already have Church Community Services funding in their budgets. Among the churches on the go-to list is Trinity United Methodist Church, a relatively affluent church that has been a solid supporter of the agency and other programs.
But this is just the latest in a string of appeals to members of this congregation. About a month ago, the Trinity United launched a “stewardship” campaign in an effort to cover its own gaping budget deficit.
The church leadership has also lent its pulpit to other causes — and the congregation, so far, has responded — coughing up $7,000 for summer camp scholarships, $3,500 to restore a field trip at a local public school after it was cancelled because of budget cuts, and $1,000 extra on Easter Sunday for its Mathew 25 emergency assistance fund.
“It’s really amazing… They are just driving the ball into the upper deck,” says Trinity United senior pastor Mark Fenstermacher of the congregation’s giving for an array of causes.
Still, there is a limit.
“I do think that people have to be wise about how often we go to the congregation,” says Fenstermacher. “We can’t run to them every week and ask for special offering… There are people who come to us to raise money for (things) and we say you know we’re humming about as fast as we can go. We can’t pick up the slack for every agency.”
Many community leaders and nonprofits have come to the same conclusion — that to meet the growing need, collaboration is critical.
In some cases, says Edith Falk, a consultant to nonprofits with Chicago-based Campbell and Co., foundations are insisting on collaboration among agencies as a prerequisite for grants.
At a retreat for Elkhart county non-profits in April, heads of more than 30 organizations met at a rural lodge to talk about ways to work together. This is an annual retreat — and a perennial pursuit – but this year the need was pressing.
“For some of these children it is the only time they get out all week,” says Forman. “It is almost therapy for some. And it really helps build self-esteem.”
Forman and the heads of eight other agencies that lost their United Way funding, are trying to work out ways to jointly raise funds. It’s not easy, she concedes, since the groups are very different sizes with causes as diverse as cystic fibrosis and Girl Scouts.
“If we’re going to do a joint fundraiser, what can we do collectively that is unique, different-and affordable?” she says “A lot of ideas have been thrown, but nothing has stuck yet.”
In Elkhart, though the United Way has less cash to disburse, it has parlayed its considerable clout into a new role — as coordinator of the county’s biggest food drive to date.
United Way led an effort to connect six local pantries to form a county-wide food network — both United Way members and non-members. The organization enrolled the local newspaper to distribute the food donation bags, implored local sports teams and congregations to provide volunteers and called together church leaders from all over the county to get behind the food drive.
“For the first time ever, we pulled together (leaders of) 40 different congregations for a breakfast meeting – and never brought up the theology,” says Quatram of Elkhart United Way. “We just asked, ‘Will you feed the hungry?’ Everybody understands feeding the hungry.”
This type of collaboration among nonprofit agencies is becoming increasingly common, says nonprofit consultant Falk, but she says it is sometimes tense.
“It takes a lot of work and putting the egos aside,” she says. “It is a collaboration in the face of an urgent situation, so you can see where people can put all that aside and make something happen.”
Longer term, she predicts that some smaller providers won’t survive, particularly if they don’t have robust and diverse sources of funding. And, while there is a lot of talk of mergers among organizations, there are few examples of successful mergers among nonprofits.
Running on fumes
Even for agencies that are not likely to disappear, it is unclear how long they can continue at the current pace.
Woodard’s skeletal staff at the Elkhart Salvation Army, for instance, has been in high gear since well before the holidays — serving hundreds more Thanksgiving and Christmas meals, feeding more people free breakfast each day, meeting a sharply increased need for utility assistance, and an array of other services.
“We have been able to keep up with the demand — though I need to give my whole staff Jacuzzis because they have been working like crazy,” says Woodard. “We’ve been keeping up, but it’s been a lot. It really has been.”
So far, organizations have stretched their funds and their personnel, getting a boost from laid off workers who have come to volunteer. But Mark Fenstermacher at Trinity United Methodist worries about what will happen when fatigue sets in.
“My fear for the community and individuals is despair,” says Fenstermacher. “People have incredible resources in the middle of the crisis … I think the real danger is the long term.”
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