This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

October 10, 2001

Rough Times Ahead for Non-Profits

Non-profit organizations do wonderful work all over the world. Some have a local mission; some have a global mission. Some generate revenue through the work they do, but most are dependent on outside funding. And therein lies the problem.

Contributions to support charitable organizations come from foundations, corporations, and private individuals. Foundations generate funds from endowment investments, but also depend on the generosity of philanthropists. Many corporations demonstrate high levels of social consciousness through their giving programs, donating money and in-kind products and services. Some also encourage their employees to contribute by matching employees' donations.

In good times, this process works beautifully. In bad times, not-for-profit organizations suffer when individuals and corporations do not have sufficient discretionary income to support the charitable organizations of their choice. With the slowdown in the economy, discretionary dollars will be in short supply. While most donors will find a way to meet their pledge obligations under long-term giving programs, current fund-raising campaigns will find that new sources will be severely limited for at least the next year or so.

What does this mean for non-profits? Expect programs to be reduced as finances get tighter. Staffs that are already lean will be challenged to meet service obligations. More volunteers will be needed. Some of this help will come from altruistic corporations like Cisco that pay employees a reduced salary to work for non-profits instead of laying them off. Unemployed workers may be invited to contribute time and expertise while they are out of work. Recruiting may be done through churches or even unemployment offices, as communities explore ways to utilize resources and bolster morale during these tough times.

With limited capability, charitable organizations will have to decline opportunities to serve. Where the need for support is urgent, if available, other community resources will be tapped. Depending on circumstances, extra strain may be placed on law enforcement agencies and others to cope with these community issues.

There are global implications of the reduction in funding for charitable causes. Improvement of living conditions and opportunities for the world's disadvantaged citizens will be slowed, with harsh consequences.

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