Parker Leavitt
June 27, 2009

More pain for non-profits as funds drop and demand rises

The recession is forcing Phoenix-area non-profit groups to lay off staff, reduce costs and seek new ways to raise money.

Many organizations are struggling to deal with falling income and still provide vital services as demand from the needy continues to rise.

More than one-quarter of Arizona non-profit organizations reported that they laid off employees in 2008 or planned to do so in 2009, according to an Alliance of Arizona Nonprofits survey released in February. That could put about 5,000 non-profit employees out of work by the end of this year.

"Generally, the stress and strain in the non-profit sector right now is really profound," said Robert Ashcraft, director of Arizona State University's Lodestar Center for Philanthropy and Nonprofit Innovation.

"It becomes necessary to re-engineer how they can accomplish their mission in a tough economic climate," Ashcraft added.

Non-profit groups are taking a variety of approaches.

Goodwill of Central Arizona is asking for more cash donations. Although sales at its thrift stores are up, Goodwill is struggling to collect enough donated items to meet the rising demand for those goods as well as for its services. Arizona's unemployment rate hit 8.2 percent in May, and more people are flocking to Goodwill's career centers for guidance and training in the search for new jobs.

So, Goodwill is trying a new technique: asking shoppers for cash donations at the checkout counter. That helped raise $132,000 in total cash donations in May, up from $49,000 a year earlier.

"Donations are the lifeblood to our organization, and we're taking a more aggressive posture than previous years to collect more donations," Chief Operating Officer Tim O'Neal said.
Goodwill in March opened its first donation-only location in north Scottsdale and could add up to 10 more around the Valley this year, O'Neal said.

St. Mary's Food Bank, the Valley's largest non-profit, based on budget size, has turned to technology to try to save money.

It is using new GPS software, made available by grant money, to plan more efficient truck routes and reduce operating expenses.

The program could save up to $50,000 annually in fuel costs and allow the food bank to collect more goods without additional trucks and employees.

Some non-profits are turning to layoffs, salary cuts and furloughs.

Valley of the Sun United Way laid off staff this spring and cut spending after its 2008 "Live United" campaign raised $49 million, nearly $4 million less than the previous year.

In all, 11 staff positions, about 12 percent of United Way's employee base, were eliminated, about half of which were filled at the time.

Catholic Charities Community Services recently laid off about 150 employees across Arizona and cut the salaries of all employees by as much as 15 percent, Phoenix Director Tom Egan said. It expects to cut its substance-abuse aid program in half, leaving about 300 affected families to seek help elsewhere.

Workers at Child Crisis Center in Mesa took a 10 percent pay cut this year, and Phoenix Theatre employees have two unpaid furlough days each month.

One group's approach to improving the bottom line, although novel, proved unsuccessful.
In May, a coalition of Valley arts-and-culture organizations launched the MyArtsCommunity.org campaign, a grass-roots effort to bring in donations through online media and social networking. The fundraiser was modeled after President Barack Obama's Web-based effort to energize young voters before the election.

The six-week arts fundraiser ended June 15 and brought in $24,172. The campaign cost $100,000 to launch.

"The goal was to seek small donations from a broad base," said Megan Brownell, an Arizona Community Foundation spokeswoman. "It brought in less than expected. I think everyone realizes that people are hurting out there."

While non-profits explore ways to improve their finances, more people are counting on them for help.

"We have people that used to be supporters of our organization who are coming to us for services," said Egan, of Catholic Charities.

Demand for food spiked by 70 percent at St. Mary's Food Bank this year.

"More and more people are being affected by job losses and cutbacks, so we're seeing a whole new set of individuals and families in need of food and services," said Terry Shannon, president and chief executive.

The organization had budgeted for $760,000 in cash donations in June but may fall about $200,000 short.

Many Arizona non-profits expect revenue to continue to decline through 2009 and have little choice but to scale back operations.

Revenue for non-profits across Arizona dropped about 18 percent last year, according to the Alliance of Arizona Nonprofits survey.

Still, United Way President Merl Waschler said his organization remains dedicated to providing basic services to the needy.

"It's the ability of an organization to manage through these times that indicates its state of health," Waschler said. "Our goal is still to pump as many dollars into the community as we can."

Reach the reporter at parker.leavitt@arizonarepublic.com