Panelists Ponder the New Normal for Nonprofits

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The Urban Institute’s Center on Nonprofits and Philanthropy somberly marked its 15th anniversary today, as a panel of experts discussed what might rescue the nonprofit world from its current downward spiral.

“I’m not sure there is a light at the end of the tunnel,” said Stephen Bennett, CEO of United Cerebral Palsy. Bennett said he has seen 10 percent of UCP’s affiliates go out of business in recent years.

The number of human services-oriented nonprofits grew from 85,122 in 1999 to 122,336 in 2009, according to a recent report by the center. During the same period, the number of social benefit-focused charities increased from 30,293 to 43,735.

But today, many of those organizations are operating at a loss or teetering on the edge of not being able to pay their bills. Total revenue for the human services organizations slightly exceeded expenses in 2009 ($186.5 billion versus $183.6 billion). Among social benefit organizations, revenue lagged expenses by more than $2 billion ($70.6 billion versus $72.9 billion).

The figures embody the thin fiscal margin found by Washington, D.C.-area grant maker the Eugene and Agnes E. Meyer Foundation when it surveyed its grantees. Out of more than 200 programs funded by the foundation, said its CEO, Julie Rogers, 57 percent reported having three months or less of operating reserves on hand.

Panelists agreed that investments in social entrepreneurs are a possible key to boosting the field. Howard Husock, vice president of policy research for the Manhattan Institute, said that of the 50 organizations that received social entrepreneurship awards from the institute over the past 10 years, only one has gone out of business.

“We used to get 150 nominations for the awards,” Husock said. “Last year it was down to 60.”

The White House Social Innovation Fund has made a sizable contribution to enabling more social entrepreneurs, said White House policy adviser Marta Urquilla, but similar investments are needed outside the federal budget.

Rogers said the nonprofit field “ought to have more mergers” during an economic downswing, a notion that the late Peter Goldberg suggested to Youth Today in June

“For better or worse, it’s not a good time for ‘Small is beautiful,’ ” said Goldberg, the longtime CEO of the Alliance for Children and Families, who died in August. “It’s just harder to have the necessary infrastructure. We will see much, much more [merging]  than we have in the past.”

Rogers said she has seen slightly more mergers discussed in the Washington area, but few have panned out.

A webcast of the discussion will soon be posted here on the Urban Institute website.