By Doris Rubenstein, PDP Services
2009

Ever since the first shoe dropped with the failure of the mortgage industry and the financial markets started their downward slide, I’ve been waiting for the other shoe to hit the ground. Weeks have passed now and I’ve been waiting to hear the long-expected thump. 

It happened this week and it hit with a wallop. The sound I was listening for was the wail and cry of the philanthropic community. In the October 16 Chronicle of Philanthropy, the second lead story was “After the Fall: Financial crisis is affecting nonprofit groups in myriad ways.” The October 17 Star Tribune reports that “Campus fundraising just got a lot harder.” Thump and thump again.

Charities large and small profiled in these stories share many similarities both in their woes and how they are dealing with them.

The reaction of an international volunteer organization cited in the Chronicle in New York City to the drop in funds was to cut staff and to cut or freeze pay for those remaining. This has been the strategy of at least one nonprofit I know: the Cedar Riverside People’s Center, a 38-year-old community clinic on the West Bank neighborhood in Minneapolis that recently was recognized by Medica for outstanding innovation. Despite these measures, their dedicated staff continues to serve with care and respect a growing population of those who have lost their jobs and/or their health insurance in the crisis. 

The People’s Center’s problems stem from a cut in federal reimbursement levels. They don’t have an endowment at this point, which is probably to their advantage right now. But the foundations that make grants to them and other Twin Cities charities do have endowments to support such groups and they have had to cut back dramatically in both the number and size of their grants. Ouch and ouch again: That’s one shoe that’s landed on the charity, and another shoe that hit the donor.

It’s much the same for the colleges featured in the Star Tribune article. They’re taking a triple hit (where did that other shoe come from?). Their own endowments are down, institutional giving is, too; the older alumni who are the backbone of both their current giving and capital campaign donations at places like Southwest State and Winona State are keeping their wallets closed as they watch their retirement funds evaporate before their eyes. 

What this means is that not only are the current operations of these institutions in danger, but the opportunity to build for the future is also imperiled. That’s bad for Minnesota, the “Brainpower State” that has always depended on its educational institutions to be the engine of economic growth.

Readers of the two publications mentioned above will note another similarity in the coverage of the economic impact of the downturn on philanthropy. Both of them have sister articles reporting on the vast sums of money being given by persons known to be major philanthropists (in the case of the Star Tribune article, Alida Rockefeller Messinger of Minneapolis is cited) to various political candidates. Those are not tax-deductible contributions, either.

Perhaps these donors believe that they will accomplish more good in either the short or long term by electing leaders who will change the system that has put nonprofits, philanthropic institutions, and “Joe the Plumber” donors into the situation they all currently find themselves. Only time will tell. 

Once the election is over, I will be listening again. I will be listening for the footsteps of politicians and philanthropists to pick up those shoes and put them on so that I can hear their footsteps as they walk into the doors of places like the Cedar Riverside People’s Center to see how it can serve as a model for effective and affordable healthcare. Or put that leather to the gas pedal and drive down to Winona State University to learn how their programs support and advance local businesses.

Nonprofits are hurting. They provide the final safety net for those who often are without shoes during these trying economic times.