Charities to feel recession’s impact through 2010

The Reuters News Service reported on March 24 that, according to a panel of experts discussing "The New Nonprofit Reality,” thousands of small U.S. charities are likely to close this year as cautious donors and governments tighten spending and some states consider removing nonprofit tax breaks. The nonprofit sector is preparing for 2010 to be harder than 2009 as the delayed effects of the worst U.S. recession hit philanthropic budgets.

"States are looking for any opportunity for tax revenue this year and nonprofits are increasingly a very big target," said Stacy Palmer, editor of The Chronicle of Philanthropy. "Foundation leaders are very worried that this economy is not doing so well and it's time for caution, so the groups that they're supporting are the tried-and-true groups – the universities, the hospitals."

Hawaii has proposed a 1 percent tax on charities, Kansas is considering making nonprofits pay sales taxes and Pennsylvania is considering removing a property tax break for charities, The New York Times reported. In a closely watched court battle, an Illinois hospital lost its property tax break in March as nonprofit hospitals come under pressure to justify the breaks they get.

"The nonprofit sector is like the caboose ... of the economy, so we often go over the cliff last and then we stay over the cliff even after the economy starts going up the other way," said Ken Berger, president and chief executive of Charity Navigator, which evaluates the nation's big charities. "The teeny-weeny, little local community-based, grass-roots charities are hitting a brick wall."

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