The Economy

Is this the new normal or is it going to get even worse?

“When people talk about the new normal I have no idea what they are talking about,” says Ruth McCambridge of the Nonprofit Quarterly. “I do not see anything re-adjusting to a stable state anytime soon. I am in the business of watching the news about nonprofits and their environments and I have to say the degree of churn is very hard to keep up with.”

“One report particularly struck me this week from the North Carolina Budget and Tax Center. It provides a stark picture of the steep reduction in government funds flowing into nonprofits in that state and it warns that the scene is only likely to get worse,” she wrote.

Here are some of the key findings:

  • State-funded grants to nonprofit organizations for services such as community and economic development, post-secondary financial aid, assistance with food and shelter, and environmental preservation plummeted more than 25 percent from fiscal year 2008-09 to fiscal year 2009-10.
  • Total grants to nonprofits from state and federal sources grew in fiscal year 2008-09 due to supplementary funds from the federal Recovery Act, but total grants from state and federal sources declined by 20 percent in fiscal year 2009-10 and are expected to drop further as Recovery Act assistance tapers off in 2011.
  • The decline in state grants to nonprofits coincides with decreasing financial support from private donors and an increase in the need for nonprofits' services driven by job losses and cutbacks in government-provided services.

According to this report, North Carolina will have lost a total of $200 million in service money from state and federal sources between last fiscal year and this.

“This kind of reduction in funding from government, which for many human service nonprofits constitutes the bulk of their budgets, strikes me as pretty significant,” McCambridge writes. “There have been a number of other reports I've seen in the past few weeks that promise the same kind of extension and further deepening of losses. It leaves me wondering. Do you see a ‘new normal?’ What do you think it looks like? What is the scenario you are preparing for? Let us know.”