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Nonprofits may see longer downturn

Tom Parsons, writing for the Associated Press features Ruth McCambridge of Nonprofit Quarterly magazine. She believes that nonprofits are in for a longer than usual downturn if they are reliant on foundations for funding.

Once again, we recommend that nonprofits embrace revenue diversification. That is, not reliant on any one funding source, but embracing a spectrum of support besides grants, that includes discretionary donors, sponsorships, endowments and event fundraising.

Nonprofit expert sees longer-than-usual downturn

Charities tightening their belts because of the recession should gird themselves for a longer-than-usual downturn, the editor of Nonprofit Quarterly magazine said Friday.

Ruth McCambridge said the asset bases of foundations that provide much of the charitable giving in the country have fallen drastically, and grants from those groups have declined accordingly.

“And many foundations are planning to give less next year than this year,” said McCambridge, who spent 35 years working at nonprofits before taking the helm of the quarterly in 1999.

Still, there are many creative ways “to help us get through this period,” she told an audience at the Clinton School for Public Service that included many staff for nonprofit Arkansas agencies.

She recalled working at a women’s shelter in Lawrence, Kan., as federal grants began to dry up in the early 1980s during the Reagan administration. The shelter got a notice that a grant providing 90 percent of the organization’s budget would be discontinued in six months, she said.

The shelter staff and board – many of them volunteers – worked hard to expand the number of people involved with the organization and do more fundraising, McCambridge said.

“In the end, we had our budget covered locally, and we had been given a new shelter house,” she said.

According to McCambridge, in nonprofits’ drive toward professionalism, “we have forgotten that these people who are at our door every day are big assets.”

Asked if organizations should consider dipping into reserves they have built up over the years, she said a lot depends on a group’s particular situation. But if an agency’s board decides that the rainy day has come, it shouldn’t be done without an eye to the future, McCambridge said.

“You have to have a plan of what it’s going to take to get through a period when you’re using your reserves,” and how to rebuild them, she said.

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