October 14, 2004 | Read Time: 2 minutes
Human-services charities in the Washington metropolitan area have been laying off staff members and cutting services because of hard economic times, a new study has found.
The report on the study, which analyzed the finances of 124 charities, says that many of the groups faced increased demand for their services and rising costs from 1998 to 2002 but their revenue didn’t grow nearly as fast. Beyond the cutbacks, charity officials said they were seeking new sources of revenue and dipping into their financial reserves.
The report was released last month by the Brookings Institution, a Washington think tank, and George Washington University and based on informational tax forms from the years 1998 to 2002.
The data show that while Washington nonprofit organizations reaped the benefits of the mid- to late-1990s economic boom, they also felt the blow of the economic downturn that began in the late 1990s, and are still affected by it. From 2001 to 2002, the survey found, private donations dropped by 0.5 percent after inflation. More than half the organizations that participated in the survey reported that they got less from United Way. About half of all the organizations reported minimal or no change in the amount of money they received from federal, state, or local government sources, while 16 percent reported declines in federal funds, 29 percent had cuts in state funds, and 21 percent lost at least some aid from city or county governments.
Greater Needs
Seventy-four of the organizations in the survey said the number of clients they served increased from 2001 to 2003, and 97 reported that the costs of delivering services increased.
In meeting the increased demand, larger groups — defined by the survey as those with annual budgets above the respondents’ median of $639,429 — were more successful in raising funds than were smaller charities. Twenty-eight of the 62 larger groups surveyed reported increases in private donations compared with 20 of the 62 smaller charities that reported the same. Small groups were more likely to see declines in private giving, with 23 of the small organizations surveyed saying those donations had declined, while only nine larger organizations reported the same. Many nonprofit executives interviewed for the survey said they believed that during uncertain times, donors are more likely to give to larger, more well-known organizations.
Copies of the report, “Thin the Soup or Shorten the Line: Choices Facing Washington Area Nonprofits,” can be obtained free from the Nonprofit Roundtable of Greater Washington’s Web site, http://www.nonprofitroundtable.org, or by calling (202) 955-6187.
