2010: Daunting Challenges Face the Nonprofit World

The nonprofit world is about to face the toughest year in its history. By every measure, 2010 could be far more painful for charities and the people they serve than any other they have known.

Already many charities have been weakened by one of the longest recessions America has witnessed.

The Chronicle of Philanthropy’s annual ranking of the 400 charities that raise the most money found that, by year’s end, the nation’s top organizations expect a median decline of 9 percent in donations, meaning half will see giving drop even more starkly.

The search for money to finance charitable work will grow more competitive than ever, as state governments and private foundations cope with coffers that have dropped sharply in value over the past two years. Need is growing fast — some 49 million Americans now don’t get adequate nutrition every day, the federal government says, an increase of 13 million over last year. And the demands from the nation’s most-vulnerable residents fall not just on emergency food and shelter groups, but on other organizations, such as health clinics that must serve the uninsured and colleges overwhelmed by demands for student aid.

The work force that charities and foundations mobilize to meet the challenges is far different than it was just a few years ago. Charities have laid off thousands of employees. Even workers whose jobs seemed protected have received pink slips, as Stanford University, one of the nation’s most successful fund-raising institutions, laid off 50 staff members in its development office, and American Lebanese Syrian Associated Charities, the fund-raising arm of St. Jude Children’s Research Hospital, last month eliminated 70 jobs.

At organizations around the country, workers are taking pay cuts and in many cases, reductions in retirement and health benefits. Some groups told Congress this fall that their very survival was on the line as they sought to meet federal pension rules and keep their organizations afloat.

As times get tougher, donors and governments are looking more carefully than ever to make sure every dollar charities receive is spent well. Lawmakers and donors look askance at the multimillion-dollar executive salaries and raise questions about whether charities are making enough of a difference to justify their donations and government subsidies.

Even amid the challenges, interest in community service is at a new high and giving is becoming an integral part of everyday life. President Obama and the first lady, Michelle Obama, who both have nonprofit backgrounds, have helped to make community service “cool,” inspiring a multitude of volunteer campaigns. Cultural arbiters like the Huffington Post and the Daily Beast this year introduced sections on their online news sites about doing good. And social media like Facebook and Twitter are bringing philanthropy to the masses through online fund raisers and contests.

The Chronicle examines 10 trends that will shape how charities fare in 2010. We urge readers to share their ideas; tell us what trends you think are key by writing to editor@philanthropy.com. And visit http://philanthropy.com/live for a discussion with the reporters and editors who compiled this list.

This special report was reported by Noelle Barton, Maria Di Mento, Holly Hall, Peter Panepento, Suzanne Perry, Caroline Preston, Christopher Thompson, Nicole Wallace, Ian Wilhelm, and Grant Williams.