As Governments Trim, More Public Institutions Fight for Private Gifts

New T-shirts that declare “Welcome to Brownbackistan” are popping up in Kansas to protest Gov. Sam Brownback’s decision to eliminate all state aid to nonprofit arts groups.

The governor’s action has set off a struggle for donations, especially because he created a new fund-raising arm, the Kansas Arts Foundation, to seek private support.

The foundation will seek $1.2-million annually to replace government subsidies—not just the state aid but also matching federal funds that were lost when Kansas eliminated arts from its budget.

The fund-raising competition angers Emily Eakes, the Lawrence artist who created the T-shirts.

“Arts organizations that were supportive of one another and trying to enhance the arts in Kansas will now be fighting for the limited amount of private support that is available,” she says.

Such competition is growing more intense around the country, as state and local governments face historic shortfalls and stiff resistance to raising taxes.

The budgetary squeeze is resulting in ambitious fund-raising drives run by governments or designed to support their work.

Among the big-ticket items is a campaign in New York to raise $1-billion for state parks over the next decade. The effort was begun after New York slashed $35-million from the public Office of Parks, Recreation, and Historic Preservation. Those budget cuts closed several parks for the first time in the New York park system’s 125-year history.

While private groups have long raised money to help parks, libraries, and other government entities, what’s different now is both the scale of the campaigns and the fact that they are asking donors to provide basic operating support rather than money for special projects and other extras.

Donors may have a tough time saying no to those requests. And that could force them to make hard calls about whether to increase their overall charitable giving or cut back on the money they provide to other causes, all at a time when charitable giving has yet to recover to prerecession levels.

“Originally such groups added value by raising money over and above what would normally be paid for,” says Doug Sauer, chief executive of the New York Council of Nonprofits, in Albany. “More and more they are raising money to replace cuts, but that is taking money away from other important services.”

Mr. Sauer points to public universities, which have been forced by dwindling government appropriations over the past several years to mount large, sophisticated fund-raising operations, as an example of a trend now expanding to other government entities. “We represent small to medium-sized nonprofit organizations. and it is hard for them to compete,” he says.

Government Actions

In other places, governments are turning to nonprofits to raise money:

• In California, the legislature has passed a measure to enable nonprofit organizations to manage public parks, a last-minute bid by lawmakers to save at least a few of the 70 state parks doomed for closure by budget cuts exceeding $20-million. And county fairs have started new fund-raising arms after the state abolished subsidies that had been in place since the 1930s.
• In Virginia, after the Federal Emergency Management Agency denied disaster-relief funds to the state after tornadoes there in April, Gov. Bob McDonnell established a new Virginia Disaster Relief Fund to raise private contributions. In August alone, it raised $1.1-million.
• In Florida, new efforts are under way to raise private money after the city of Jacksonville sought to eliminate middle- and high-school sports programs in public schools.
• In Georgia, the 15-branch Gwinnett County Public Library plans to seek corporate sponsors and money from individuals to keep Atlanta libraries open after the county cut its library budget by $2.8-million, or 15 percent, on top of a $138,000 loss in state funds.

More Cuts Coming

Given the current economy, states will probably continue to make cuts that put pressure on private philanthropy to make up the difference, says Steve Seleznow, president of the Arizona Community Foundation.

“Government cuts are nowhere near the bottom,” he said, “and we have to be prepared for some very difficult times ahead.”

Arizona charities are already facing a tough time raising money, even without competition from government.

For the third year in a row, most of the state’s charities saw a drop in revenue last year, according to a report by the Alliance of Arizona Nonprofits. In addition to losing gifts from corporations, foundations, and individuals, more than half of Arizona nonprofits also reported a drop in government support, with an average decline of 23 percent.

Yet elected officials continue to turn to private donors to fill the gaps left by government cutbacks for basic services such as food, shelter, and child care for the needy, as well as public resources such as parks, libraries, and schools, says Patrick McWhorter, president of the Alliance of Arizona Nonprofits.

“The idea that nonprofits can just pick up these programs is ludicrous.”

Still, some Arizona charities are trying to help pay for public services. The Tubac Historical Society, for example, has organized volunteers and raised money to keep the Tubac Presidio State Historic Park open after state shortfalls threatened to close the facility; such organizations have raised more than $800,000 for the cash-strapped Arizona State Parks department.

Rent-Free Leases

Some Arizona charities are even getting a bit of unexpected help from their local governments as they seek gifts to provide services that municipal agencies previously provided.

Last year, after the city of Phoenix discontinued programs and services in a dozen recreational buildings, visitor centers, and other facilities, it started to lease those buildings rent-free to nonprofit groups with similar missions. City officials have agreed to maintain the grounds around the properties and share the cost of utilities.

So far, the city has placed nonprofit groups in eight of the 12 properties and said they could stay for at least five years. “We were looking to find nonprofits who could restore services similar to those lost,” says Ann Wheat, a Phoenix recreation supervisor. “To start to bring those services back is very exciting.”

‘Making It Worse’

But the growing efforts by governments to seek private money to pay for basic public services puts charities in a difficult position, nonprofit officials say. Charities want to help their communities, but they could easily become saddled with services they aren’t prepared to offer or sustain, particularly over the long term.

Charities “could be making it worse by accepting the extra burden of things the government cannot or won’t do,” says Rena Coughlin, chief executive of the Nonprofit Center of Northeast Florida, in Jacksonville, where the school district is cutting athletic programs.

Ms. Coughlin says that the threat of this year’s sports activities being cut prompted a flurry of frenzied fund-raising activity by groups of parents and nonprofit organizations that scurried to raise enough money over the summer to “save” tennis, cross country, and other sports from elimination this fall. But, she says, the fate of the athletics programs next year and beyond is uncertain at best.

Emmett D. Carson, president of the Silicon Valley Community Foundation, in California, says charities should speak up about the competition and added burdens they are being asked to take on as governments make cuts.

“We’re at a juncture in our country and in local communities where we are re-evaluating the social contract between the government and its people,” says Mr. Carson.

The attitude is “we want parks, but don’t tax me to have parks,” he says. “There was the old deal that said there should be public amenities, and we ought to provide for seniors and help the mentally ill,” says Mr. Carson. “Now there is a new deal that says, ‘We can’t afford those things anymore, so if it is important to you as private citizens, provide it yourself.’”

Like other charity officials, Mr. Carson says that nonprofit organizations have failed to articulate what the role of governments and charities should be in a time of sharply constrained resources.

“There will be enormous consequences for the next 10 to 20 years in terms of how government functions and responds to the neediest, but we have been incredibly passive,” he says. “The tragedy of the moment is that we are silent.”