Ease the Squeeze
By Doris Rubenstein, PDP Services
Minneapolis Star Tribune, August 25, 2001

That the economic downturn is hurting people at the lowest end of our local economy is no surprise. But exactly how it’s hurting them in the post-welfare reform world often is not understood.

Most of us know that when low-wage workers lose jobs or hours, it can make the difference between paying rent, buying food, or not. How they cope with that dilemma is different today than it was two years ago when the stock market was still soaring.

The poor and working poor could, until recently, count on services provided by a variety of non-profit organizations to provide a few days’ worth of food, a week of shelter, or job training.

Non-profits have been hit doubly hard in these times, as reported in the August 8 issue of The Chronicle of Philanthropy.

Not only are their donations down, but their endowments and reserves have shrunk along with your investments.

Donor organizations, such as foundations, also have seen their endowments shrink. Local foundations, if they follow the trends reported in the Chronicle for the top 10 national foundations, have lost anywhere from 1.5 to thirty percent of the value of their endowments.

Fewer resources to non-profits can mean fewer staff and other resources. It’s easy to see what that means for clients of social service organizations.

But what does it mean for the larger community, and the business community in particular? What’s the business connection?

Let’s look at Bridging, Inc., a small nonprofit in Bloomington that serves as a free furniture and home products bank. Its clients include women forced to leave their homes due to abuse, and persons who have been living in shelters for the homeless.

Bridging has eight full-time employees with a payroll of $330,000, including benefits. It’s a tight budget by anyone’s standards. Nevertheless, Bridging’s payroll still translates into a lot of commerce for local merchants and service companies from Bridging’s employees.

Multiply Bridging by the dozens of food shelves, battered-women’s shelters, and other agencies serving the poor in our community, and the economic impact is clear.

If each of these organizations were to lose only one or two employees, the ripple effect can be considerable.

Fortunately, Bridging doesn’t count heavily on large institutional or foundation donors for cash donations.

But other nonprofits do. Merrick Community Services provides human services for St. Paul’s East Side neighborhood. When the United Way cut Merrick’s funding by only 4% in mid-cycle at the start of this year, the nonprofit was forced to cut three staff positions.

Here’s another slant on the implications of the economic slowdown for another non-profit sector: the arts.

In its 2002 report on the economic impact of nonprofit arts organizations and their audiences, Americans for the Art reports that attendance at arts events generates related commerce for businesses like hotels, restaurants, parking garages to the tune of $22.87 per person per event -- not including the cost of admission.

Out-of-towners spend even more. Do we need any more evidence of this than the battle over the new Guthrie site?

Loring Park businesses are loathe to see the Guthrie relocate because they recognize the link between the Guthrie and their prosperity.

How else does the non-profit sector affect business?

Bridging, Inc. provides a valuable service to needy clients. But it also provides a valuable service to businesses: Hotels donate their furniture when they remodel. It’s a tax-deductible form of recycling. And it’s a better economic deal than paying to have it carted off to a landfill.

Opportunity Partners and Lifeworks underwrite employment opportunities with major corporations for people with disabilities.

Non-profits are in crisis.

“So is my company,” business replies. But there is a solution. Business owners should do a strategic study of what kinds of non-profit organizations have missions that relate to their areas of business or provide services to groups of their employees. Then, find the ways - financial, in-kind, volunteering - that fit your resources at this time.

If business does not respond adequately during this crisis, it may find that the services their employees and customers have counted on in the past will not be there to serve them when this downturn is over.