It Takes Great Creativity to Fill Government Funding Gaps

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December 11, 2011; Source: Crain’s New York BusinessIt is the time of year of multiple stories about nonprofits facing end-of-the-year fundraising crunches. One interesting dimension is charities that have long been part of the government-funded social safety-net are now struggling because of government funding cutbacks. For example, the Food Bank for New York City is running an ad campaign looking for donations of all sizes, even small donations, pointing out that “for the cost of a $5 latte, the Food Bank could fill 25 children’s lunch boxes.” The Food Bank was once mostly government-funded, but now it is forced to rely on private donations for the bulk of its moneys: Last year, the Food Bank got $18 million from the government and $15 million from individual and foundation contributors; this year, the expectation is for $15.4 million from government and $17 million in private donations.

The Crain’s story notes some nonprofits doing well with creative fundraising strategies and increasing their private donations significantly. But for how long? Nonprofits are tapping board members for more money (at St. Nick’s Alliance in Brooklyn, board contributions have increased from $1,000 per member to $10,000, for example), and they’re putting more effort into creative “friend-raising” efforts. But at some point, will potential donors facing deluges of new and repeated requests begin to succumb to charity exhaustion? Will they resent having to fill in as bottomless “piggy-banks” substituting for basic government programs? Will the economy’s effect on them simply limit how much excess capital they might have to devote to charitable giving?

We wonder how government-funded safety-net groups are faring in this environment of government cutbacks. Are the groups serving the poor filling the gaps on an emergency basis or altering their business models for the long term, for a prolonged environment of shrinking government funding?—Rick Cohen