July 19, 2012; Source: The Statesman
As the recession grinds on, some nonprofits find that losses they had been hoping would be very temporary are more long lasting. So it is with the United Way for Greater Austin (UWGA). UWGA has awarded between $3.4 million and $3.8 million to 49 agencies for the past four years by putting in $1 million of their own reserves—and kudos to them for it—but the recession is longer and deeper than expected and this share-the-pain tactic could only work for so long. So this year, the UWGA cut the awardees to 31 and the amount to be given away to $2.2 million.
Predictably, this will have serious effects not only on those that have been defunded (like Meals On Wheels and More, the Salvation Army, AIDS Services of Austin, People’s Community Clinic and Family Eldercare) but also on those that have had their grants cut.
UWGA President Debbie Bresette said, “As soon as we knew we were short of our financial goals, we made our agency partners aware…We know this is going to cause budget headaches for some organizations, and we are sorry for that.”
According to The Statesman, the “funding changes stem from donations to UWGA’s workplace giving campaigns dropping 17.7 percent in the past few years” and board Chairman Bill O’Brien says that the pull from reserves has taken a toll on UWGA’s finances, leading to cutbacks, layoffs and a three percent reduction in pay for executives.
But O’Brien says, “We were proud to keep giving grants…It’s what we should have done. The economy was down. But we can’t keep doing it.”
This, of course, is terrible news for the agencies involved. For more on giving trends, NPQ would point you to our recent article on the Giving USA study results for last year.
It looks like it will take about ten years for giving to rebound to previous levels, but more specific to the point here, the category of giving in which federated funds are measured—public society benefit—was flat last year but the charitable gift funds like Fidelity, Vanguard and Schwab realized an average growth of 77 percent in 2011 over 2010. This would tend to suggest that the federated drives, like those of the United Way, saw a significant decrease in their fundraising. NPQ will check this against other material and get back to you. –Ruth McCambridge