Agencies feel pinch of poor economy; donations shrink
The recession is giving Arizona nonprofit agencies a double blow: shrinking their funding at the same time a soaring number of people are turning to social-service agencies for help.
Because corporations, foundations, individuals and governments began donating less last year, Arizona non-profits lost an average of 18 percent in revenue in 2008 and expect to lose at least that much again this year, a new survey by the Alliance of Arizona Nonprofits says.
Revenue has shrunk so much that one-fourth of the 87 organizations surveyed in early February have laid off or plan to lay off employees this year. The alliance estimates that will mean at least 5,000 job losses by the end of this year. Most organizations are still getting volunteers.
At the same time, 75 percent said the demand for their services rose last year, and 80 percent expect the demand to grow even more this year.
The Association of Arizona Food Banks said its members saw a 48 percent increase in people seeking food in fourth quarter 2008, compared with a year earlier.
The United Food Bank in Mesa alone has been running about 2 million pounds short of supplying all the food requested this fiscal year.
Among the food-bank newcomers are Chandler resident Paulette Pineda, who lost her job at a temporary-service agency four months ago and had to move in with her daughter, a single mother of three, because it took 10 weeks to begin receiving unemployment aid. Then her daughter was laid off.
So, with her unemployment funds about to run out, Pineda, 58, on Friday went to the United Food Bank in Mesa to buy a food box that includes a whole chicken, bread, fresh and canned vegetables and a bunny cake for $16.
“With a big family to feed, it’s about enough for one meal,” she said. “Maybe I can make a big stew.”
Patrick McWhorter, president and chief executive officer of the alliance, said social-service agencies that serve people directly have become the most dependent on government funding. And they are getting hit the hardest because of devastated government budgets, especially the state’s.
Sixty percent of the agencies surveyed said their government funding has fallen, and they expect deeper cuts this year.
“Without question, the combination of the revenues being down and the service demand going up is something the non-profit sector probably hasn’t seen in a couple of decades,” he said.
The biggest drop in funding has come from big corporations, foundations and wealthy individuals. Companies are pulling back on supporting fundraisers, such as golf tournaments and lunches and dinners, agency officials say.
More affluent people used to donate stock to foundations and non-profits to get a tax deduction for the difference between the purchase price and the current market price, said Veronica Meury, vice president and executive director of the Universal Technical Institute Foundation.
Meury is attempting to raise $1.5 million a year to help students attending the vocational school in Avondale and other campuses.
But with the stock market down, those donations have also dried up.
“The hardest part this time versus other recessionary times is that it’s not just one segment of the society that seems to be suffering,” Meury said. “It’s all segments. It’s going to be a very difficult year.”
Although several groups have seen individuals contributing more, Mesa United Way says more people appear to be cutting back. While each person may figure the United Way won’t miss their $5 or $10 a week, Carol McCormack, the group’s president, said so many people are pulling back that the agency is hurting. “It’s death by a thousand cuts, a little bit from everybody,” she said.