Washington area charities take action to prepare for ‘fiscal cliff’
By Vanessa Small and Sarah Halzack,
At the nonprofit United Communities Against Poverty, Nina Lewis has a goal for this holiday season: Don’t let one volunteer slip away.
Her position as volunteer coordinator was created in October as part of the charity’s strategy to gird itself against the looming federal budget cuts, which threaten to hack $178,595 from its government funding.
Lewis has been tasked with combing through the group’s volunteer base to see if she can persuade some to donate cash in addition to their time. The organization hopes that money might help offset a potentially gaping hole in its budget.
“It gets frightening thinking about the cuts,” said Gwendolyn Ferguson, president and chief executive of the Capitol Heights-based organization. “So we have to be more creative in ensuring that we have what we need to function.”
November marks the arrival of peak giving season, but many local nonprofit organizations are more focused on January, when automatic government spending cuts could go into effect through a process called “sequestration.” The combination of budget cuts and tax hikes have become known as the “fiscal cliff” for the danger they present the economy, at least in the near term.
Worried that their government funding could be sapped and corporate giving could be dampened, some groups are taking action to better position themselves to absorb financial shock.
At Whitman-Walker Health, a health center in the District, executive director Don Blanchon and his team have created a fundraising campaign called Neighbors in Need that it hopes will raise $200,000 to supplement its annual year-end giving efforts.
This initiative was devised to create a buffer against a possible 5 percent reduction in public funding for the staff in its HIV prevention and care program. The additional cash would give them flexibility in the new year.
“We want to make sure that in the event sequestration does get us, we want to have other funds available so there’s no disruption in services to our patients,” Blanchon said.
Donations tick up
So far, 2012 has been a turnaround year for some nonprofits, with many seeing donations hold steady or tick up after sliding during the recession and sluggish recovery.
United Way for the National Capital Area is expecting double-digit growth in donations this year, while the Center for Nonprofit Advancement reported that nearly half of its charity members say donors have committed to maintain or increase donations. The Community Foundation for the National Capital Area said its contributions are up 15 percent compared with last year.
The Combined Federal Campaign of the National Capital Area, the authorized workplace giving drive for federal employees, has seen an increase in pledges so far this year compared with the same period last year.
Still, Washington nonprofits have seen in recent years how economic woes can weigh on their coffers. When corporate giving titans Fannie Mae and Freddie Mac were put under government stewardship in 2008, the mortgage giants slashed their charitable giving by 40 percent, leaving many groups scrambling to raise money to fill the void.
With that scenario not far in the rearview mirror, charities are fighting to inoculate themselves against the effects of the fiscal cliff and to make sure they don’t lose the ground they’ve gained or held this year.
The fiscal cliff is not only a concern for charities because of the drain it could place on public funding. It could have other ripple effects that will indirectly affect their strategies and bottom lines.
At Martha’s Table, a District-based group that provides food, clothing and services to low-income families, leaders are worried that if funding is reduced for government programs or like-minded charities, they could see an influx of needy people turning to their group instead.
“We would be hard-pressed to try to find ways to accommodate more people,” said Michael Bartscherer, interim president.
Changes in corporate giving could also take a toll on local nonprofits. While some companies in the region said they expect their giving levels to remain stable this holiday season, some also acknowledged that they considered the possibility of sequestration as they formulated their giving plans.
Arlington-based BAE Systems expects its giving budget will hover at about $14.9 million, the same amount as last year. But Diane Parisi, the firm’s vice president of community investment, said the defense giant is rethinking its approach to giving.
“Obviously as our budget declines, we focus more on employee giving and employee volunteering” than on doling out company money, Parisi said.
If the company’s workforce shrinks next year because of sequestration, Parisi said further changes could be in the pipeline, with increased emphasis on giving time, not dollars.
‘Prepare for the worst’
Because the fiscal cliff presents different threats from different fronts, nonprofits are taking varied approaches to plan for it.
The Nonprofit Roundtable of Greater Washington sent a memo to its nonprofit members last week telling them to “prepare for the worst,” and suggested that they build a contingency plan in case the cuts take place.
Horton’s Kids, a District-based tutoring and mentoring organization, has hired two interns whose job it is to research foundations to which the group can make grant appeals. With each new proposal, they mention the potential fallout of sequestration.
“We’re really turning it up this year,” said Lisa Peri, development director of Horton’s Kids.
And even groups that aren’t making precautionary changes are bracing for the possibility of having to make do with less.
“When the economy goes down, the number of kids showing up increases,” said Judith Dittman, executive director of Vienna-based Alternative House, which shelters homeless youth. “That’s what keeps me up at night.”
real effects 1,511 Fewer meals that will be served atone of United Communities Against Poverty’s programs if the 8.4 percent budget cuts of sequestration go into effect, according to research done by the organization.