Editor's Note: Nonprofits Have Been Clutched in the Economy's Grip
There are more than 29,000 nonprofit organizations in Illinois. That number, by the way, includes this magazine.
Many nonprofits provide services that the private sector or government can’t or won’t do. They span the social spectrum, offering such benefits as health care, education, arts and cultural institutions, volunteer service to communities, training and housing for the developmentally disabled — places to worship or learn or engage in social activities.
They also provide more than 425,000 jobs in the state, according to a 2008 survey by the Donors Forum, a Chicago-based umbrella organization that promotes philanthropy and a healthy nonprofit sector in Illinois. That’s more than five times the number employed by state government. They also contribute about 9 percent of the state’s economic product, about the same amount as the combined output of Illinois’ construction, transportation and warehousing industries. And altogether, nonprofits mobilize a civic army of 3.9 million volunteers.
But during the past year or so, as the state and national economies have become clutched in the grip of the worst recession since the Great Depression, nonprofits have suffered, as well. Contracts with government agencies have been canceled, or payments are so far behind that they are forced to borrow heavily or sometimes even fold up operations. Charitable donations are declining because the investments of foundations, corporate donors and philanthropists are dwindling. Nearly half of the nonprofits that responded to a Donors Forum survey this year reported that they no longer have operating reserves, or what they had have been depreciated.
Illinois Issues has been planning to publish a series of articles about nonprofits since last summer, before the depth of the current financial chasm became evident. The three-part series, which begins in this issue, takes on even more urgency because of the economic crisis. Other installments will appear later this year.
The articles were made possible by a generous grant from the Donors Forum, and we are immensely grateful. Donors Forum executives and I agreed beforehand that the organization would have no editorial control over what we published or who we chose to report and photograph the articles. Nor did they review the articles prior to publication. They graciously wrote us a check and trusted that we would produce an honest and fair portrayal of the plight of nonprofits and their importance to society, along with a look at the philanthropic and charitable groups that provide the financial underpinning that allows nonprofits to perform their work.
We intend to examine all of those issues and more, highlighting the successes and failures, showing the breadth of nonprofits’ involvement in Illinois’ economic and social structure and outlining the immense challenges they face.
To help us do that, we asked Crystal Yednak, a former Chicago Tribunereporter whose free-lance work has also appeared in such publications as the New York Times, Crain’s Chicago Business and the International Herald Tribune, to interview administrators and others from nonprofits and philanthropic organizations throughout the state. Her reports have given us a view from the ground floor of how they are coping with their difficulties and what the future might hold. We also asked photographers Darrell Goemaat in the Chicago area and Robert Pope in central Illinois to use their talents to show us firsthand the work of nonprofits throughout Illinois. Later this year, we’ll also feature an essay about the role that nonprofits play in a civil society.
I must admit that at first, I wasn’t certain it was a good idea to form a financial partnership to produce a series of articles for the magazine. During its 34-year history, Illinois Issues has earned a reputation as an independent and impartial journal that objectively examines and analyzes Illinois public policy. We in no way wanted to give the impression that we could be influenced by any outside source to write favorably — or unfavorably — about an issue. To do so would destroy our credibility, and ultimately, our magazine.
But given this experience with the Donors Forum, we now intend to seek opportunities to underwrite other major projects, in much the same way as the Public Broadcasting Corp. or National Public Radio. Other publications and organizations are doing so, as well. For instance, a group of investigative reporters, many of whom were laid off from their financially stricken news organizations, has formed an independent, nonprofit newsroom called ProPublica, which is funded by the Sandler Foundation and other philanthropic groups. Aside from publishing on its own Web site, www.propublica.org, ProPublica’s work has appeared on CBS’ 60 Minutes and Fox News, as well as in Newsweek and other publications.
In researching nonprofits and philanthropy, we found — on our own accord — the Donors Forum to be an invaluable resource, as were several other organizations. Among the most foreboding findings in the Donors Forum’s Economic Outlook 2009 survey, conducted in October and November 2008, was that “both nonprofits and grant makers reported a sense that the sector has not yet felt the full impact of the economic crisis.” Given the further erosion of the economy in the early part of this year, that certainly has proven to be the case.
The primary problems nonprofits face, according to the survey, are government funding cuts or delays and a decline in corporate giving. Donations from charitable foundations have remained relatively strong, but the report cites historic trends that any downturn in foundation giving usually occurs in the second or third year of a recession.
Meanwhile, two-thirds of the 168 nonprofits that responded to a question in the survey said the demand for their services has increased, even as their resources have dwindled. That presents a heightened concern that in this time, when the services of nonprofits are needed the most to help those who are suffering from the economic crisis, their ability to provide them has been diminished.
It also presents a challenge to us, as responsible citizens, to recognize those needs and help nonprofits fulfill their missions in any way we can, whether through our volunteerism or our financial contributions.
Nearly half of the nonprofits that responded to a Donors Forum survey this year reported that they no longer have operating reserves, or what they had have been depleted.
Dana Heupel can be reached at firstname.lastname@example.org.
Illinois Issues, April 2009