----- Original Message ---- From: Alan Rudy <alan.rudy at gmail.com>
What'd be nice to see would be folks in the non-profit sector organized to argue that the last quarter century of neoliberalism had effectively displaced the state's fiscal crisis onto the non-profit sector - which more or less worked so long as there was economic growth and the property value bubble. -A
[WS:] Our studies of nonprofits suggest that they have been growing faster than the rest of the economy and did not shrink during the last recession (http://www.bls.gov/opub/mlr/2005/09/art3full.pdf http://www.jhu.edu/ccss/research/pdf/md2003update.pdf).
However, it is worth noting that the main source of nonprofit revenue is not charity, as many mistakenly believe, but government (about 40 % of total revenue, charity accounts fore mere 13 %). So while the collapse of the stock market will wipe out charitable giving, especially foundation giving, since this depends on investment income) - the effect of that on the nonprofit sector as a whole will not be that great due to the relative small size of private charity in nonprofit finances. The worst hit will be religion where the bulk (33%) of private giving goes - which is a good thing. Education gets the second largest share (14%), health 7%, human services 10% arts 4% and environment 2%.
Government policy toward nonprofits will have a far greater effect than charitable giving. A big chuck of government payments to nonprofits are Medicare and Medicaid payments and other service contracts, so I do not think these will be affected. If anything they will go up, and this will be a windfall for nonprofit health care providers. The only part that is likely to be affected are discretionary grants which amount to about 18 percent of total nonprofit income. So it boils down to whether state governments will try to balance their budgets by cutting discretionary payments to nonprofits or whether the Obama administration will channel some of its stimulus packagae through nonprofits (where a lot of lobbying action is now.)
It is my understanding of the situation that the latter is a strong possibility and that will offset any cuts from state governments. So my assessment of the situation is that the effect of the current recession on nonporfits will not be as bad as some may think. Private giving will shrink, but this will most likely affect religion than any other type of nonporfit - which is a good thing. Beside that, any loss of private or state grants may be offset by stimuls money. At the end of the day, most nonprofits will survive with little or no cuts to their services. But then, who really knows? It may well be that I will be collecting unemployment in a year or two, or trying to get a government job.
Wojtek