The View from the Cliff

Nonprofits need to prepare for 50 to 60 percent less government resources

View from the Cliff: Government-Funded Nonprofits Are Looking Out on Steep Cuts and an Uncertain Future Sitting on the edge of the cliff, we are overwhelmed and isolated as we gaze at the next decade of federal, state and local cuts that lie ahead of us. The release of The View from the Cliff: Government-Funded Nonprofits Are Looking Out on Steep Cuts and an Uncertain Future by Daniel Stid and Vishal Shah of the Bridgespan Group offers some background on how we got into this predicament and some solutions, albeit ones we have already implemented or considered. If you have not already read the full report, we encourage you to do so and to share your thoughts with us.

Nonprofits need to envision a world where they are receiving 50 to 60 percent of the resources they receive from the government now,” said Stid. “The short-term options are getting exhausted. This calls for a re-thinking of how things should be done.”

The report states:

The Great Recession has been difficult for almost all nonprofit organizations. For those that rely primarily on funding from foundations, individual donors, membership dues, or user fees, economic recovery is a light shining at the end of the tunnel. Their funding will pick up with the economy. For those nonprofits that depend on government funding–especially those organizations that deliver human services–there is a cliff at the end of the tunnel. Based on a recent Bridgespan Group survey, and interviews with nonprofits that depend on government funding and government leaders themselves, much of this revenue is poised to fall off amidst the public sector’s ongoing fiscal shakeout.

Our national safety net of human services to feed the hungry, house the homeless, or mentor at-risk youth, etc., is a curious public-private hybrid. Federal, state, and local government underwrites the bulk of the cost of supporting vulnerable people in our society.  But most services are delivered by nonprofits operating under government contracts or grants. In essence, government outsources its social work.

In what may be a surprise only to candidates for president, the report states that “This funding–and the safety net of essential services it supports–is under threat.”

Even though Monarch Housing has lost all of its direct public support, we – and the communities we partner with to end homelessness – are all impacted by the increased demand for services and the diminishing of the resources to address this crisis.

What will a decade of cuts mean to the safety net? How many more will become homeless in NJ?

The potential impact of sequestration on January 2, 2013, would have a dramatic impact. Among the cuts:

  • $173 million from McKinney-Vento affecting 27,758 people.
  • $1.7 billion from Section 8 affecting 202,491 people.

How has the Great Recession impacted you and your organization? How can we work together to prevent a dramatic rise in homelessness? How can we change the tone of the national debate so we can have a real debate about fixing the safety net?