Over the weekend, I have watched and read quite a bit about the possibility of a federal government shutdown. We faced this same situation in New York State last year as well. And in general, if a state or federal government shuts down, how does that effect nonprofit organizations? Will they lose some funding and state or federal support? Probably. However, will their services be needed even more, depending on the type of organization they are?
I am not an expert in nonprofits and their associations with the government, however I am curious to see if a political situation like the one we have now, and have had in the past can have a serious effect on nonprofits. After reviewing 990's for quite a few organizations over the last year or so, I do know that they rely on some state support, and annual comparisons show that funding from the government has decreased for these organizations. It does not appear that any sort of funding will increase over the next several years. So, how do these organizations survive? They have to have strong strategic plans. Also, they seriously have to consider operating without federal or state support for the foreseeable future. Relying on the government is probably not a smart fiscal strategy and moving towards supporting themselves through their own fund raising is going to be essential.
Hi Matt,
ReplyDeleteYou make some good points in regards to financial risk management.
Funding sources are not always stable, especially not in times of economic hardship. For the Apalachin Library Book Sale last year we had to go out of our way to ask new business for donations to ensure we would have enough for our expenses. Since the Tioga County Historical Society doesn't receive any federal (or state, we only receive local) funding, we at least won't need to worry about that funding source drying up!
I found an interesting website for the Nonprofit Risk Management Center: http://www.nonprofitrisk.org/
While they offer a lot of consulting services, they also have a pretty good library of documents to read for free.
In addition, they also have resources for risk management beyond financial; volunteer risk management, employment practices and youth protection.
Matt,
ReplyDeleteI actually discussed the possible government shutdown in my paper. One of the organizations I rated was a Christian-related organization (which I have no problem with) and I was wondering if anyone could evaluate a religiously –affiliated organization from an unbiased perspective. I think that there may be people who possess the ability to do so, but they may also be influenced by issues that are prevalent. Traditionally, I believe I would have been able to rate the organization with an open-mind. Yet, at the moment, following the push by conservative politicians to bring social issues into the budget debate (no offense to my beloved conservative classmates), as well as the Pastor in FL who burnt the Koran-leading to death of many UN workers- objectively is more difficult than normal. What I am trying to say, it that the budget debate may impact the nonprofit sector in other ways, beyond funding.
I am not sure that I think crowdsourcing the evaluation of organizations associated with ANY religion is a good idea. I see this leading to biased evaluations (whether positively or negatively) and irritated reviewers.
Matt you raised very interesting point.
ReplyDeleteWhile in developing countries the non-profits are doing their first steps to develop the culture and mechanisms to receive funding from their in the US the funding form government has a tendency to decrease and may be very soon it will be even stopped completely. If it happens with what governmental funding will be replaced? Philanthropy and income generating projects are future funding sources for non-profits. There will be more funding from big corporations who would try to influence and control the non-profit sector. If it happens the profiles of many non-profits in the future will change dramaticly.
Matt I too thought this was an interesting post. The first thing that came to mind was the nonprofit tax-exempt status. Obviously there would be many other bigger issues to worry about if we had a Government Shutdown, but it made me wonder how important the tax-exempt status is for nonprofit organizations. I believe there will always be people who donate to charity regardless of the tax-exempt status, but how much of nonprofits revenue come from funders who donate large sums because it is tax-exempt? Would these people donate as much if organizations no longer had a tax-exempt status?
ReplyDelete