The Economic Downturn and Community-Based Services: What the future might look like for nonprofit programs
By: David Gray

Reprinted from the California Association of Nonprofits CAN Alert Jan/Feb 2009
www.CAnonprofits.org

The current global financial crisis is having enormous impact on families, businesses, government revenues and, ultimately, on the services provided by many community-based organizations.  As we confront declining economic conditions that constrict the revenue streams that fund community-based services, all of us need to consider new ways to provide help and support to our local communities.

PROFOUND CHANGES IN THE ECONOMY:
The economic crisis we are now in is unlike anything we have experienced before.  For those of us who work in community-based services, this will not be a few “bad funding” years followed by a quick recovery to the status quo; we are going to see profound changes in the way people live and in the way economies work.

Families everywhere are already experiencing the consequences of the downturn through lost jobs, reduced purchasing power, and increased reliance on public services just as those same services are being cut back.  And the businesses that provide jobs and earned income so that people can support themselves also provide the revenues that pay for public programs, directly through corporate income taxes and indirectly through the personal income tax and sales tax people pay to local, state and federal governments. When business declines, the funding that pays for services declines with it.

PROFOUND CHANGES IN GOVERNMENT:
The majority of state and federal revenues come from taxes.  When incomes drop due to job losses, when people cut their purchases, and when corporations lose money, revenues decline proportionately.  It doesn’t require a lot of imagination to understand what will happen to state and federal revenues as the state and national economies slide further into economic recession.

Declines in personal income, spending, corporate profits and property values will lower state and federal revenues.  If the economy continues to decline as many predict, revenues will also continue to decline; even when the economy bottoms out, revenues will remain low until there is significant economic recovery, which could take years.

There are some services that must be maintained.  Entitlement programs like Social Security, Medicare health programs for older people, and Medicaid health programs and other assistance for people with low incomes are mandatory programs.  Nationally, the federal government spends about $1.5 trillion annually on entitlement programs, a little more than half of the federal budget.

When revenues decline, funds for non-entitlement or “discretionary” programs are cut first in order to protect entitlements.  Often these discretionary programs are delivered through contracts with nonprofit community-based organizations, which means that as revenues drop, many nonprofit programs will lose funding first.

THE CALIFORNIA BUDGET - A MOVING TARGET
By law, California is required to balance its budget – expenditures for programs and services cannot exceed revenues collected through the tax system and other sources (savings, investments, loans, etc).  Approval of the California state budget for 2008/09 was delayed for more than three months.  And, when that budget agreement was finally signed in September 2008, revised California Department of Finance financial projections suggested that the new budget was already out of balance.  Estimates were quickly revised again based on even newer fiscal data suggesting that the two-year deficit for 08/09 and 09/10 would reach more than $41 billion.

At the start of 2009, there is no new budget, negotiations have broken down, and California is expected to run out of cash in a few short weeks.  This fiscal chaos, which is severely complicated by political gridlock in state government, is likely to continue in light of the rapidly deteriorating economic conditions affecting California, the U.S. and the rest of the world.  No one can predict how deep the cuts will be or which programs and services will be curtailed, but it is clear that what is currently left of the so-called “social safety net” is already so close to the ground that it offers no soft landing for people who fall into it.  Today, you have to “fail first” — go bankrupt, get arrested, experience life-threatening illness — before you qualify for many critical public services.  Tomorrow, some of those services might not be available at all.

SO WHAT ARE WE GOING TO DO ABOUT IT?
When those of us who work in community-based programs selected this line of work as our chosen career, I believe we made a promise to our communities that we would be there for children and adults and families who, for whatever reason, need help.  No matter what.

Few of us ever imagined the possibility of the severe financial collapse that is rapidly overtaking our communities and our world.  But now things have changed and we’re all at risk.  Some of us may lose our own jobs or our own homes and find ourselves in need of the very services we provide.

Nonetheless, these are our times and we are the ones whose job is to provide help and support:

• We need to rethink our situation, come to grips with the new economic reality, and find ways to strengthen the local services many people are going to depend on as this rolls forward.

• We will need to work in different ways, paying more attention to one another’s programs rather than just focusing on our own services and our own agencies and our own funding; not simply mouthing the platitudes of collaboration, but actually working side by side to reinforce one another’s efforts in order to meet the comprehensive needs of people in our communities.

Advocacy
We have long understood the importance of advocating for the programs we operate.  But much of our advocacy has been to preserve funding for our separate agencies, rather than ensure that the people we serve also get all the other help they need from every other agency they depend on, not just from our own.  We will need to advocate for other programs in addition to — or perhaps even instead of — our own, if that’s what it takes to address people’s most pressing needs.

As state and local politicians and administrators make critical funding decisions, we need to ensure that the best interests of the community — not just the administrative interests of the bureaucracy or our own vulnerable agency — are represented.  And when people need help getting into increasingly scarce services in other agencies, we will need to join together to help open every door.

Working together
There are lots of ways for agencies and administrators and workers to work together:

• We need true communication between agencies, not just happy talk about how important our programs are, but serious discussions about the strengths and limitations of our respective resources and services and about ways we can combine our separate pieces into whole services to address the holistic needs people are experiencing every day.

• We need to coordinate our programs to eliminate the gaps between them, to ensure that someone moving out of one program can step straight into the next program they need, without falling through the cracks.

• We need to collaborate, working together as a single comprehensive team for those people and families who need seamless services from multiple agencies simultaneously.

• And we may need to consolidate separate agencies or programs into single combined organizations to prevent the collapse of vulnerable parts of the service system.

Increased Volunteerism and Technology Transfer
In the past, many of our organizations emerged from grassroots social movements that were created and sustained by local volunteers who worked without financial compensation to meet unaddressed needs in their communities.  Domestic violence programs, substance abuse services, child protection, community mental health, housing programs, food banks and many other services were born in communities and grew for years without big budgets or highly-paid administrative staff.

As funding declines and agencies face the risk of collapsing, we may need to return to some of those grassroots strategies to preserve essential resources and services, transferring the professionalism and technical skills we have acquired to other people who simply want to help.  Some program staff may need to shift from direct service delivery to volunteer development and supervision, handing off service delivery to volunteers, peers and people in the community who are experiencing needs firsthand.  Some administrators may need to get back into direct services work.

A new business model:
We need to completely rethink the ways in which our agencies and organizations work, letting go of business practices that might have worked in the past but that cannot meet the new emerging conditions in the communities where we operate.  We will need more flexibility, less bureaucratic overhead, fewer categorical controls, and more communication between agencies.

We may need to bend more rules and take more chances, and overcome the risk-averse management attitudes that compel agencies to protect themselves from the people they are supposed to protect.  New times will call for new approaches.

IT'S NOT ALL DOOM AND GLOOM AHEAD:
Yes, we are facing difficult times and a lot of unknowns.  But people have been through very challenging times before and we will get through these.  Perhaps we will emerge better and stronger and more committed to including everyone in the shared benefits of our communities.  Perhaps the basic community relationships that keep people safe and healthy and every other good thing will flourish as we turn to one another to get through.

If we all must face the challenges of living with less, maybe more of us will understand the plight of the poor and those who experience adversity, and reshape our communities to ensure that no one falls through the cracks or gets left behind ever again.  As frightening and difficult as these hard times will undoubtedly be, there is hope that we can make the best possible future come true.

David Gray has worked with community-based non-profit organizations since the early 1970s in the US, Latin America and Africa.  His key interest is in developing locally-controlled, multi-agency, holistic health and human services for children, adults and families.  David's current projects focus on mobilizing and organizing comprehensive supports and services for several vulnerable populations including US veterans and their families, children in Africa whose parents have died from Aids, children and families served by public mental health and child protection agencies in California, and fathers trying to regain access to their children through the family and dependency courts.  He holds degrees in English, English Literature, Latin American Studies and Sociology. David can be reached by email at davidgray@intersufficiency.net or by phone at 530-887-0904.

Article posted on 4/9/09