Nonprofits Scramble as United Way Cuts Grants
More than 20 nonprofit groups in Austin are looking for new financial support to make up for money they were awarded through United Way grants. The agency has announced it will stop or reduce those payments. One nonprofit lost almost 20 percent of its annual budget.
Nonprofits tend to run on extremely lean budgets that don’t allow for surprises, such as losing a fifth of their expected funding.
“The first thing that most agencies will do, they’ll look at their budgets; if they’ve been running good shows they’ll find there’s not so much to cut,” said Barry Silverbug, head of the Texas Association of Nonprofit Organizations. “Therefore, you have no choice but to reduce personnel.”
Austin’s Any Baby Can lost $30,000 in the United Way cuts. But that’s less than 1 percent of the organization’s $5 million budget. It’s a hole that may be difficult, but not impossible, to make up.
The news isn’t quite as good for the dental clinic run by Manos de Cristo. Tom Richardson says his group was hit harder because it lost its entire United Way grant. And his group, unlike many others, does not receive any government money. More than 4,000 people received dental care last year at the Manos de Cristo clinic.
“We deal with a segment of the population that has been called ‘underserved,’ and that is an understatement because the folks that are here they are in a really bad situation, because they simply cannot carry on with their lives given to the pain they have of dental origin,” Richardson said.
The strategies nonprofits will attempt to make up for their budget shortfalls are still coming together. Most of the nonprofits have been through this before, but these cuts may be harder to overcome.
A 2011 study by Changing Our World, a group in Washington that looks at philanthropy and fundraising, shows that every source of income nonprofits rely on is shrinking. And that if they want to make up for projected cuts, their donors would have to increase their giving by 60 percent.
Silverbug acknowledges the challenges.
“There is a lot that can be done without significant funds by nonprofits,” he said. “And a nonprofit can survive for a number of years with a negative fund balance.”
Silverbug says the key to nonprofits’ survival is a combination of active committed leadership and a strong mission. Already, the leadership of nonprofits such as Family ElderCare have organized emergency fundraising events.