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Nonprofits’ cliff hanger
Charlotte agencies uncertain of future with budget impasse
 
Published Thursday, December 20, 2012 8:07 am
by Herbert L. White

 

Charlotte nonprofits, still reeling from financial uncertainty after the Great Recession, are bracing for the fiscal cliff.

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PHOTO/DANIEL COSTON
Nonprofit colleges like Johnson C. Smith University, will have to change their business models to balance reductions in federal aid and charitable giving, JCSU President Ronald Carter says.


Agencies that provide aid and services are weighing their options for the future should Congress fail to craft solutions that address the federal deficit reduction and boosting tax revenue. In the end, there are more questions than answers, and no one’s in a position to predict the outcome.


“The uncertainty around the fiscal cliff is just one more battle that nonprofits are going to have to face, said Brian Collier, senior vice president at Foundation for The Carolinas, which manages charitable resources for individuals and groups. “It’s been an unending series of battles since 2008 when the economic challenges first occurred. Ever since then, nonprofits have faced one uncertainty after another and it’s caused many nonprofits to go out of business or merge with other organizations to just get their work done.”


At its November board meeting, United Way leaders announced the campaign was about $1.1 million behind goal, or 60 percent of 2011’s mark. Donors have picked up the pace since, but the results are still lagging.


“Our board, staff, and the total community have stepped up to the plate in the last month,” United Way Chair John Cannon said.  “Of our top 100 corporate campaigns, half have had an increase in giving, which is a strong statement about their belief in United Way of Central Carolinas and the agencies we fund.”


Nonprofits are caught between increased demand and tepid giving due to economic uncertainty. A fall off the financial cliff, Collier asserts, is less bothersome than the uncertainty of not knowing what’ll come from Washington, where political leaders debate eliminating tax breaks for charitable giving and federal programs for the poor.


“They don’t know whether they’re going to see a demand from clients,” he said. “They don’t know if they’re going to see a decrease in donations from donors because of some of the reforms Congress is talking about. They’re really seeing this as sort of a double-whammy moment for them and you also see a lot of discussion at the federal and state level about the need to push more services out of government funding and into the private sector funding, yet you hear this discussion about reducing tax recognition of charitable contributions.”


One of the region’s largest philanthropic agencies, United Way of Central Carolinas, announced last week it had raised $16.5 million toward its 2012 goal of $21.2 million, but is projected to fall as much sat $750,000 short.


“We won’t rest until we meet, and hopefully exceed, our $21.2 million goal,” Executive Director Jane McIntyre said. “The needs continue to grow across all three areas supported by United Way partner agencies – children and youth, housing and stability, and health and mental health. Our agencies and their nearly 350,000 clients are depending on us.”


At Johnson C. Smith University, President Ronald Carter said the school, which has been impacted by cuts in federal funding for student aid, is rethinking its finances.


“We are not sitting and waiting” for federal resolution, he said. “We are now looking at our budget and thinking of new business models for us not to just survive. “We’ve got to thrive.”


Carter said a “quiet shift” in government aid has already impacted how families pay for college, and by extension, how schools plan for enrollment. One example is a rule change to the Parent Plus Loan, which has been amended to take into account parents’ credit history as well as credit score when considering applications. As a result, students – particularly African Americans – are more likely to be denied, which Carter said impacted nearly half of JCSU’s 2012-13 applicants.


“When that happened to us back in August, we immediately knew that we had to start thinking very carefully about our budget plans for the future,” Carter said. “We cannot depend on the federal government’s commitment to helping our young men and women afford higher education.”


JCSU, like many colleges, are looking into alternative revenue streams to offset potential losses in federal funding, Carter said. Starting school-run businesses is an option, as well as programs that can boost enrollment and recruiting new giving.


“We can’t just depend on alumni giving; we can’t just depend on enrollment; we can’t depend on traditional auxiliary services,” he said. “We have to create new markets, we have to create new revenue streams for this university.”


Ultimately, that’s the bottom line nonprofits have to face.


“You can develop a business plan to deal with the facts once you know them,” Collier said. “We tell nonprofits first and foremost to concentrate on your business. At the end of the day, that’s the most important thing you do for our community. …The worst thing you can do now is plan for a scenario that doesn’t occur. We’ll know soon enough what the decisions are.”


 

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