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Nonprofits restructure to survive downturn

By , - Last modified: March 14, 2011 at 5:26 PM

As nonprofits continue to face a revenue squeeze, they are stepping up fundraising efforts and mulling mergers to keep their organizations and their missions alive, according to a new survey by New Jersey’s Center for Nonprofits.

Whether nonprofits depend on individual donors, foundations, corporations or government, “flat funding is the new increase,” said Linda Czipo, executive director of the center. “While it is still a struggle, some are seeing cause for a glimmer of hope; some think the (funding) decreases don’t outweigh everything else.”

The survey, conducted in February, found 59 percent were told in 2010 by a funding source that their funding was going to cease or be reduced. The survey found 34 percent experienced a decline in funds last year, while 73 percent said demand for their services has increased.

Nearly half reported launching partnerships or collaborations in 2010. Three percent completed a merger last year, 9 percent had looked into a merger and 16 percent expect to explore a merger this year.

Czipo said the increased interest in mergers is significant: “More organizations are willing to talk about it. A couple of years ago, it was barely a blip on the radar.”

Nearly half of respondents have launched new fundraising appeals or sought new donors, while 27 percent increased their advocacy efforts and 36 percent recruited additional volunteers. A quarter of respondents said they expect a decrease in funding in 2011, while 31 percent expect flat funding this year.

Czipo said the impact of Gov. Chris Christie’s proposed budget varies.

“There are some areas that don’t look quite so bad, and others that have been cut significantly,” she said. For instance, Christie has proposed cuts in Medicaid spending, and “Medicaid is huge for a significant part of our sector,” she said.

Lowell Arye, executive director of the Alliance for the Betterment of Citizens with Disabilities, said Christie’s budget is the fourth straight state spending plan that doesn’t increase funding to nonprofits that provide services to the disabled.

“This is a very significant problem for providers,” who are coping with higher expenses for health and workers compensation insurance, gasoline and other items, he said.

Arye said his members are 14 New Jersey nonprofits serving 10,000 residents with disabilities. The agencies are trying to make up the shortfall through fundraising, and by shifting more health insurance expenses to their staffs. Arye said it’s not unusual for employees of these nonprofits to qualify for food stamps and to receive health coverage from New Jersey’s FamilyCare program.

E-mail Beth Fitzgerald at bfitgerald@njbiz.com

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