Thursday, February 26, 2009
The U.S. Bureau of Labor Statistics reported that in January over 1,000 Hawaiian workers were laid off. That is compared to 217 for January 2008. Many of these jobs were in the nonprofit sector, causing nonprofit organizations to lobby the state of Hawaii to set aside stimulus package dollars specifically for nonprofit services. This is a good strategy for the short-run, but in the long-run this strategy has the potential to be devastating to the entire nonprofit sector.
Nonprofit organizations have three primary sources of revenue: Grants, donations, and earned income. Grants can be from the government, corporations, or foundations. Donations are generally from individuals and earned income is from services and activities conducted by the nonprofit. The recession has caused a decline in grants, donations, and earned income, resulting in a shortage of services and subsequent layoffs. The injection of stimulus dollars will help restore services and jobs, but it is only for two years. If nonprofits rely on stimulus dollars as a development strategy, in two years they will back where they are now.
Fundraising success for a nonprofit organization depends on relationships. Now is the time to create new relationships that will yield success over the next two years. Nonprofit leaders should be visiting with foundation representatives, corporate liaisons, and elected officials. These relationships take time to nurture and there are no shortcuts. By working on these connections now, they will bear fruit by the time the stimulus money ends.
The stimulus money will create a funding bridge for nonprofits who continue traditional fundraising effort. For those nonprofits who don't, the stimulus money will be a bridge to nowhere.