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Recession slams nonprofits

December 3, 2010

Demand for North Carolina nonprofit services increased substantially since the economic recession, forcing organizations to rethink they way they provide crucial services for needy residents.

Nonprofits in the state reported a 62 percent increase in service need since the recession started several years ago, according to the North Carolina United Way. This increase in demand was coupled with a decrease in private and federal funding and support for the nonprofit agencies.

"Need used to spike around October then decrease (after Christmas)," said the Rev. Robert Silber, of Eastern Catawba Cooperative Christian Ministry. "We're bracing for it (to remain the same after the holidays)."

ECCCM provides needy residents with crisis assistance, including food services, utility payments and other emergency monetary needs. The organization now averages serving about 120 people a day, when the normal average is about 80 people, Silber said.

According to November statistics from the North Carolina Justice Center, about 37 percent of Catawba County residents in 2009 were considered low-income, which means their incomes were less than twice the federal poverty level, or $44,100 for a family of four.

The increasing number of low-income families in the area adds pressure to the county's crisis-service providers, like ECCCM.

More than 22,000 people in Catawba County received assistance from food stamps in 2009. This year, that number increased by almost 17 percent to more than 26,000, according to the N.C. Division of Social Services.

"Though we've been faced with all these challenges, we've not been faced with a significant decrease in demand for services," said Jill Cox, North Carolina United Way Government Relations and Communications director. "Even as unemployment levels off, demand for services isn't leveling off or going down."

Cox said the demand for nonprofit services will continue to increase as more people fall through the "safety net" of regular income and health care.

The safety net Cox spoke of continues to fray, with almost 50 percent of N.C. nonprofits reporting a drop in individual donations and 70 percent of nonprofits reporting a decrease in state grant revenue, according to United Way data.

Cox said state grants awarded to nonprofits decreased more than 25 percent in fiscal year 2009-10.

This increased demand and decreased funding was evident for Hickory nonprofit Exodus Homes, which announced Nov. 22 it lost $346,000 in revenue since 2008.

The organization said it needs to raise at least $75,000 to continue operations. Staff members implemented cutbacks, including deferring and restructuring mortgages and loans and eliminating the organization's annual Christmas Lights Festival.

Cutbacks at Exodus Homes are part of a larger trend among N.C. nonprofits. Cox said 60 percent of nonprofits in the state froze or reduced employee salaries to manage decreased revenue. About 40 percent of nonprofits drew on reserves to make ends meet, while 44 percent reduced the number of employees and 18 percent relied on larger credit lines.

Only 13 percent of N.C. nonprofits reduced services to people, according to the North Carolina Justice Center.

Cox said the economic downturn caused many to lose their jobs and incomes, in turn forcing them to seek help with everyday needs.

Because so many people faced difficult economic times, people who donated time and money in the past were no longer able to contribute, Cox said, creating a downward spiral for nonprofits and the services they provide.

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