February 16, 2009

New Mexico Nonprofits Brace for Battle with the Economy

Part I: Foundation Giving

As an organization that focuses on seeking and obtaining grants for nonprofits throughout New Mexico, The Grant Plant has a unique opportunity to evaluate the grantmaking prospects for 2009. Lately, during our interactions with nonprofits we are asked our view regarding the effects of the current economic instabilities on grant seeking.
New Mexico’s nonprofit sector provides comprehensive support throughout the state, giving a voice to the people and ultimately increasing the quality of life for all New Mexicans. Support from foundations floods the state and improves the outcome of many causes; ranging from helping the disadvantaged through their darkest hours to preserving a culture unique to New Mexico. Today, many of these foundations are questioning their ability to support the causes for which they stand.

Foundations throughout the state give mixed responses when asked about their giving outlook for 2009. The Santa Fe Journal reports that most foundations in northern New Mexico have been significantly impacted by the economic crisis, with some nonprofits considering mergers to survive. The McCune Charitable Foundation lost 25 percent of its assets and will probably have one million dollars less to spend in 2009. Within one month’s time, the Santa Fe Community Foundation was recently approached by three local nonprofit groups, all asking for help to instigate mergers.

According to The New Mexico Business Weekly, grantmaking organizations in Albuquerque may be faring slightly better than those in northern New Mexico, although many report that it is still too early to tell. Among noteworthy successes: the United Way of Central New Mexico’s end of year campaign goal went well; and the Albuquerque Community Foundation does not anticipate drops in this year’s grants – in part due to their protective system, which takes the average balance of a fund over three years to make distributions.

The hardest hit nonprofits are those that depend on returns from their endowments, rely totally on foundations or government funding, or otherwise do not have diversified revenue sources. Organizations that provide basic human service needs are, in particular, feeling the pressure. This sector is trying to cope with dramatic increases in demand with insufficient resources.
In New Mexico, the nonprofit sector employs 44,000 people out of a total population of less than 2 million, as reported in 2006 by the University of New Mexico Bureau of Business and Economic Research. This is twice as many workers as those paid by the state government, and more than manufacturing, mining, oil, gas, and utilities. If these nonprofit groups cannot weather the economic storm, the impact to New Mexico’s economy will be twofold in nature. Besides losing the benefit that nonprofit organizations provide to the community, the need for services will be further strained as displaced nonprofit workers enter unemployment lines themselves.

To cope with losses of philanthropic resources while maintaining grantmaking levels, foundations are freezing salaries, reducing spending on travel and supplies, and even dipping into assets. In the end, the determining factor may not lie in these actions as their fate is intertwined in the unpredictable length and depth of the economic downturn.

The nonprofit sector, however, can prevail. At The Grant Plant, we know that those working in the nonprofit sector are among the most resourceful and resilient. Creative measures may ultimately strengthen the sector, as organizations better leverage resources, diversify their revenue streams, and increase donor prospect research. We are humbled by our colleagues, inspired by their ingenuity, and prepared to weather the storm with them.

Next up: Part II: Federal government grants and the stimulus package – watch for it in the next newsletter!

Contact: Wendy McCoy, Resource Development Officer, wendy@thegrantplantNM.com

Sources:

Constable, Anne. “Economic Downturn Has Nonprofits Preparing for Scary 2009,” Santa Fe New Mexican, 12/14/08.

Kamerick, Megan. “Nonprofits Fret about Uncertain Future,” New Mexico Business Weekly, 11/13/08.

University of New Mexico Bureau of Business and Economic Research. “The Economic Impact of Nonprofit Organizations in New Mexico,” 1/06.

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