Posted By Sidney on July 26, 2009

Photo by Stefano Mortellaro

When it’s all said and done this is how the social sector’s late 2000s recession story might be written.

• 2008 – The late 2000s recession was finally acknowledged and it all suddenly came unraveled.
• 2009 – Nonprofits began to feel the effects of the recession and sector thought leaders issued their predictions.
• 2009 – The  “people” began to feel the crunch from the unraveling; began accessing public safety-nets if they had not already. By the end of the year the safety-net was significantly diminished in local communities due to cuts in public and private funding streams; reduced endowments at foundations; and reduced giving at United Ways.
• 2010 – The “other shoe” fell and some nonprofit doors began to close. First the less connected less familiar ones; then the less connected well-known ones; then a few of the well-connected well-known ones had to call it quits as well (to everyone’s surprise).
• 2010 – The social sector reached a “bottom” with major losses then…

The case before us has been stated, restated, clarified, and quantified throughout 2009 with predictions for 2010 and beyond.  Most recently, in a timely, thoughtful discussion titled “Turning Crisis Into Opportunity: A Conversation With Two Nonprofit Sector Leaders,” Bradford K. Smith, president of the Foundation Center, and Robert G. Ottenhoff, president and chief executive officer of GuideStar, discussed how the social sector is handling the recession; how foundations are responding; and the challenges, strategies, and opportunities that the sector has going forward.  Moderated by Katherina M. Rosqueta, Executive Director of the Center for High Impact Philanthropy, this national conference call was heard by 540 listeners.

Similarly, in her apt Philanthropy 2173 Blog post “Whither Giving in 2009,” Lucy Bernholz states:

We don’t know how much smaller the nonprofit sector might be at end of 2009 or 2010. IRS is reporting that applications for 501-c3 status continue apace, but anecdotal evidence points to nonprofits going out of business at faster than usual rates. Mergers don’t seem to play big role, though they are happening. Some (Paul Light of NYU) have predicted a 10 percent overall decline in NPO numbers by 2009.

Now that the key findings are published and the thought leaders have weighed in, my question to sector leaders on the ground is, “Who will step up and press the reboot button?”  Who will lead the charge through the final segment of the Elisabeth Kübler-Ross’ stages of grief .  In her seminal work On Death and Dying she describes how people deal with grief and tragedy when diagnosed with a terminal illness or after experiencing catastrophic loss.  No one will argue that we are dealing with catastrophic loss.  Subsequently, nonprofits have experienced denial, anger, bargaining, and depression due to this most difficult state of affairs.  But, who will issue the call to move to “acceptance” and beyond by saying “True – this traumatic state of affairs sucks – but now what?”  Who will be the catalyst, convener, and mobilizer in local communities that will ask critical questions such as:

• What services and systems are most crucial to the long-term health of our community and therefore should be lifted up for community support and held harmless to the best of our ability?
• How can we streamline, restructure, and prepare these services and systems (with no sacred cow operations) for a stronger more effective existence on the other side of the recession?
• How do we address the loss of talented nonprofit staff that may leave our community?

As we are learning from the U.S. Federal Government’s attempt to reboot the national car industry, this is no small undertaking.  It amounts to a colossal leadership gut-check especially since most public and foundation funders are dealing with mission critical issues that threaten their own operations if not their own existence. On the other hand, if the sector is not “thoughtfully rebooted”, we are destined to reach the post-recession era with challenges that are not easily remedied with gifts and grants from newly appreciated securities.

For example, it is obvious that when childcare subsidies are halted or slashed many working parents are unable to pay for childcare, which can result in lost productivity on the job and ultimately loss of employment altogether.  But, it can also mean the loss of critical childcare sites that are known for their quality childcare and the diverse socio-economic makeup of their families.  Even more, it can mean the loss of preschool learning opportunities for the children.  Thus, an additional result is children that are not prepared to enter kindergarten ready to learn.  THAT cannot be easily overcome.

This is more than simply making a decision of who to fund and who not to fund.  This is about taking a strategic view of the vital role the social sector plays on the local/regional level and determining the most critical issues and services that if overlooked now could have a profoundly negative impact on the growth and vitality of communities in the near future (and beyond).

My hope is that there will be additional entries to the social sector’s recessionary story that say:

• 2009 – The funding community; public and private leaders; and other community stakeholders joined together to thoughtfully reboot the social sector.
• 2010 – The social sector reached a “bottom” with major losses then began to show signs of rising again as a leaner, stronger, more innovative and cohesively networked system.

Categories: Changomily, Commentary
Tags: community, endowments, foundation, foundations, global economic downturn, health, job loss, lucy bernholz, nonprofit, nonprofit sector, nonprofits, philanthropy, private funding, public funding, recession, safety nets, social sector, thought leaders, united ways