If the recent financial crisis has caused lawmakers, bankers, and homeowners to panic, then nonprofit organizations are simply in shock. According to the Wall Street Journal, charitable donations this year have grown by only 1% percent even prior to the first bank failure. As fixed-rate mortgages have come back to haunt the national economy, that number is expected to decrease even more.
Nonprofit organizations are particularly worried about losing donations as the crisis is happening in the last quarter of the year, when the holiday season tends to bring out people’s generosity and make up the majority of nonprofit contributions.
“There will be fewer dollars coming in the doors,” said Gordon Campbell, president and chief executive of the New York United Way in an interview with the Wall Street Journal. “There needs to be thought given to strategic alliances, partnerships, back office consolidation, mergers and acquisitions. In many ways, it’s a variation on what’s going on Wall Street.”
Mergers and bailouts in a swindling economy have hindered many large contributions on behalf of corporations in an already financially tight disaster season.
The Red Cross, one of the world’s most famous nonprofit organizations is having its own plethora of financial issues.
Prior to hurricane season, the Red Cross was already in the red. Once Gustav and Ike hit, only $5 million was raised for disaster relief forcing the organization to take out loans.
“Before any of that (financial crisis) was happening, even during Gustav and the earlier storms of the hurricane season, we were unfortunately having to borrow monies to pay for those disaster relief efforts,” said Melanie McDonough, a public relations worker at Greensboro’s Red Cross chapter.
However, McDonough made it clear that even though lack of funding makes things difficult, is does not stop the Red Cross from helping with disaster relief.
“With the Red Cross we’re not going to not respond because we don’t have money, if we have to borrow money, we have to borrow money,” said McDonough. “That’s just part of our mission that we’re going to be there.”
The Red Cross has also attributed some of the lack of funding to negligence by the media. While Hurricane Gustav was not as catastrophic as Katrina, the Red Cross has still had their work cut out for them, without the added awareness provided by mass media.
“We sheltered more people during the first nights of Hurricane Gustav than the first days of Katrina,” said Gail McGovern, American Red Cross and CEO in a press release on the organization’s Web site. “While the media has packed up and moved on, we are still there helping a large number of people.”
McDonough believes the media’s downplay of the hurricanes have made people believe they were not severe.
“People think ‘Oh you dodged a bullet, everything’s ok.’ Well no, everything’s not ok,” said McDonough. “It’s just a tough situation to be in. It really is.”
In addition to the $100 million fundraising campaign this year and a $500 million fundraiser over the next three years, the American Red Cross asked Congress for a $150 million loan on Sept 10. Congress has not decided their answer, even though the Red Cross is an organization mandated by legislators but receives no government funding.
“I think a lot of people believe that the Red Cross locally and nationally receives a lot of funding government and we don’t receive any unless we decided to apply for a grant or something like that,” says McDonough. “But that’s few and far between . we’re on a treadmill, so to speak.”
Contributions to the Red Cross can be made at www.redcross.org.