About three years ago, Derek Boyd, the executive director of the Atlanta Recovery Center, started seeing a change in the people who walked through the doors of the Downtown shelter and resource center.
There were more people working several jobs but not making ends meet. There were families with babies in strollers lining up for meals. The waiting list for one of the center's 165 beds — $9 gets you a space and helps the shelter stay open — reached as long as 30 people. And the day labor jobs with which the 44-year-old facility connected clients had started drying up. That meant fewer people could pay to spend the night.
"We're trying to do the same job with less people now," Boyd says.
When the national economy crashed and burned in 2008, metro Atlanta was hit especially hard. Nonprofits, which across Georgia employ more than 230,000 people and have a total payroll of $11 billion (more than the construction industry), took a particular beating in the years following the nosedive. While some within the community say the organizations that survived the downturn learned valuable lessons and have a hunch things are improving, others think the sector is not out of the woods just yet.
The United Way of Greater Atlanta, which serves 13 counties, in 2009 cut its community grants by 25 percent and reduced its staff. Global behemoths, including Amnesty International, cut positions at their Atlanta offices. PushPush Theater, the acclaimed improv group and theater company, moved from its longtime home in Avondale Estates because it was only breaking even on renting out the space.
Hard-and-fast numbers don't exist for how the recession specifically impacted metro Atlanta's nonprofit community. But according to Karen Beavor, the president and CEO of the Georgia Center for Nonprofits, of the approximately 7,500 nonprofits in the metro region that filed returns with the Internal Revenue Service, an estimated 10 percent shut their doors following the recession. Many of those were small organizations with less than $500,000 in annual revenue.
For those that survived, the downturn in philanthropic giving, the bulk of what helps nonprofits keep their doors open, forced cuts to staff and programming, which meant fewer meals served, fewer artists getting funded, and less advocacy. In 2007, the year before the market tanked, individuals, foundations, and corporations reported massive levels of giving — around $344 billion nationwide, the highest figure on record. By 2009, giving had dropped to around $300 billion, a level not seen since 2002.
"2009 erased a decade of growth," says David King of Alexander Haas, an Atlanta fundraising firm for nonprofits. "We lost a decade" — he snaps his fingers — "like that. We really reset the bar and we're still trying to get out of it, not unlike a lot of other industries."
In 2009, King's clients were more focused on maintaining the status quo rather than expansion. Capital projects, which usually signal growth, were put on the back burner. Wealthy donors were more hesitant about making multiyear pledges.
"None of us had any way to know exactly how that was going to impact philanthropy, just that we knew it wasn't going to be good," King says. "We were building the plane and flying it trying to figure out what we would do."
Different nonprofits were hit harder than others. Some well-managed human services groups, such as homeless service providers, food banks, and other organizations that provide needed resources to people affected by foreclosures and unemployment grew. The Atlanta Community Food Bank distributed even more food to 600 organizations in 29 counties, says Founder and Director Bill Bolling. As is often the case during recessions or budget cuts, groups focused on boosting the arts were more severely affected, as were environmental advocates.
Had the stock market and people's fortunes just taken a temporary dip, nonprofits might have been able to live off financial reserves until conditions improved. But the recession's aftershocks, including drops in property tax revenue because of foreclosures and lower income tax revenues from unemployment, meant less cash to spend on grants.
In May 2012, the Fulton County Commission cut its grant funding in half, from $5 million to $2.5 million. Some groups were awarded less; others were given nothing.
Some state agencies, under orders from Gov. Nathan Deal to cut budgets, were late doling out promised grant awards, leaving nonprofits waiting on the funding in a bind.
In Washington, D.C., uproar over deficits and debt, spurred in part by the Tea Party, led to additional clampdowns at the federal level. The sequestration talks added even more uncertainty for groups that relied on federal funding. Trees Atlanta, which for years received an annual grant for forest restoration from the U.S. Forestry Service, recently saw the funding program end.
If there's a silver lining to the downturn, nonprofit officials say, it's that it forced nonprofits to get creative with how they raise funds. Many revisited their missions, resulting in renewed and tighter focuses. Trees Atlanta Executive Director Greg Levine says the nonprofit had long discussed leasing sheep and goats to help fight invasive species such as kudzu, but the recession gave them an incentive to pursue the project. The Atlanta Recovery Center, which also had to cut staff and number of meals served, welcomed some of the churches that feed homeless people in nearby parking lots to instead serve meals in its facilities.
There's still debate over whether the community is rebounding. Donations have picked up slowly, but it will likely take until 2017 to see giving levels that come close to the high pre-recession numbers. And because of the various ways foundations structure donations — some wait until the end of the year to make granting decisions, others dole out money over a number of years — nonprofits typically experience the effects of economic downturns later than everyone else. When things finally start to turn around, they're often the last to celebrate.
According to Beavor, a recent survey of nonprofits by Nonprofit Finance Fund Georgia found that more than 20 percent of organizations are uncertain about the upcoming year — nearly just as many think it will be as difficult or harder than 2013.
"[It]'s otherwise work that would need to be done by somebody," says Beavor. "You're not going to just let [the number of] homeless people increase and run over the city. It's not ethical. You're not going to have stray dogs ... We play an important role. It's hidden and invisible but it's important."
Next week: CL and WABE compare and contrast one of metro Atlanta's biggest and smallest nonprofits.
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