September 14, 2009

Governments Cutting Back On Social Service Spending

Some 62 percent of human services organizations in the New York City metropolitan area saw decreases in public funding, and of those, 22 percent saw cuts of more than 20 percent, according to a recent survey.

Public funding accounts for more than 40 percent of the operating budgets for 70 percent of the organizations, while 44 percent of organizations said they receive more than 80 percent from public funds. Some 75 percent responded they lack financial reserves, either no endowment or no lines of credit, to levy against the economic storm. 

“The Helpers Need Help: New York City’s Nonprofit Human Service Organizations Persevering In Uncertain Times” survey had 244 executive directors from human services organizations respond from a myriad of service areas, including child welfare, emergency relief, employment and training, homeless, substance abuse and more.

The survey, conducted by Human Service Council (HSC) and Baruch College: School of Public Affairs, both in New York City, painted a bleak picture for human services organizations that face funding decreases and client need increases.

Of the respondents, 60 percent reported difficulty managing cash flow, and 30 percent of organizations have no lines of credit while 67 percent have no endowment. Of those organizations with endowments, 73 percent saw decreases, 12 percent stayed the same and 1 percent saw an increase. For those with decreasing endowments, 72 percent have a decrease of more than 20 percent in their endowment and 21 percent of organizations had more than a 40 percent decrease.

“On a broad level, this is the worst scenario for human services organizations,” said Michael Stoller, executive director of HSC, in a statement. “There’s less government money because there are less taxes and there’s less foundation and personal giving because of the uncertainty in the market. Yet, the number of human services clients keeps increasing as poverty levels go up and these organizations are trying their best to help those who have nowhere else to turn.”

While human services organizations are seeing an increased demand for service, 53 percent were forced to cut staff during the past year, with 10 percent responding cutting between six and 10 staff members and 7 percent dropping 11 to 20 staff members.

Other cost cutting measures included 60 percent reducing salary increases, 45 percent using attrition to cut staff, 45 percent implementing hiring freezes, 25 percent reducing employee retirement benefits and 24 percent reducing healthcare and other employee benefits.

Despite the squeeze from both sides of service and funding, 62 percent of organizations have not eliminated any programs in the past year while 35 percent responded that they had to cut programs. Nearly three-quarters of respondents said they did not significantly reduce programs over last year, but 23 percent said they needed to make considerable cuts and 35 percent eliminated entire programs.

The survey was published by the Center for Nonprofit Strategy and Management at the School of Public Affairs, Baruch College/CUNY and Baruch College Survey Research.

***

This article is from NPT Weekly, a publication of The NonProfit Times.

Subscribe to The NPT Weekly eNewsletter or any of our other enewsletters and get the latest news and ideas related to fundraising delivered to your inbox