Charlotte-area nonprofits try to do more with less: Recession leads to mergers and cuts in staff, programs

By Sam Boykin

“Doing more with less” has become the grim mantra for many Charlotte industries as the city continues to struggle through the recession.

But it’s particularly applicable to the city’s nonprofit sector. With a record-high jobless rate, a growing number of families are in need of basic assistance provided by nonprofits, while donations and contributions to charities and nonprofits have dwindled.

“It’s a very challenging time,” said Trisha Lester, vice president of the N.C. Center for Nonprofits in Raleigh. “Many nonprofits, especially those handling basic social service needs, have seen demand go through the roof while their funding has been reduced. Many are cutting programs, laying off staff, forming mergers or shutting their doors altogether.”

The Charlotte Coalition for Social Justice, which offered youth programs and events promoting equality, leadership and diversity, lost much of its public and private funding and is in the process of closing, said Brian Collier, senior vice president for Foundation for the Carolinas.

The Charlotte-based foundation is a philanthropic organization that manages charitable resources for individuals and groups and makes grants in the Carolinas. It, too, has struggled through the recession, Collier said. Donations plunged 70 percent from $260 million in 2007 to $78 million in 2008. There were signs of improvement in 2009 when donations increased to $101 million, but the foundation still laid off five employees last year.

The foundation has also had to scale back some of its programs. “In the summer of 2008 we were looking at bringing on partners and going after civic and community-based programs like affordable housing,” Collier said. “But since then we’ve had to pull back and do smaller initiatives by ourselves. A lot of organizations have their heads down and are just focused on getting their own business done”

One new program that the foundation started to help other charities survive the economic downturn is the Community Catalyst Fund. Launched in October, the program offers grants to nonprofits that form partnerships or mergers. Corporations, including Bank of America, Wachovia, Wells Fargo and Duke Energy Corp., have given a combined $750,000 to the program.

Time to merge

Collier said there have been notable mergers among nonprofits, particularly between the Emergency Winter Shelter and the Uptown Shelter, which merged to form the Men’s Shelter of Charlotte.

Carson Dean, the shelter’s executive director, said that while talks of a merger had begun nearly a year before it was made official in October, the gloomy economic situation helped seal the deal. “Certainly there was some concern that if the merger didn’t take place the two agencies would really struggle over the next few years. So that had a role in the decision-making process,” Dean said.

Dean said the merger is ultimately a good thing. Previously, the 240-bed winter shelter—now known as the Statesville Avenue Campus—was closed from May to September, leaving many men without a place to stay. Since the merger, both facilities, including the 260-bed Tryon Street Campus, are open year-round. “We can now provide at least 500 beds of shelter every night all year,” Carson said. In July, the two Charlotte-based shelters averaged a total of 494 men per night.

Another benefit of the merger, Carson said, is that both shelters now offer homeless services, like substance abuse treatment and medical and dental clinics. Before, the services were only available at the Tryon Street facility.

But those new services and partnerships come with additional financial burdens. “This year our budget increased by almost $1 million, Carson said. “We’re in the midst of a gift campaign to help raise the additional money, but we’re going to need that every year going forward.” Carson said figures aren’t available from the fundraising campaign, but he added that while overall the number of donations has been relatively steady, the amount being given has declined.

Dianne Chipps Bailey, an attorney at the Charlotte law firm Robinson, Bradshaw and Hinson, represents nonprofits exclusively and worked on the Men’s Shelter of Charlotte merger, one of about six nonprofit mergers she’s handled over the past year.

“In some cases these mergers are really healthy for the sector, but you’d prefer for them to come to that decision on their own terms and not because they’re forced by economic realities,” she said.

In January, Youth Homes Inc. of Charlotte merged with Children’s Home Society of North Carolina and Family Life Council, both in Greensboro. All three are now collectively known as Children’s Home Society, which provides child welfare services ranging from parenting education and family preservation to foster care and adoption.

“We’re now in 80 to 90 counties in North Carolina,” said Executive Director Frank Crawford Jr., who’s based in Charlotte. “We have a much broader footprint. In the Charlotte area we serve on any given day about 600 families.”

Like Dean of the Men’s Shelter of Charlotte, Crawford said the recession played a role in the merger of all three organizations, which had been adversely affected by the economy. Crawford said he cut his staff at Youth Homes Inc. from 70 to 28 during 2008 and 2009, and his budget plummeted from $7 million to $3.5 million.

“We had all cut to the bone and had restructured ourselves,” Crawford said. “But we were all on the other side of the crisis when this merger opportunity came along. Nonprofit mergers that are done in the midst of a crisis have a much more difficult time in the long run than those that are done out of strategy and growth.”

Rob Hammock, director of strategic partnerships for Hands On Charlotte, said that while his donations are down, the nonprofit benefits from the fact that four of its eight staff members are funded through AmeriCorps, which is part of a federal program that offers volunteer opportunities with local and national nonprofits. Another plus: The nonprofit is based out of a Wachovia-Wells Fargo office in Plaza-Midwood, and the financial institution doesn’t charge any rent.

Hands On Charlotte is a charter member of a national organization that uses volunteers to help homeless families, guide at-risk youth, tutor disadvantaged children and feed the hungry. Hammock said that in late 2008 and early 2009, Hands On Charlotte actually had an uptick in volunteers, many of whom had been laid off and were looking for ways to be constructive with their free time. “That’s waned some with the summer,” Hammock said.

Others struggle

But it’s not just social service organizations that are struggling. Scott Provancher, president of the Charlotte-based Arts and Science Council, which provides planning, oversight and funding for artistic, cultural and scientific organizations, said revenue and donations “have seen a significant decline” similar to the situation at other nonprofits.

“No one has been immune,” he said.

Provancher said much of the Arts and Science Council donations and contributions come from workplace giving. With so many jobs lost, especially in the financial sector, donations took a big hit. “Workplace giving will continue to be challenge for us over the next several years,” he said. “We’re in a jobless recovery, which translates to anemic growth for us.”

Contributions to Provancher’s organization dropped from $11.2 million during the 2008 fundraising campaign to $7 million last year. There was a slight uptick this year with $7.3 million in contributed funds. As the group’s funds plummeted, it eliminated eight positions, reducing its staff from 26 to 18 and slashed some of its programs.

“We made deep reductions in a lot of our education efforts within Charlotte-Mecklenburg Schools, like field trips and other activities,” Provancher said. “We lost about $1 million that was invested in those educational programs in the schools. That will be a real focus for as we move forward and try to raise dollars again.”

Also feeling the economic pinch is Loaves and Fishes, a Charlotte-based organization that provides food to needy families. Executive Director Beverly Howard said the organization has seen a big increase in demand. In July, the organization fed 9,800 people, an 8 percent increase over July of last year and a 34 percent increase over July 2008.

Howard said that while donations have held relatively steady, they don’t match the spike in demand. “Right now we can say we’ve been able to feed every person that’s been referred to us. But we have no idea how long we’ll be able to keep that up,” she said. “When times are bad, generous folks tend to focus on basic human needs: food, shelter and utilities.  But as the recession limps along, we’re afraid people may lose that focus of helping support hungry people. That’s a real concern for us.”

The organization has 18 locations at churches and community centers throughout Mecklenburg County and feeds families that have been referred to them through social workers, pastors and medical providers. Each family gets a week’s worth of food, which is prorated according to the size of the family. The organization has five full-time and four part-time employees and more than 700 volunteers.

“We’re like a lot of nonprofits that are struggling with ‘the new normal,’” Howard said. “Eighteen months ago, when the bottom fell out, we all thought we would stagger through this and within a year start seeing some relief. But that has not happened. There’s still far more need than there are dollars.”

Sam Boykin can be reached at [email protected].

Dwindling dollars

The Charlotte-based Arts and Science Council has had to do some belt-tightening as its fundraising campaigns, revenue and operating budgets have all been squeezed by the recession.

Funds raised through campaigns

2008

$11.2 million

2009

$7 million

2010

$7.3 million

Revenue

Fiscal 2009

$18.5 million

Fiscal 2010

$14 million

Fiscal 2011

$13.5 million

Operating budget

Fiscal 2009

$3.4 million

Fiscal 2010

$2.7 million

Fiscal 2011

$2.8 million

Many mouths to feed

Loaves and Fishes provides a week’s worth of groceries to people in crisis in Mecklenburg County. The organization has seen a big spike in demand. Below is the number of people the organization has fed over the past 3 1/2 years.

2007: 70,135

2008: 84,045

2009: 102,638

2010: 110,000-plus (estimated)

Donations decline

The Foundation for the Carolinas manages charitable resources for individuals and groups and makes grants in the Carolinas. It has struggled through the recession, as its donations have dropped by more than half since 2007.

2007 donations: $260 million | Grants awarded: $102 million

2008 donations: $78 million | Grants awarded: $91 million

2009 donations: $101 million | Grants awarded: $92 million