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Nonprofits get creative to ease the squeeze

By Rob Anthes

Like most businesses, local nonprofit organizations have had to change the way they operate during the economic downturn of the past few years.

There are statistics that could prove true in any business. Half of New Jersey nonprofits responding to a survey conducted by the Center for Nonprofits had frozen staff salaries, 33 percent had cut staff and 42 percent expected to spend more money than they earned in 2009.

But while 61 percent of respondents experienced decreased funding between January 2009 and October 2009, demand for service increased for 54 percent of organizations in that time period. Throw in the looming threat of cuts in state funding, and many organizations have started to wonder how much longer they can continue to hold up under the opposing forces of more need for services and less money to provide those services.

It’s a hefty problem for a sector of New Jersey’s economy that spent $33 billion in 2007.

“It’s no surprise that, yes, the economy has been terrible for nonprofits,” said Linda Czipo, the center’s executive director. “It’s certainly a difficult time. With the state budget the way it is, there’s a lot of anxiety.”

The issue is particularly pronounced in Mercer County, which hosts 2,524 nonprofit organizations, according to the Center for Nonprofits. Mercer has the third most nonprofits of any New Jersey county.

In response, the organizations have had to get creative to survive.

One such nonprofit is Allies, Inc., a Hamilton-based organization that helps people with disabilities find housing, health care and employment. Allies culls much of its funding from the state, a worrisome fact considering that cash source may dry up as state officials try to solve the budget shortfall. It also receives private funds, an unreliable source in a depressed economy.

Allies decided to buffer itself from any potential loss by partnering with the New Jersey branch of the Friends of the Guard and Reserve, which supports military personnel from the National Guard and the Reserves, in its fundraising efforts. The first dual event is a Casino Night in October at the National Guard Armory in Lawrence.

The ultimate goal will be to spin off some of Allies’ services to help military veterans, said Don Tretola, the senior director of public affairs for Allies. He added that while the partnership may seem mismatched, the two organizations have the similar goal of helping people who may have trouble obtaining basic needs.

Allies isn’t alone in its strategy. The Center for Nonprofits’ survey showed 39 percent of nonprofits that responded to its October survey had formed similar partnerships in 2009, with 42 percent working on launching new partnerships.

“It’s going to show other nonprofits that maybe it’s a good idea to partner with other nonprofits,” Tretola said. “With the economy and budgetary cuts, you’ve got to be a little creative. You have to work smarter and look for other opportunities.”

Lawrence-based Princeton Area Community Foundation doesn’t draw any funds from the government, so it avoids much of the worrying that has consumed other groups. But that hasn’t totally insulated PACF from contemporary economic forces.

Still, PACF has enjoyed solid financial years despite the recession, said Nancy Kieling, president of the Princeton Area Community Foundation. The key has been PACF’s endowment, a strategy it employed before the downturn which has continually looked better as the economy worsened.

“It’s basically the community savings account,” Kieling said. “The flow out of it remains stable. A lot of the nonprofits we fund came to understand that when our funds didn’t diminish.”

She said the silver lining to the recession has been that organizations have had to use strategies they may not have considered in better times.

But there’s some skepticism about how well those strategies will work. Kieling said she’s heard stories of donors becoming clients of the same nonprofits they previously funded. Czipo said this has lead to a situation where some organizations may be reaching their tipping point soon.

“Nonprofits are noteworthy for their ability to be creative,” Czipo said. “But even there, there’s a limit to have far they can stretch.”

That nonprofits could be approaching their breaking point is a thought some municipal governments — beneficiaries of the work of nonprofits — don’t want to consider. Lawrence Mayor Michael Powers pointed to several projects in his town that wouldn’t have happened without an organization offering the government assistance. Neighborhood groups like the Greater Eldridge Park Neighborhood Association and Lawrenceville Main Street have offered to help with rejuvenation projects.

“They’re a true community partner,” Powers said. “We wouldn’t be able to do half of what we do without them. We really appreciate their help. It makes my job as mayor easier. The town tries to meet the nonprofits halfway. We try to help them out when we can.”

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