Layoffs Hitting Nonprofits Despite Need Increasing

November 24, 2008       Mark Hrywna      

The economic downturn is battering nonprofits, first with a marked decrease in donations and now the ensuing layoffs because of the dramatically reduced revenue. In some cases, the layoffs are in the double-digits of percentage of workforce.

The American Lung Association (ALA) announced it will cut 14 employees, about 15 percent of staff, at its national headquarters in New York City. Affected employees received four weeks notice and will receive severance packages commensurate with service, according to ALA.

The cuts were across most all departments, according to Carrie Martin, a spokeswoman for ALA, and “were taken in conjunction with other cost reductions to significantly reduce operating expenses to align with lower expectations of revenue for this fiscal year, from both fundraising and shareable revenue from the field.” ALA had revenues of almost $158 million in the last fiscal year.

Susan G. Komen for the Cure is paring staff by 16 percent, with 39 of 244 employees at its Dallas, Texas headquarters being laid off. The organization was ranked No. 49 in the 2008 NPT 100, a study of the largest nonprofits in the nation, with $275 million in total revenue during Fiscal Year Ending 2007.

“Like many private companies and other nonprofits, Susan G. Komen for the Cure is wrestling with the impact of the most significant economic troubles in decades,” said Emily Callahan, managing director of marketing communications. “This decision to reduce our workforce at headquarters was, as you can imagine, extremely difficult for an organization like ours. It was not made in a vacuum and comes in tandem with aggressive cost reductions in administrative and overhead expense elsewhere in the organization.”

Focus on The Family (FOTF) eliminated 202 positions, of which 149 were occupied and 53 were vacant, almost 18 percent of its 1,150 employees. Affected staff were notified Nov. 14. The eliminated positions were across the board, including 20 percent in management, all the way up to senior vice president, according to spokesman Gary Schneeberger.

“Tough economic times required tough decisions to be made,” Schneeberger said. The organization entered a new fiscal year in October with a budget of $138 million, but had it done everything just as it did the previous year, expenses would have been $160 million, he said. “Economic realities were recognized by the board. From there, we had to work to meet that budget figure.”

Last year’s projected budget was $151 million and FOTF raised $146 million. While revenue missed the projections by $5 million, it was still the most the ministry had received in its 32 years, Schneeberger said. During October, the first month of the new fiscal year, he said giving was off by $2 million compared to the same time the previous year. “The prudent thing to do was to budget at a lower point,” he said.

Laid off employees will receive an array of transition package materials, including additional pay based on years of service, up to two months, outplacement help and unused vacation pay, Schneeberger said.

The Colorado Springs, Colo.-based organization also eliminated four of its eight print publications, with another two cut back to less frequency while two remained unchanged, Schneeberger said, noting that there’s been an increase in online traffic instead, not unlike what’s been seen the newspaper industry.

The situation faced by the National Domestic Violence Hotline in Austin, Texas, is not unlike the stories heard by nonprofits elsewhere in the country: As demand for its services increase, funding is dropping off and difficult to find.

The organization eliminated 11 positions at the end of October but if the organization doesn’t raise $1 million by year’s end, more layoffs could be on the way. Two of the 11 positions were vacant, according to spokeswoman Retha Fielding, but none included advocates, who answer hotline calls, but that could change if future layoffs are necessary.

Calls to the hotline were up 21 percent in September and 21 percent in October, and based on anecdotal information from calls, Fielding said a lot of it is economic stress that’s causing problems at home. “We’re concerned about being able to meet those needs. It feels like we’re being pulled in both directions,” she said.

Most of the recent layoffs were communications, fundraising and human resources staff that the nonprofit shares with the Texas Council on Family Violence and the two-year-old National Teen Dating Abuse Hotline. The organization was able to offer those laid off an extra month of insurance, along with a number of weeks of severance pay based on their longevity, Fielding said.

The hotline receives federal funding directly by Violence Against Women Act funds, but 35 percent also comes from private funds. “What we’re seeing is donors who have been giving to us still are, but at a very reduced rate,” Fielding said. For instance, one donor who gave $300,000 last year probably will be able to give $100,000, while corporate and foundation funding is drying up.

The hotline’s budget before the cuts was $6.7 million, and about $700,000 was trimmed from that as a result of layoffs. The organization now has 82 employees, down from 87 because some were moved into advocate positions at lower pay due to expanding shifts, Fielding said.

“Our sense is that while there don’t appear to have been significant reductions in force in the nonprofit sector in Texas, the possibility of it hangs heavy over all of us,” said Barry Silverberg, president and CEO of the Texas Association of Nonprofit Organizations (TANO). “There’s a palpable concern and fear that the economy is going to cause those kinds of reductions, with fewer people to be able to help as needs increase dramatically,” he said.

“There’s an anticipation, anxiety, outright fear about what the economic environment is going to lead to in terms of the state of nonprofit services,” Silverberg said.

“I’ve never seen the times like they are today,” said Richard Mattingly, executive vice president and chief operating officer of the Cystic Fibrosis Foundation (CFF) in Bethesda, Md.

Though there are no plans for layoffs, CFF has instituted a hiring freeze, strategically filling certain positions. Mattingly said there’s an effort to fill posts if there’s a leadership vacancy in a major market or a position that has to the potential to create revenue. He estimated about 30 positions of the 600 nationwide, roughly 5 percent, have been frozen.

These measures are a result of contributions in the past six to seven months that have “clearly gone in a different direction than we’ve become accustomed to for some time,” Mattingly said. “People supporting us are still supporting us, over and over again at events, contributions are steady, but the level of giving is down,” he said. Some events have raised more money than the previous year, Mattingly said, but overall he estimated about a 50-percent drop-offer versus the same time last year in giving at a galas or auctions.

If not for the downturn, CFF might have put more resources into some market development late this year and early next or more into planned giving initiatives, Mattingly said. The organization also will have to pull back on its medical budget, he said, though it is “committed to not let any important commitment to our science go unfunded.”

He did note some bright spots, such as major gifts, which have not changed dramatically from a year ago. “Whether that will in coming months, I don’t know. We’re all concerned about future,” he said.

A bright spot for Kelly Browning is that response rates and average gifts are up 3 to 4 percent this year, after seeing them dip as early as 19 months ago.

The executive vice president and chief financial officer at the American Institute for Cancer Research (AICR) in Washington, D.C., Browning said the organization has been in an economic downturn since early 2007, laying off about 20 percent of its roughly 100 employees this past summer.

“The positive from our perspective, as bad as the economic news has been in September and October, we’re actually doing a little bit better than this time last year,” Browning said.

In an effort to respond to the economic crisis, the National Council of Nonprofits (NCN) created the Nonprofit Economic Vitality Center, an online resource that compiles case studies, strategies and analyses about the impact on nonprofits and how they respond.

 

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

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