M ANAGING
Social-Service
Charities
and Government Aid
Largest source of government support
State government
41%
Federal government
35%
Local government
24%
Problems charities cite with government support
Payments do not cover
full cost of contracted services
44%
24%
32%
Complexity of/time required for
reporting on contracts and grants
37%
39%
24%
Complexity of/time required
for application process
37%
39%
25%
26%
Government changes
to contracts and grants
31%
43%
24%
Late payments
(beyond contract specifications)
29%
47%
Big problem
Small problem
Not a problem
Cutbacks made in last year
Froze or reduced employee salaries
50%
Drew on reserves
39%
Reduced number of employees
38%
Reduced health, retirement,
or other staff benefits
Borrowed funds or increased
lines of credit
Reduced number of programs
or services
Reduced number of people served
23%
22%
21%
17%
Increased program fees
15%
Reduced hours of operation
10%
Closed offices or program sites
7%
SOURCE: Urban Institute
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Social Services Hit Hard
by Government Cuts
By Grant Williams
Many human-service groups
are slicing services to those in
need in the face of widespread
cuts in government support, according to a new study.
Fifty-six percent of human-service organizations reported
that they received less money from state governments in
2009.
Forty-nine percent reported
drops in local government aid,
and nearly one-third, or 31 percent, said they received less
money from federal agencies.
The national study, conducted by the Urban Institute, a
Washington think tank, said
the declines in government
funds—along with reductions
in contributions and investment
income—have led to a “
hollowing of organizational capacity
that may take years to rebuild,
More than four in
five social-service
groups say they have
scaled back their
operations.
if ever,” as many of these orga-
nizations have had to scale back
their operations.
As a result, they are cutting back services like food, job
training, and child care even as
demand for these services is on
the rise.
In fact, more than four in five
human-service groups in the
survey—82 percent—reported
that they have scaled back their
operations.
Twenty-one percent have reduced programs or services; 17
percent have served fewer people; 50 percent have frozen or
reduced the salaries of employees; 39 percent have drawn on
reserves; 23 percent have reduced health insurance, retirement contributions, and other
staff-member benefits; and 22
percent have borrowed money
or increased lines of credit.
Making matters worse, the
report predicts that the tension
between increased demand and
reduced government support
will only intensify.
If projected state budget
shortfalls for the 2011 and 2012
fiscal years “are coupled with
declines in donations and investment income and heightened demands for services,
many nonprofits may reach the
breaking point,” the Urban Institute said.
Widespread Pain
The scope of these problems is
widespread, given the amount of
money the government provides
to human-service groups. The
Urban Institute estimates that
federal, state, and local government agencies have about
200,000 formal contracts and
grant agreements with about
33,000 human-service groups
that total about $100-billion.
Government aid accounts for
more than 65 percent of these
organizations’ total revenue, the
Urban Institute said.
“About 60 percent of organizations with government grants
and contracts count those
grants and contracts as their
largest funding source,” according to the report, which focused
on human-service groups that
have more than $100,000 in annual expenses.
And the problems are height-
ened by government inefficien-
cy, the Urban Institute said.
“While pain from the recession may have been unavoidable, better government management of contracts and grants
can at least avoid adding to non-profits’ financial stress,” the report said, pointing to “serious
and widespread problems” with
the management of government
contracts and grants.
Of the human-service organi-
zations that were surveyed:
The report said these prob-
lems are becoming more com-
mon: 31 percent of the nonprof-
its surveyed said that their ex-
perience with governments was
worse in 2009 than in prior
years. Only about 5 percent said
it was better.
The study is part of a project the Urban Institute operates with the National Council
of Nonprofits, a Washington coalition of charities. The project
was paid for by the Bill & Melinda Gates Foundation.
The Urban Institute present-
ed its findings in the report,
“Human Service Nonprofits
and Government Collaboration:
Findings From the 2010 Nation-
al Survey of Nonprofit Govern-
ment Contracting and Grants,”
and a companion report, “Con-
tracts and Grants Between Hu-
man Service Nonprofits and
Governments.”
For information about how
to obtain the reports, go to
the Urban Institute’s Web
site at http://www.urban.org/
nonprofitcontracting.cfm.
