2009 Is Looking Grim for Nonprofits Nationwide and in Richmond
Posted by daniel schauder on February 5, 2009 in Uncategorized
When you turn on the TV, switch on your radio, or pick up the paper, the barrage of stories about cutbacks, pay cuts, and bankruptcies is unrelenting and unavoidable, and the quagmire of a recession in which our economy is currently wallowing may hit the arts especially hard. While giving to charitable organizations in the US has been on the rise steadily since 1969 (with the exception of one year when the tax laws changed), it will be an enormous challenge for arts organizations to continue to bring in the donations they rely on so heavily in 2009. Giving in 2007 reached a record of $306 billion, but Robert L. Thalimer of the Community Foundation Serving Richmond & Central Virginia stated in a recent Richmond Times-Dispatch article that arts organizations in particular would face incredible financial difficulties in the coming year.
Thalimer went on to explain that private foundations are required to give away 5% of their assets, based on the estimated worth of the previous year’s assets. This means that foundations were giving throughout 2008 based on their relatively good finances at the close of 2007. Giving for 2009 will be based upon the financial circumstances at the close of 2008, which was rather poor for most foundations. This means that foundation giving, and likely giving from other sources as well, is likely to decrease in the coming year.
Thalimer remarked further that “Individual donors are likely to be the strongest segment of donors. They have a history of maintaining charitable giving as a priority in recessions,” which reinforces the 80%-20% rule we discussed in class. 80% of the funds raised by an arts organization are from 20% of the donors. The particularly difficult struggle this year for arts organizations will be to accumulate the remaining 20% of donations needed from the 80% of donors who do not give at the highest levels.
While the state of the economy will make it difficult for nonprofits to raise money this year, Richmond nonprofits such as the Richmond Symphony may have added financial difficulties to contend with as city government officials contemplate a revision in their tax collection practices. Currently, Richmond nonprofits are largely exempt from paying property taxes in accordance with their 501 (c)(3) status. Richmond’s Style Weekly reported in a recent article that City Assessor James Hestor is considering the implementation of a 1993 ordinance which would require Richmond nonprofits to pay a service fee for public services such as police and trash pickup.
A change in the city’s tax collection practices could resort in an additional $800,000 of revenue for the city, but the change would cause serious consternation from local nonprofits. With the Richmond Symphony finally returning to its home in the Fall after five years of renovations, the organization will be faced with a number of costs related to the upkeep of its new facility. A new service fee from the city would certainly make for a sour homecoming and in my opinion would be a major mistake on the part of city government.
http://www.timesdispatch.com/rtd/business/local/article/P-NONP25_20090117-235521/181459/
1 Comment on 2009 Is Looking Grim for Nonprofits Nationwide and in Richmond
By kpanoff on February 8, 2009 at 7:58 pm
When the economic climate is bad for corporations and city and state governments, there is going to be a tremendous impact for non-profit orgs. The addition of public works fees for orgs that rent or own property could really send the fragile financials of many arts orgs in to comlete chaos. Orgs can carry some debt for a few years, but there needs to be a clear plan for reducing the deficit. The VA symphony has been carrying deficits for sometime and now they are in serious peril.
kp
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