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Year in Review: Economy Continues to Challenge

December 26, 2010

Econ_crisis Although it was announced in September that the Great Recession officially ended in June 2009, nonprofits and foundations -- not to mention millions of Americans -- continued to be challenged by an uncertain economy in 2010.

With the unemployment rate edging close to 10 percent and underemployment running at 17 percent, it was no surprise that demand for emergency assistance continued to grow during the year. A February report from Feeding America found that the number of Americans seeking emergency food assistance had increased 46 percent since 2006, while an April report from the Pew Economic Policy Group found that 23 percent of unemployed Americans had been jobless for a year or more -- the highest rate since World War II. Human service providers were further challenged by widespread and serious problems with government contracts and grants, an October report from the Urban Institute found.

The perfect economic storm of 2009 continued to vex nonprofits in 2010, causing many to seek mergers and alliances while forcing others to lay off staff, make service cuts, and/or look for other ways to tighten their belts. "We expect 2010 to be another treacherous year for many nonprofits that routinely take heroic measures to meet demand for services," said Nonprofit Finance Fund president and CEO Clara Miller in March. "While the 'coping mechanisms' we're seeing are encouraging, we also need to make fundamental changes to the way the sector is financed."

Whether grantmakers were doing enough to help nonprofits and the sector in the wake of the downturn was an increasingly contentious topic as the stock market moved off its 2009 lows and endowment values began to recover. A May report from the Philanthropic Collaborative argued that U.S. foundations had been flexible, targeted, and quick to act in response to the crisis, while a June report from the Center for Effective Philanthropy suggested that a significant percentage of nonprofits believed that foundations had provided insufficient communication and little in the way of useful help to them in response to the downturn.

Despite the continuing challenges confronting the sector, the second half of the year offered signs of hope. A September report from the Fiscal Policy Institute found evidence of job growth, if not robust economic recovery, in New York State, one of the most economically challenged states in the country, while a number of media outlets (including Philanthropy News Digest) reported in November that, for the first time in two years, nonprofit online job boards had seen a jump in the number of postings, signaling a possible improvement in the nonprofit job market.

Meanwhile, a November research advisory from the Foundation Center found that while it may take several years for foundation giving to return to levels it hit in the middle of the decade, giving should rebound slightly next year after being flat in 2010. "The foundation community is adapting in our dramatically changed environment," said Steven Lawrence, the center's director of research and author of the advisory. "Even though the 2010 economy has been anything but predictable, foundations are working with greater efficiency, holding their giving steady, and a number are planning for growth."

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