How Is the Economic Recession Affecting Charities?

Raise money through Razoo.

Whether it’s getting turned down for a loan, losing thousands of dollars from your retirement account, or even being laid off from your job, you’ve probably been affected by the current economic recession in some way. Times are tough for just about everybody these days—even nonprofit groups.

Many nonprofit groups rely heavily on large corporate donors—including businesses like Freddie Mac and Fannie Mae, who’ve recently fallen into steep decline. Individual donors, too, are not as reliable as they’d been in years past: many once-generous philanthropists have seen their own stock portfolios drop severely, and aren’t making the sort of generous contributions to their pet causes that they used to. Many nonprofit groups also have endowments that have turned sour since the financial markets started to fall, and have lost a large portion of their annual revenue.

In a recent Wall Street Journal article , Geoffrey Canada, the executive director of the formerly successful Harlem Children’s Zone , describes how the economic crisis has impacted his nonprofit. The group has lost major donors such as Merrill Lynch, Citigroup, Morgan Stanley, and the bankrupted Lehman Brothers, and has lost $2.7 million from an investment that his financial manager had placed with Bernard Madoff. Canada believes that the charity’s revenue for the year is likely to fall by at least 7 percent, or $5 million.

As a result of such setbacks, many charities are laying off staff members and implementing hiring and pay freezes. They are forced to cope with limited resources, and are cutting important programs out of financial necessity. And while their services are in even greater demand than ever before, many groups are being forced to turn down countless people in need.

To help nonprofit organizations thrive and allow them to keep providing aid to the people who need it most, make a donation to your favorite group today.