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Nonprofits in Arizona are feeling the effects of the improving economy after the damage of the recession that started seven years ago.
An analysis of itemized tax deductions by The Chronicle of Philanthropy shows that Arizonans donated just under $3 billion in 2012.
Jacky Alling, chief philanthropic services officer of the Arizona Community Foundation, said that means charitable contributions are close to pre-recession levels.
The Arizona Community Foundation sets up charitable funds and grants for nonprofits.
“We have had a record growth over the last year in terms of new charitable funds being set up,” she said. “About one-third of our funds in total have been set up in the last three years. We think that’s a very positive indicator.”
This growth comes after nonprofits had to find creative ways to operate during the hardest times of the economic downturn.
“What we saw was a trend towards nonprofits really looking at mergers and acquisitions,” Alling said. Two groups that provided similar services could stay in operation by joining forces.
Patti Caldwell, executive director of Our Family Services of Tucson.Merging to Survive
An example of that is Our Family Services, a nonprofit that helps Tucsonans become self-sufficient and avoid homelessness. The organization was formed when two nonprofits merged in 2005. Our Family Services merged with another nonprofit in 2008, and with another in 2012.
Executive Director Patti Caldwell said some of those mergers were purely strategic, while the one in 2008 was motivated by finances. Our Family Services merged with the then-struggling Information and Referral Services.
That's an example of how the size and scale of nonprofits were affected by the recession, said Barbara Brown, vice president of program services and community initiatives with the Community Foundation for Southern Arizona.
Small nonprofits that operate as volunteer-only or with few employees might have had an easier time weathering the recession, she said. Many midsize nonprofits had a hard time paying all of their employees while still providing services.
Caldwell said Our Family Services was lucky to survive the recession the way it did. As a midsize nonprofit that pulls in about $5 million annually, she said there were enough cash reserves to stick out the hardest times, though not without sacrifice.
Staff was whittled down through attrition, and some programs had to be cut, she said.
“We really had to look at which of the services we were providing were core to what we did,” Caldwell said.
Downsizing also occurred at the Arizona Theatre Company, said Matt Lehrman, interim managing director. He said 40 percent of the group’s $6 million budget is based on donations.
Fewer donations during the recession meant Arizona Theatre Company productions were scaled back, with fewer cast members and less elaborate sets.
The mergers and coping strategies at Our Family Services during the recession had some benefits.
“I think with each of the mergers we’ve actually been able to enhance the services we provide to the community,” Caldwell said. “That’s because we’ve had the capacity to reach out and do more because we blended services, and actually found efficiencies in doing that.”
An Improving Economy
Our Family Services is seeing numbers like prerecession totals now. Individual donations to the organization were record-breaking last year– contributions totaled $380,000, Caldwell said.
Even though the economy is growing and donations are increasing, Lehrman, with the theatre company, said nonprofits have to be smart with their money.
“There’s no such thing as extra money when you’re running a nonprofit arts organization,” he said.
Fundraising at the Arizona Theatre Company is especially important this year because an anonymous donor has offered to match individual contributions up to $500,000 through the end of the month.
Lehrman said the company will use the funds wisely.
“If you are in a nonprofit organization, you learn how to stretch a penny further than it has ever been stretched anywhere,” he said.
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