Rhode Island Nonprofits Feel the Squeeze

Apr 16, 2013

It’s hard to turn on the news these days without hearing about another nonprofit in financial trouble.  Advent House – the state’s first homeless shelter – is without a director because it can’t afford one. John Hope Settlement House is bleeding $30,000 a month. And the Institute for the Study and Practice of Nonviolence has laid off a third of its staff.

The bottom line is that many nonprofits are on the edge as a result of a punishing recession and a weak recovery. This morning, Rhode Island Public Radio’s Flo Jonic peels away the layers of the onion to find out the root causes of these problems and how they’re being addressed.

Harrington Hall, the state's largest homeless shelter, has been struggling under reduced finding an increased demand for service.
Credit Flo Jonic/RIPR

On a recent evening, men lined up to get into Harrington Hall, the state’s largest homeless shelter. Once their backpacks are checked for alcohol and weapons, they’re allowed into the former gymnasium on the grounds of the Pastore complex in Cranston.  Fifty-four year old Walter McLean, who’s been living on the streets for two and a half years, said the shelter has saved his life.

“I’m glad it’s here,” said Mclean. “Without this place I never would have made it through this winter.”

Harrington Hall, like the other shelters in the state, is seeing record demand for services. According to the Rhode Island Coalition for the Homeless, the state’s homeless population has mushroomed by 24 percent since the recession began five years ago.  Harrington Hall routinely packs in more than 100 men in a space designed to sleep 88.

What’s more, federal and state funding haven’t kept pace with the demand, said Jean Johnson, executive director of the House of Hope, which runs Harrington Hall.

“Sometimes we look very, very closely at the checking account to see that there’s money in it and it runs close,” said Johnson. “We have never been able to say ‘we can’t pay you this week.’ But we have had a few really close weeks when things have been very difficult.  Those are the nights I really don’t sleep.”

Johnson has a lot of company during those sleepless nights. Back in December the Institute for the Study and Practice of Nonviolence had to lay off a third of its staff because of reductions in federal and state funding. And Institute director Teny Gross took a 40 percent cut in pay.

“Between federal, state and other grants we actually lost over two-and-a-half years about $920,000,” said Gross. “Now, to the credit of private donors we have increased funding from private donors and foundations because if just lost $920,000 the Institute probably wouldn’t be here.”

The financial outlook is no better for the Rhode Island Coalition against Domestic Violence. Director Deb DeBare said her coalition, made up of six agencies, has lost one million dollars a year – 20 percent of its funding – due to state and federal budget cuts.

“There used to be $425,000 in the state budget to support the court advocates,” said a clearly frustrated DeBare. “And at this point we’re down to a pitiful $125,000 or so. It’s just a ridiculously low amount where we’re supposed to be able to provide services to over five thousand victims a year.”

The result, said DeBare, is that victims of domestic violence have to be turned away.

“It’s just heart wrenching when someone is on the phone and feeling desperate that they need someone to support them in court," she said, "Or they don’t know where to turn for help and we have to say to them ‘we don’t have enough advocates available to help you.'"

The financial squeeze isn’t the exclusive domain of nonprofits that provide human services.

Perishable Theater was aptly named. It went under about a year ago when restructuring efforts failed.  The Providence Black Repertory Company closed in 2009 after the organization failed to keep a positive cash flow.

Loss of state and federal contracts is only part of the problem. Donations from individuals and corporations fell precipitously when the recession began. Although donations have recovered somewhat, they remain a source of concern according to Patrick Rooney, associate dean at the Indiana University School of Philanthropy.

“Giving has recovered since the Great Recession has ended,” said Rooney, “ but just like the rest of the economy [it] has been growing at a relatively slow state of recovery. Giving by households and giving overall has grown at such a slow rate that it would take another decade to reach where we were in 2007 before the recession began.”

Of the 50 states, Rhode Island ranks fifth from the bottom for charitable giving, according to the Chronicle of Philanthropy’s annual “How America Gives” report.

Another problem, said the Rhode Island Foundation’s Neil Steinberg, is that there are too many nonprofits. Indeed, according to the Secretary of State’s office the number of nonprofits in Rhode Island has swollen by 12 percent since 2008, from roughly 6,700 to close to 7,500.

“Do I innately believe there are too many? Yeah,”  said Steinberg. “The barrier to entry isn’t hard. If you and I wanted to start a nonprofit today and assuming we have a legitimate purpose to do it, we file with the IRS, we do the proper forms, we go out and raise some money, we rent a space, we hire an executive director and we’re another nonprofit. It doesn’t mean it’s the right thing to do. But I think that nonprofits or groups thinking about forming a nonprofit should look at the landscape. Is it really a program that should be part of another nonprofit rather than an organization with overhead?”

Nonprofits are meeting the financial challenge in a variety of ways. Two nonprofits that help immigrants, the International Institute and Dorcas Place, saved a quarter of a million dollars when they merged last year. Trinity Rep trimmed costs and increased programming. And everyone’s doing more fundraising, said Jim Ryczek of the Rhode Island Coalition for the Homeless. But, he cautioned, it’s a distraction from their primary mission.

“It takes you away from the mission and the purpose you are trying to fulfill,”  said Ryczek. “Instead of serving people you’re looking for money to serve the people and you’re looking for money at ever increased amounts of time.”

So the once-robust nonprofit sector is going through a shakeout, leaving many Americans without services and culling the weak from the strong.  And if you don’t think it will affect you, think again. Anyone who goes to a museum, works out at the “Y” or goes to a theatre production is reliant on a nonprofit.