Stephen J. Gill

The current economic crisis is no time for Ann Arbor area nonprofits to hunker down. Whether social services, health care, arts, education or advocacy, nonprofits should use this time to re-examine themselves, ask themselves the tough questions, and develop a culture of learning that will result in long-term effectiveness and sustainability.

Local nonprofits have been hit hard by the economy. Less corporate money is going to United Way of Washtenaw County (the checking account for local nonprofits) and fewer dollars are being generated by endowments at the Ann Arbor Area Community Foundation (the savings account for local nonprofits). The money earned by our community’s philanthropies that then goes to nonprofits is off by 30% to 40%.

Workers earning less or laid off from good paying jobs are not donating as much to United Way, AAACF, or directly to any of the 800 to 900 nonprofits in Washtenaw County. County government has proposed cutting $700,000 from the annual budget for nonprofits as a way of closing its projected $26 million deficit over the next two years. And the state is delaying and, in some cases, cutting its promised payments to social service providers.

At the same time, the demand for the services of nonprofits is increasing dramatically. One example out of many is Food Gatherers, which has experienced a 50% increase in demand for its food rescue and distribution services over the past two years. Some people who had donated to the organization in the past are now using food pantries themselves. In addition to food, there is increasing demand on nonprofits for housing, clothing, affordable health care, psychological support, employment counseling, education, and job placement. The needs are increasing but the money to provide these services is decreasing and funding will probably not recover to past levels for many years to come.

Everyone should be concerned. The Ann Arbor area, as well as the state of Michigan, will not see its economy turn around without effective nonprofits. Nonprofits have a huge impact on the local economy; nationally they account for 5% to 10% of the economy. In Ann Arbor and Ypsilanti that number is probably higher, given that the largest employers are nonprofit organizations. Nonprofits contribute directly to the economy by employing people and by purchasing local products and services. They contribute to the development of new businesses by providing support to entrepreneurs. And they contribute to the quality of life by creating opportunities for all people to participate in the life of the community and advocating for issues and programs that are essential to a civil society.

The initial reaction of nonprofits in this economy has been to try to continue what they’ve been doing but with less staff and less space.  What they should be doing is learning how they can be more effective as organizations and learning how to learn from these challenging circumstances. Nonprofit organizations, now more than ever, must learn to use their limited resources wisely, efficiently and possibly in new and different ways.

An example of this is HelpSource, a human services agency that several years ago was struggling to survive financially but was able to disperse all of its programs to other agencies in the county, after it made the difficult decision to discontinue operations. Having a noble mission is the place to start, but it is not sufficient to stay in business. Another example is the Childcare Network, an Ann Arbor agency that works with communities to develop quality care for children, which recently held a Community Stakeholders Day to learn from others how to best serve the community, build financial sustainability, and generate new revenue streams.

Today, nonprofits need to be continuously learning. The pace of change is too fast to try to stand still. They must constantly be evaluating themselves and using this information to improve performance. This can’t be only at an annual retreat or when there are problems. They should be learning all the time, particularly from their successes. They need to create a culture of learning that supports and encourages evaluation and collective discovery, sharing, and application of knowledge. In this kind of culture, people are continuously applying their collective wisdom to current and future challenges.

About the writer: Stephen J. Gill, Ph.D. is author of the new book, “Developing a Learning Culture in Nonprofit Organizations,” published by Sage Publications. He is chair of the board of trustees for Washtenaw Community College.