Trickle-down financial crisis hits neediest
Resource type: News
The Washington Post |
by ROBIN SHULMAN For Citymeals-on-Wheels, a nonprofit group that delivers food to homebound New Yorkers, the Wall Street crisis already means 100,000 fewer meals will be delivered to people who need them. One day this spring, the group lost about $500,000 it expected from employees of Bear Stearns as the firm collapsed. A few days later, $225,000 promised by a hedge fund vanished after its stock plummeted. This summer, private contributions were running 20 percent less than a year ago. And in the past few weeks, significant numbers of longtime donors have cut their giving in half, said Executive Director Marcia Stein. After Citymeals-on-Wheels cut back its program, some elderly people began receiving one meal a day instead of two. “You know the next day you got a meal coming, so you don’t have to worry, then all of a sudden it’s not there,” said Dorothy Skinner, 82, a retired special-education aide who lives alone in Manhattan. “It really hits you.” Across New York, nonprofit organizations are anxiously tracking the demise of longtime donors such as Lehman Brothers, Merrill Lynch, and Bear Stearns, as Wall Street’s problems begin to trickle down to the city’s poorest residents. “Our people had the lowest earning power and greatest risk,” said JoAnne Page, the president and chief executive of the Fortune Society, which serves adults leaving prison and juveniles in trouble with the law. The organization already faces cutbacks from various sources. “If you ask me about what the future is going to look like in the next couple years, it’s going to hurt like hell.” While it is still too early to ascertain the full impact of the financial crisis and a slowing economy on organizations that serve the poor, one consultant to nonprofit agencies said a handful of executive directors already have contacted him because they are unsure how to raise enough money to continue providing services. Some organizations are seeing cuts in city funding as tax revenue, foundation giving, gifts and contributions from corporate and private donors decline simultaneously. Others are awaiting talks with funders to see how they will be affected. Some nonprofit groups, such the Harlem Children’s Zone, which offers educational programs, have depended on major funding from donors whose futures are suddenly bleak. The group recently received $6 million from the Lehman Brothers employees, and is partway through disbursement of a $25 million gift from the Starr Foundation, whose board members include AIG executives. About $306 billion was given away last year, according to the Center on Philanthropy at Indiana University. About 75 percent came from individuals, 13 percent from foundations, 8 percent from bequests or wills, and 5 percent from corporations. The Giving USA Foundation recently released a report saying that during the last recession, in 2001, donations dropped 2.2 percent. Giving remained flat during the recession of 1982 and dropped 5.4 percent during a downturn in 1974.