Assessing Impact Of Financial Crisis On Nonprofits

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The financial crisis is going to have an effect on many organizations that are not interested in making any money. Nonprofits rely on corporate donations and interest income from their endowments for special programs, operational support and long-term sustainability.


Wall Street's recent problems are causing anxiety in nonprofit organizations. To survive, they rely on wealthy individuals, corporations, foundations, and their own investments. As NPR's Elizabeth Blair reports, arts organizations, schools, and charities are worried.

ELIZABETH BLAIR: Nonprofits are preparing for the worst, says Stacy Palmer, editor of the Chronicle of Philanthropy.

Ms. STACY PALMER (Editor, The Chronicles of Philanthropy): Because we've never had anything quite like this in our country before, so it's hard to tell that it could be a very big deal because all of the donors that nonprofits count on are in trouble.

BLAIR: Take the nonprofit ACCION International, a company that provides micro financing to poor people in developing countries. A few years ago, AIG gave ACCION more than $5 million, the largest corporate grant ACCION had ever received. Last year, AIG promised them another 1.2 million. Then it was announced that AIG was taking a government bailout. Roy Jacobowitz is ACCION's development director.

Mr. ROY JACOBOWITZ (Development Director, ACCION International): We did receive an email from our program officer in the corporate affairs office and she did say that they have every intention of completing that pledge.

BLAIR: But Jacobowitz is still worried about raising money not next year, but the year after.

Mr. JACOBOWITZ: We have plans to expand into five new countries in Africa, opening new microfinance institutions to serve poor people in West Africa. If we don't have the funding to do that, we won't be able to open those programs.

BLAIR: Wall Street firms and their employees are major contributors to nonprofits, from the Alvin Ailey Dance Theater to the American Cancer Society. Last year, Lehman Brothers alone gave $39 million to charity. Beyond individual companies that are having hard times, a drop in the stock market also affects endowments and foundations. Steve Gunderson is president of the Council on Foundations.

Mr. STEVE GUNDERSON (President, Council on Foundations): Two things are happening at the same time, and they converge in a difficult way. On the one hand, the needs of the American people in our communities have grown. At the same time, the value of foundation asset is decreasing and while there may be a short time lag in some of that. There is inevitably a downturn in foundation assets. They can go to work to serve our communities.

BLAIR: Some foundations took action to mitigate the effects of a poor economic climate. Jim Steinberg is director of the Harold and Miriam Steinberg Charitable Trust, which gives grants to American theaters.

Mr. JIM STEINBERG (Director, Harold and Miriam Steinberg Charitable Trust): We did not like the economic condition that we saw coming early as the third quarter of last year, and we repositioned ourselves dramatically.

BLAIR: Steinberg says they're planning to give more money next year, but he's still concerned about the theaters they support. He's expecting them to see a drop in how much they get from individuals, who may get in to a financially defensive mode.

Mr. STEINBERG: As individuals feel that they have less money, whether they do or don't, if they perceive that they have less to give, there will be a drop off in individual giving as well.

BLAIR: Meanwhile, the damage caused by recent hurricanes has almost completely vanished from the national headlines. The Salvation Army, the American Red Cross, and other charities trying to raise funds for hurricane relief are finding it very hard to reach their goals. A spokesperson for Catholic charities says this is one of the worst responses they've ever seen. Elizabeth Blair, NPR News.

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