The stress has increased for the leaders of some local nonprofits, reeling from painful Metro United Way funding cuts and trying to minimize the potential impact on area residents and staff members.
“That’s exactly the world I’m living in right now,” ElderServe CEO Julie Guenther said.
Metro United Way recently announced that it had cut funding to about 100 nonprofits by 30 to 50 percent as a result of fundraising trends, such as a societal shift away from payroll deductions as a means of giving, and some contributors earmarking their donations for specific projects.
The severity of the cuts “was just a real sock in the gut to many of us, especially on the heels of the city” saying that external agency funding from Metro government could also be slashed, said Jeri Swinton, chief executive officer for Big Brothers Big Sisters of Kentuckiana. “For us, it’s a cut just from Metro United Way of $87,000, which for us is significant.”
The reductions are a result of what United Way President and Chief Executive Theresa Reno-Weber has described as “seismic shifts” in the way funding is coming into the organization.
For example, “some of our bigger corporate partners, some of our foundation partners are starting to get more targeted in their giving and not necessarily wanting to give to just a general pool of dollars,” she said. “And they’re saying we want to see specific outcomes in financial independence or asset security, we want to see specific outcomes in early childhood or specific outcomes in health behaviors.”
Although the United Way’s 2018 annual campaign brought in just 3.4% less than the prior year — $26.3 million vs. $27 million in 2017 — nonrestricted dollars, which historically have been the organization’s bread and butter, were down by $3 million, or 32%, Reno-Weber said.
That was a major factor in needing to reduce funding to nonprofits while also trying to ensure that no cut was so severe that an organization would have to close its doors. “We didn’t want to see that happen for any of our partners,” she said.
Also, Reno-Weber added that 14 organizations will be receiving an increase in funding because of grants that also come from the United Way but are from a different bucket of money, so to speak.
Nevertheless, some organizations are struggling to handle the cuts, which come at a time when many nonprofits also are faced with potential budget reductions from Metro government. External Agency Funding from the city to community services and the arts could be reduced by about 28 percent, but the budget hasn’t been finalized yet.
The overall financial tightening for nonprofits is making life more challenging for leaders like Guenther.
The organization, which provides a variety of services for older people, must figure out how to absorb a 43 percent reduction in United Way funding — about $115,000 — while also expecting less funding from the city.
“It’s taking some significant thought to try to figure out how to work through the budget cuts in a way that support for the community can be provided as much as possible,” Guenther said. “… It’s very bad. We’re talking about people’s lives.”
Areas that could be affected include the Senior Companions program, which provides support and companionship to frail, housebound clients, and Crime Victim Services, which supports older victims of crimes, such as physical and financial abuse.
In the past, money from United Way and the city have been used to provide matching funds for federal dollars that Senior Companions and Crime Victim Services bring in, Guenther said. “We’re really struggling right now to figure out how to continue meeting the match requirement if these historical supports are not going to be there the way they have in the past.”
Another area that’s likely to be affected is client services, a category that includes being able to provide help from a social worker, care management, and wellness activities at a senior center on 28th Street as well as care management throughout the community.
“So I’ve been working through each individual budget, and I’ll be honest with you, I don’t have it all figured out. And so I’m trying to keep the impact as minimal as possible, but it’s pretty serious,” Guenther said.
United Way gave nonprofits a heads-up that cuts were coming, but the actual dollar amount was a real shock, Swinton, of Big Brothers Big Sisters, said.
“We have about a $1.8 million budget, so when you get that kind of a cut, it’s impossible to just absorb …. and maintain stability as an organization,” she said.
The organization, which matches young people with adult role models, incurs processing costs of about $1,500 a year per child for things like screening volunteers, providing coaching and support, and going through a detailed enrollment process.
Losing funding from the United Way and the city is expected to reduce the number of children Big Brothers Big Sisters is able to serve and to affect staffing, Swinton said.
“We’ve already had positions that we’re not replacing because we found out about the allocation. We already lopped off that much from our budget and are projecting even more decreases next year,” she said.
When someone isn’t replaced “the work to some extent has to be absorbed by others, but you can only do so much,” she said. Also, “it’s very disheartening when you have a team who’s as well put together, as highly focused and as proficient as our team is right now, to not be able to retain some positions.”
Reno-Weber said United Way turned over every stone to raise money and did some internal streamlining.
“This year we have cut over $440,000 from our operations or more than 5% of our total budget,” she noted in an email. “These savings came from several areas across our organization and are on top of cuts we made in 2017 when I first arrived.”
Reno-Weber said United Way has been seeing declines in traditional corporate workplace giving for the last 10 years.
“That’s really been driven by all the disruption in the corporate landscape that we see across Louisville,” she said. “We know that there’s been mergers and acquisitions, and there’s been headquarter changes, and there’s been turnover. And there’s been retirements, and there’s a new generation in the workplace. And there’s more competition in workplaces,” offering employees ways to donate more broadly instead of just to United Way.
Retirements also contribute to the funding shortfall, she said, as they can mean losing sizable donations from seasoned workers.
Newer workers “are saying, ‘I want to give online. I want to put it on my credit card and get airline points.’ That’s just a shift in the generation,” she said. “Those new donors who may be in the workplace giving aren’t coming in at $1,000 a year. They’re coming in at maybe a couple of bucks a pay period. And that’s where their predecessor started. Okay. But they started there and grew over time.”
Swinton said she remains a fan of United Way but would like to see an increased focus on payroll deductions and to see the community “step up to the plate” when asked to give to the United Way. “It really does make a difference,” she said.
Reno-Weber also stressed the importance of giving to United Way, as well as donating directly to organizations.
“I think the outcry from our partners about how painful having less investment is should, hopefully, make clear to folks why it’s so critical to give,” Reno-Weber said. “… But I also don’t want folks that do designate (their dollars) or the grants that we’ve received to be seen in a negative light … because those dollars are still going to do
great work in our community and meeting the needs that we’ve identified.”
But Pam Darnall, a member of a group of nonprofit leaders called the Council of Agency Executives, said human services sometimes seem to take a backseat to other areas, such as the arts and education, when it comes to corporations making donations. Also, companies may be focused on giving worldwide instead of Louisville, she said.
“What that means is these critical services that are in our community are going to continue to decrease,” said Darnall, president and chief executive of Family & Children’s Place. She said she doesn’t know yet the full impact of a $347,000 cut from United Way on that nonprofit, which works to prevent child abuse.
But, in general, “when there are not these high-quality critical services, our entire community suffers,” she said.
Join Insider Louisville for a discussion on nonprofits and the changing funding landscape from 5:30-7 p.m. Wednesday, June 19, at South Louisville Community Ministries. The time of the event has been updated from an earlier version of this story.