Sunday, January 25, 2009
A story in yesterday's Wall Street Journal detailed the struggles of one New York Charity, Harlem Children's Zone, in the wake of the Bernie Madoff scandal and the economic crisis. Here is a short excerpt:
Geoffrey Canada has spent decades building a strategy for saving poor children from crime-ridden streets and crumbling public schools. His "Harlem Children's Zone" now serves thousands of kids, some of whom are showing impressive test scores. He has attracted the attention of the new White House because of his charity's model: Instead of tackling problems here and there, the program envelops an entire neighborhood, with services ranging from parenting classes to health clinics to charter schools. But Wall Street's meltdown and money manager Bernard Madoff's alleged financial fraud threaten the donor base that bankrolls Mr. Canada's work. Facing declining revenues, he's had to lay off staff and cancel plans to expand. He says he doesn't yet "have a Plan B" for replacing his Wall Street support, which had reached upwards of $15 million annually. Mr. Canada's difficulties show how dependent nonprofits can become on certain steady donors, and how their plans can be derailed when those revenues dry up. It underscores the challenges facing nonprofits, which grew and proliferated amid the bull-market earlier this decade. Today, the U.S. boasts more than one million nonprofits, up from about 774,000 ten years ago. Their biggest donations come from corporations, foundations and the ultra-wealthy. Many have been hit hard by the deepening recession. A drop in charitable contributions could shutter as many as 100,000 nonprofits over the next year, says Paul Light, a professor at New York University's Wagner School of Public Service.