Innovation key for nonprofits in current economy

The national economic crisis has finally extended into the cultural and artistic foundation of Austin.

This was the conclusion of a discussion, entitled “Weathering the Economic Storm,” at City Hall today, where panelists from Austin’s nonprofit scene met to discuss strategies to promote art, culture and philanthropy.

In the past year, 54 percent of 830 Austin nonprofits surveyed in July by Greenlights for NonProfit Success and United Way Capital Area reported a drop in donations. Yet 66 percent witnessed an increase in demand for their services, leaving nonprofits struggling to generate enough revenue to sustain business.

“I don’t know anyone who hasn’t been affected by the economic storm,” said Robert Faires, panel moderator and senior arts editor for The Austin Chronicle.

18 percent feared they might have to cease operation due to the sharp drop in donations caused by the downturn.

Peter Frumkin, director of the RGK Center for Philanthropy and Community Service at the University of Texas at Austin, said the decreased philanthropy is related to the immense pressure imposed upon individual giving.

“There is not a lot of money floating around for the public anywhere, from the government or from individuals,” he said. “When money is tight, funding art and nonprofits is just not a priority.”

The discussion at City Hall aimed to provide nonprofits with progressive strategies to supplement waning philanthropic contributions.

Frumkin said there are two options nonprofits can employ: fundraising and costing cutting, and entrepreneurial endeavors.

Within fundraising, he said nonprofits can focus on revenue generation and limiting expenses, while entrepreneurial endeavors involve sharing employees, altering targeted markets and developing new business ideas.

“The best approach to avoiding financial difficulties is a hybrid approach,” Frumkin said. “Neither option should be thrown aside. It involves both.”

Bijoy Goswami, founder of Bootstrap Austin, said many nonprofits are in what he calls the valley of death. Goswami, whose company has become a resource for emerging entrepreneurs in Austin, said the valley of death is a crucial turning point where organizations hit significant challenges that need to be overcome.

“It should be used as a place to innovate,” Goswami said. “Organizations don’t succeed because they immediately know the solution to every problem they faced. They had to innovate, and think ‘what else do I have to offer?’”

Nonprofits should also consider what other organizations can offer them, said Victoria Corcoran, owner of Corcoran & Co.

Corcoran & Co., a fundraising and nonprofit consulting firm in Austin, specializes in helping nonprofits do just that. Corcoran said there are a multitude of things that can get done for free by tapping into available resources in donors, leadership boards and other nonprofits.

“Most of the time it isn’t money that is needed, but a resource that you cannot just go to the store and buy,” Corcoran said. “There are different types of capital, not just monetary.”

Kevin Patterson, general director of Austin Lyric Opera, said utilizing social capital is key and engaging in shared services is a sound business practice for nonprofits. Organizations should collaborate to share and stretch the resources they already have and increase the efficiency of their collective services, he said.

Despite evident success of enterprising, cooperative techniques, only 11 percent of the nonprofits surveyed said they anticipated sharing services in the next year. Only 4 percent have already done so.

The Austin community has more nonprofits per capita than any other city in Texas, according to the I Live Here I Give Here Web site, a Central Texas campaign created to encourage local philanthropy.

Patterson said these organizations, which total around 6,300, are an integral part of Austin’s overall identity and success.

“Nonprofits and the arts are critical to the continuing growth of the corporate community and to the growth of this city,” he said.