Of all the economic indicators, I believe unemployment is the most important one for nonprofits to watch. More important than consumer confidence, stock market, housing market, etc.
Why?
High unemployment rates:
- Increases in demand for services. A larger population struggles to meet the basic needs for themselves and their family. This puts additional strain on the nonprofits that already serve and underserved population with limited capacity for expansion.
- Decreases in individual donations. This comes in two forms. First, a smaller donor pool, and second, pressure from the remaining employed to increase gifts to cover the funding short-falls.
- Finally, Decreases in corporate giving. If employers had to resort to workforce reductions, and employees are their most valuable asset, this means that there is fewer dollars available for charities. Now, not all corporations may operate this way, but in general, I bet this is very, very true.
Let's take this a step further. Unemployment also affects tax bases, particularly for the states. The tax-revenue gaps create budget shortfalls, some very severe.
Because of the short-falls, some states are looking to revoke some tax-exemptions for charities such as state tax, property, etc and/or institute deals to cover fire/water services with nonprofits (such as large educational institutions and hospitals). There is no word if any of this will actually go through, but it certainly may "tax" already cash-strapped service providers.
Tell me I'm wrong....
