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Local nonprofits facing challenges

After taking a sharp hit during the recession, nonprofit organizations in San Diego County began to make a comeback last year, according to the first annual State of Nonprofits report released this month by the University of San Diego.

But they still remain well below their peak. And even though the dollar amount of individual donations has been on the rise, the number of donors continues to fall, and per capita donations to local foundations sharply lag state and national averages.

That has put nonprofits under increasing pressure to collaborate on providing services and to put more emphasis on demonstrating the specific value of their programs to the public, according to nonprofit executives who gathered for a Daily Transcript roundtable last week.

“We have to link up and align ourselves with other parties that are focusing on our target groups,” said Rudolph Johnson, president and CEO of the Neighborhood Housing Coalition. “If we go at things on our own, there are going to be gaps.”

The USD report shows that the Great Recession took a major toll on local nonprofits. After 501(c)3 nonprofits hit a peak of 10,326 in 2010 — including private schools, clinics, churches, associations and cultural groups — the number fell to 9,518 in 2011 and has since come back only to 9,688 in 2012 — or 230 less than there were in 2009.

The county also lags behind many of the nation’s major metropolitan areas in terms of local funding of foundations. According to the USD report, grants from foundations totaled only $34,000 per capita in San Diego County last year, compared to $56,000 in Denver, $86,000 in Pittsburgh and $297,000 in San Francisco, where a concentration of Fortune 500 firms provides a steady stream of funding to local foundations.

Nancy Jamison, executive director of San Diego Grant Makers, suggests that one reason the county ranks so low for corporate giving is that so few major corporations are located here. Several of the biggest companies, such as Sempra Energy (NYSE: SRE) and Qualcomm Inc. (Nasdaq: QCOM), do make large charitable contributions.

But for a more sustainable flow of contributions, she said, nonprofits will have to build alternative models for fundraising, relying more on small and mid-sized companies as well as younger individuals, since the older generations of baby boomers has already begun hitting retirement, putting a crimp on donations.

“Most nonprofits get most of their money through individuals rather than major endowments or corporations, so focusing on individuals is important — and so is the growth of youth philanthropy,” she said. “The question is how do you foster that? One thing that can make a difference is having effective programs where people can really see the impact of their donations.”

And that has put more of them under pressure to demonstrate the specific impact of their programs.

“I’m reading more business books than psychology books these days,” said Pradeep Gidwani, regional director of projects for the American Academy of Pediatrics. “You can’t just wave the flag of feeling good and expect to get support. You have to deliver. You have to focus on the outcome.”

But one problem that Gidwani faces is that when dealing with children’s health issues, it sometimes takes 20 or 30 years for the real impact to be seen.

“We may be changing the trajectory of their lives, but how do you measure something like that?” he asks.

Johnson’s foundation, which is involved in such programs as helping poor children find health care, and Early Start education to provide 4-year-olds the foundation they need to start their education, faces similar a similar challenge.

Johnson is able to cite statistics that show that 94 percent of the Early Start children enter kindergarten with skills that are already at or above kindergarten level. But he is trying to gather more data to show how that affects their future education or careers, because “fundraising is all about showing outcomes and answering the question ‘Are we making a difference?’” he said.

Jamison said that local nonprofits that support innovations in health care or biotech research face similar challenges, since some of their innovations may or may not succeed.

“Sometimes you have to take the risk of making innovation, but on the other hand have to do things that have been proven to show tangible results,” she said.

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