Inflation affects nonprofits’ services, fundraising ability

Last Mile Food Rescue in Cincinnati began shopping in November for a refrigerated box truck to move perishable donations from food retailers to distribution sites. The purchase will take some of the pressure off of overstretched volunteers, who must run three or more runs in their cars to carry as much food as a single truckload.

But Last Mile is experiencing sticker shock. Prices for the kind of truck its leaders have in mind have soared from thousands of dollars to $80,000 in recent months. For an organization with an annual budget of $650,000, that’s a huge hit to absorb.

Frustrated, the charity begins a search for older trucks, but the prices of used vehicles have soared as well.

“We see that every day,” says Julie Schiffman, executive director of The Last Mile. “We hope to be able to afford it, or that a major donor may be able to help us.”

The Last Mile is far from alone. Experts say that all types of non-profits are suffering huge losses due to inflation. Price and wage increases are hurting nonprofits in many ways, making it difficult for them to maintain their own basic operating expenses, as well as forcing them to reduce the services they provide. being done.

Also, there are early signs that the number of generous donors shown in the first year of the pandemic may be slowing down significantly.

“It’s not a pretty equation,” says Shannon McCracken, chief executive of the nonprofit Coalition, an advocacy group.

McCracken says that nonprofits that provide annual cost increases for their employees, as many do, are getting hit with higher payroll costs of about 6%, even without any increase based on qualification or seniority. Huh.

David Lipsetz, CEO of Housing Assistance Council, says inflation has consumed the number of affordable housing units his organization offers.

The council outlines loans for housing development at below-market rates in some of the country’s poorest areas, and it seeks to maximize the amount of housing available with limited resources. “We’re operating on an extraordinarily thin margin,” Lipsetz says. “We’re getting those loans out the door as cheaply as possible.”

When the price of building materials increases by 10%, says Lipsetz, there is usually no room in the debt to accommodate that increase. Lipsets says that sometimes his nonprofit can renegotiate the terms of the loan or find additional sources of financing, but that doesn’t always work.

“It has stalled countless projects for us, right in the midst of a time when housing and shelter are the most important things to weather a pandemic storm,” Lipsetts says. “For us, a slight increase in cost can put off a project in the region of the country where it is needed the most.”

Jesse Tree, a nonprofit in Boise, Idaho, that pays rent for people who are on the verge of eviction, has seen a sharp increase in demand for aid in recent years. Ali Rabe, the organization’s executive director, says research shows housing prices in his area increased by 75% from 2015 to 2020, when local wages increased by 18%.

Rabe says that the situation has worsened since 2020. She says the pandemic-induced work-from-home policies allowed highly paid urban residents to move to rural areas, and housing prices rose 40% or more last year.

Local courts in southwestern Idaho’s Treasury Valley area, which serves Jesse Tree, hold about 20 eviction hearings a week, says Rabe.

“We can only help a quarter of the people who apply for aid,” she says.

A government grant provided through federal COVID aid helped keep the nonprofit operating, says Rabe, but that grant expires in September. She says the nonprofit is hoping donors will fill the gap.

Experts say nonprofits by their very nature are in a poor position to adapt to rising costs. While McDonald’s can offset higher beef costs by raising the cost of a Big Mac, for many nonprofits the only option is to cut services or hope donors will come to the rescue.

Kelly Kuhn, CEO of the Michigan Non-Profit Association, says nonprofits that provide basic items and services, such as food and housing, are suffering the most. At the same time, says Kuhn, nonprofits are struggling to retain workers who are being lured by businesses to be able to offer higher wages.

“That’s something that any nonprofit is experiencing now, trying to keep up with requests for higher wages and wages,” Kuhn says. He said a passion for the mission won’t stop nonprofit workers from seeking higher wages elsewhere if they can’t meet basic living expenses.

“It’s a lot of pressure on human capital happening to nonprofits,” she says.

Billionaire philanthropist McKenzie Scott recently took the brunt of inflation away for some nonprofits with another round of major gifts. For example, the Housing Assistance Council received $7 million. And Habitat for Humanity, which has had to reduce the number of homes it builds because of the increased cost of timber and land, received $439 million, which would allow it to reverse and accelerate operations.

Corinne O’Connell, CEO of Habitat for Humanity Philadelphia, says the cost of replacing a roof on a row house rose from $5,000 to $8,500 a year. And while her local affiliate of Habitat for Humanity received $5 million in Scott’s gift, she notes that most nonprofits can’t count on being bailed out by a generous billionaire. “It just keeps clamping down on nonprofits that are working on the front lines,” O’Connell says.

Like Shiffman in the Last Mile, Diana Lara leads a charity that collects and distributes food that would otherwise have been headed for garbage. Lara’s Southern California nonprofit Food Explorers has three trucks and one van, all refrigerated, and fuel costs a big chunk of its budget.

At the same time, grocery stores have been hanging on to perishable food for a long time, she says. Food that would have been donated before is being marked for quick sale instead.

The group buys some non-perishable food to complement the donated goods, says Lara, and those costs are increasing. Meanwhile, new employees are demanding a higher starting salary.

In short, a wide range of expenses are over budgeted.

“So we’re starting to feel that in our pockets,” she says. “It’s just crazy.”

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This article was provided by Chronicle of Philanthropy to The Associated Press. Dan Parks is the Chronicle’s senior editor. Email: dan.parks@philanthropy.com. The AP and Chronicle receive support from the Lilly Endowment for its coverage of philanthropy and nonprofits. AP and Chronicle are solely responsible for all content. For all of AP’s philanthropic coverage, visit

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