Here's who paid the price for the Pa. budget impasse - Generocity Philly

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May 27, 2016 12:29 pm

Here’s who paid the price for the Pa. budget impasse

Nonprofits surveyed were short $179M: They dipped into savings, took on loans and, interestingly, got permission from vendors to go past due on cash they owed.

Harrisburg.

(Photo by Flickr user Governor Tom Wolf, used under a Creative Commons license)

Nonprofits across Pennsylvania took a massive hit over the course of the state’s nine-month budget stalemate.

In many ways, it was a fight to stay afloat. In Philadelphia, education nonprofits came close to losing swathes of their own budgets. Nonprofit Need In Deed, for instance, stood to lose 35 percent of their operating budget. Children’s Scholarship Fund Philadelphia nearly lost $7 million.

Those nonprofits were saved at the last minute when Gov. Tom Wolf pushed a funding program through the impasse. Hundreds of nonprofits did not make it out unscathed.

Nonprofits endured blows to programming outcomes and cash reserves, according to a survey conducted by the Pennsylvania Association of Nonprofit Organizations (PANO), United Way of Pennsylvania (UWP) and the Greater Pittsburgh Nonprofit Partnership (GPNP).

“The stalemate literally kept domestic violence victims in the communities where their abusers had access to them, stalled training for those seeking jobs and forced food banks to distribute less nutritious food,” said PANO Executive Director Anne Gingerich.

According to the report, 176 nonprofits participated in the survey (3,194 nonprofits receive contracts from the state). The most heartening takeaway? Small business partners came to save the day for a number of their nonprofit partners.

Here’s what you need to know:

  • It was an expensive struggle for survival. According to the report, 135 organizations borrowed a total of $171.9 million to continue operations.
  • But constituents still took a hit. 17,100 clients served by 22 of the nonprofits received either reduced quality of service or no services at all.
  • And nonprofits will continue to pay for it. Forty-five organizations collectively owe debtors $532,000 in interest.
  • As will nonprofit staffers. The report says over 382 full-time employees were laid off, furloughed or had their hours, pay or benefits eliminated or reduced.

Where is that $171.9 million coming from? Here’s how the debt breaks down.

From our Partners

  • 50 percent from cash reserves. Nonprofits dipped into their own coffers, coughing up $85.6 million from organizational reserves
  • 39 percent from credit/loans. About $67.3 million was borrowed from lines of credit or through bank loans.
  • 8 percent from small business. The report says $15 million was effectively borrowed from small businesses that serve nonprofits through “delayed payments. Put another way, nonprofits got the OK from some vendors to push back due dates on what they already owed.

Nonprofits weren’t the only victims of the impasse. According to Auditor General Eugene DePasquale, school districts borrowed nearly $1 billion and have racked up as much as $50 million in interest payments.

The 2016-2017 budget deadline is only a month away. Here’s to hoping for more productive negotiating in Harrisburg this time around.

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