Dear EarthTalk: Is it true that environmental non-profits have been hit hard by the economic downturn, and has this had an impact on their effectiveness?

—  Bridget W., Bainbridge Island, Wash.

Non-profits of every stripe have been suffering from the economic downturn. In a recent survey of 800 U.S.-based non-profits, 75 percent reported feeling the effects of the downturn, with more than half already experiencing significant cuts in funding from both government and private foundation sources.

According to a recently released report from Civic Enterprises and the Democratic Leadership Council entitled “Quiet Crisis: The Impact of the Economic Downturn on the Nonprofit Sector,” few of these groups have strong reserves to weather the downturn — more than half have less than three months of operating funds on hand, while three-quarters cannot make it six months on existing cash reserves.

And the outlook is not promising. The Chronicle of Philanthropy, which reports on trends in grantmaking, says that foundation assets have declined by some 28 percent following the economy’s nosedive; two-thirds of them expect to have reduced grants significantly by the end of 2009. Many grantmakers have, in fact, suspended grants altogether for the time being.

Despite their funding troubles, many environmental groups continue to provide core services. According to the Environmental Grantmakers Association (EGA), many cash-strapped groups are adapting by using more volunteers to get their work done, and actively seeking partnerships with other groups in order to make the most of limited resources and share overhead costs. And, of course, many green groups have cut costs through hiring freezes, layoffs and forced reductions in pay and hours for existing employees.

To Mark Tercek, president of the non-profit Nature Conservancy, the silver lining in the funding crisis for green groups is that it forces them to operate more efficiently and focus on core priorities: “Non-profits…have to be smart about adjusting to a tougher economic environment, including setting priorities,” he says. “If resources are going to be constrained…then organizations have to ask the questions: ‘What are we really best at? What are we uniquely positioned to do?’” Tercek adds that the recession also provides an “opportunity to connect the economic stimulus to environmental matters.”

And that’s just what the Obama administration hopes to do. By encouraging development of green technologies and services, the federal government aims to leverage environmental progress for an overall economic benefit. Most federal funding will go toward incentives for businesses and homeowners to adopt greener ways, but green groups with related expertise are in a good position to benefit as well.

Another boost for green groups could come if Congress passes the Edward M. Kennedy Serve America Act, which aims to flood non-profits with some 250,000 volunteers each year in a program akin to the Peace Corps but on the domestic front. Non-profits are also seeking changes to the federal tax code to further encourage corporate, foundation and individual donations.

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