Forsyth nonprofits mobilize to fight potential budget cuts

by Keith Barber

Topaz Matthews speaks with a high school student about attending Winston-Salem State University during the first Forsyth County eLink Youth Education and Employment Fair at Goodwill Industries of Northwest NC on April 1. (photo by Keith T. Barber)

As Galyn Shivers walked down the hallway of the Goodwill Industries of Northwest NC facility on April 1, she pointed out that Fridays are typically slow days at the nonprofit’s Forsyth County workforce development headquarters, but the place was bustling with activity. Skills training classes in fields as diverse as healthcare and welding are held Monday through Thursday, but as Shivers described the agency’s work, instructors taught classes in job readiness and parenting skills; job seekers utilized Goodwill’s Job Link Career Connection; and the first Forsyth County eLink Youth Education and Employment Fair was being held.

“What we have here is job readiness classes, employment specialists who work with them one on one to find a job,” said Shivers, director of workforce development services for Goodwill, as she passed a row of classrooms. “We also have support like parenting classes, nutrition classes, all those other things that goes into being a good parent because you have to be a parent to get [these services] from our Work First program.”

Shivers explained that the Work First program was launched seven years ago when welfare changed to Temporary Assistance for Needy Families, or TANF. The NC Division of Social Services, or DSS, contracts with Goodwill to administer the program, and the nonprofit helps clients find a job.

“If you’re going for unemployment, food stamps, you present yourself at DSS and before they give you benefits, they’re going to send you out to get you a job so you get off those benefits as soon as possible,” Shivers explained. “They send those Work First clients over to Goodwill and we connect them with all the skills résumé writing, interview skills, and connecting them with potential employers — everything they need to help them get a job in the community.”

Goodwill Industries is a donor-driven agency but relies heavily on its fee-for-services programs like Work First to support its operations, Shivers said. Goodwill, just like dozens of nonprofits in Forsyth County are waiting to see what cuts to state agencies and nonprofits receiving state funds will be made by the NC General Assembly as legislators wrestle with a $2.4 billion budget deficit.

When the inevitable ripple effect hits Forsyth nonprofits, Goodwill Industries of Northwest NC [unless Gibel is the president of the national umbrella group] will be immediately affected, said Art Gibel, president and CEO of the nonprofit.

“We’re in a different position here at Goodwill because we don’t get direct funding through the state and federal government — we’re in a reaction mode as far as how the funding affect us,” Gibel said. “The biggest impact is fee-for-services contracts. If DSS funding is cut, it would impact that contract with us.”

Goodwill also contracts with a number of other state agencies that fall under the umbrella of the NC Department of Health and Human Services. Republican-controlled subcommittees in the NC General Assembly have targeted Gov. Beverly Perdue’s proposed health and human services budget for more than $591 million in cuts, according to the General Assembly’s Fiscal Research Division. Republican lawmakers have also set budget targets that would lead to a $1.4 billion reduction to the governor’s education budget; a nearly $230 million cut to the justice and public safety budget; a $61.7 million reduction in the Gov. Perdue’s general government budget; and a $57 million cut in the area of natural and economic resources.

Hugh Quinn, president of the Northwest NC chapter of the American Red Cross, said his agency is in the same boat as Goodwill.

“Our budget is not based on direct government dollars, but my position would be that we could see the ripple effect,” Quinn said. “I can see that the organizations in the community that are going to be hit hard are going to be looking for funding in a lot of places.”

Quinn said a greater number of nonprofits competing the same finite pool of private contributions would take a challenging situation and make it even worse.

“We’ve lost a number of staff members over the past few years due smaller donations; we’ve taken some cuts funding wise,” Quinn said. “We’re also consolidating our resources throughout the region and doing things more efficiently. Our chapter has focused on driving down our expenses, and that has included laying off staff members.”

Quinn described the legislature’s approach of making deep cuts to social programs as “penny wise and pound foolish.”

“You might save today but you run the risk of what will happen down the road,” Quinn said. “The key is to protect the most vulnerable in the population.”

Amy Lytle, executive director of Hands On Northwest NC, said a $591 million budget cut would create a “cascading effect,” on the social fabric of communities at a tremendous financial cost.

“If those funds are removed from communities, those problems and those issues those funds are addressing will remain and it’s going to be nonprofits that respond,” Lytle said.

“We’ll still be working to meet those needs but it’s going to be a lot harder.”

Lytle said the majority funding that goes nonprofits in the health and human services arena is directed toward prevention, and when the money goes away, the problem grows.

“What happens is it’s much more expensive for the taxpayer to handle that problem on the back end,” Lytle said. “The community as a whole is going to feel it.”

Hands On Northwest NC is one of 29 Forsyth County nonprofits that have signed on to a letter sent to members of the Forsyth County legislative delegation in Raleigh. The letter states, in part, that services delivered by nonprofits are crucial to the financial health of communities through workforce development, job preservation and reducing the number of people applying for government entitlements; that nonprofits deliver services which are both efficient and transparent by utilizing an effec tive

business model; and that private dollars cannot fill the gap that would be created by drastic government cuts.

The letter also offers a snapshot of the impact of cuts on Forsyth nonprofits. For example, if Smart Start and More At Four were eliminated from Gov. Perdue’s budget, Forsyth County would lose 900 childcare slots and 170 jobs at childcare centers and support agencies. That would lead to increased financial pressure on households and the potential of working parents having to quit their jobs due to their inability to pay for childcare. That would, in turn, lead to more workers seeking unemployment benefits.

Lytle said the reason nonprofits go into this business is because the state decided to get out of it and nonprofits deliver those same services in a more cost-effective way.

“That’s just good business for the taxpayer,” she said.

Last week, state Sen. Andrew Brock (R-Davie) introduced Senate Bill 460, which would establish eligibility requirements for a nonprofit to receive state funds. The bill uses the same language as House Bill 100, which was introduced by Rep. Larry Brown (R-Forsyth) in February and withdrawn in March after Brown listened to the concerns of a coalition of Forsyth nonprofits.

Senate Bill 460 stipulates that any nonprofit receiving state funds must raise 35 percent of its annual budget from private contributions. It also caps administrative expenses for nonprofits at 15 percent of its annual budget.

House Speaker Pro Tem Dale Folwell (R-Forsyth) said he supports the legislation.

“There are over 7,000 organizations that are getting money from the state and there is no law that requires any of them to be audited or even submit a mission statement and we want to know the nonprofits who are doing what they set out to do and doing it better than anyone ever did,” Folwell said. “This whole idea is like a stoplight. Green is which ones are doing a great job and deserve more funding or less cutting; red is which ones have no accountability, no transparency, and no mission statement; and yellow is which ones have we not thought of and how can we get groups to work together to serve people with less overhead.”

Sen. Pete Brunstetter (R-Forsyth) said he wasn’t familiar with Senate Bill 460 but found House Bill 100 to be problematic.

“I would rather evaluate all stated funded agencies and entities, including nonprofits, on their merits, rather than with a particular funding formula in mind,” Brunstetter said.

Sen. Gladys Robinson (D-Guilford) said she opposes Senate Bill 460.

“Many small nonprofits will be seriously impacted because of their limited budgets and many must rely on state funds to do the work they do,” Robinson said. “The state also saves a lot because of the work of these nonprofits, that operate with volunteers and low-waged staffers.”

During the current recession, fewer foundations and corporations are making grants to nonprofits, which makes it difficult for them to generate 35 percent of their budgets from private donations, Robinson continued.

“This bill would put small nonprofits out of business and their going out of business will leave our communities without critical services for children, families, homeless, et cetera,” she said.

Also last week, Rep. Carolyn Justice (R-New Hanover) introduced House Bill 572, which would demand greater accountability from nonprofits receiving state funds. The bill stipulates that nonprofits must provide their latest financial statements and income tax forms to any member of the public who requests to see them to show how public funds are being used by the organization.

Lytle said nonprofits are already held accountable for the public funds they receive.

“They’re one of the most accountable institutions in the community,” she said. “We meet outcome statements and have to prove results with any [contributor].”

Later this month, a coalition of Forsyth nonprofits plans to take a trip to Raleigh and speak face to face with lawmakers about their concerns over potential cuts to health and human services.

However, cuts to government agencies and nonprofits that receive state funds appear inevitable. Folwell said he believes the issue of cuts comes down to a philosophical difference on the role of government.

“It starts with the belief that either good government starts with the government itself or good government starts at home,” Folwell said. “I believe it starts at home. As far as childcare slots, there are plenty of openings for kids to be served and the fact is if we get these systems operating more efficiently we can serve more kids and not less.”

“I don’t accept the premise that we should run an inefficient system where less money is going to the people it’s supposed to serve,” Folwell continued. “You should not operate a nonprofit where your sole mission is to just employ people; the purpose is to help people.”