1. Leah Davis
Mrs. Corbett
AP Literature
10/30/11
Senior Project Essay
Nonprofit organizations have a profound effect on the economy. The economy of today,
however, is not a favorable environment for nonprofit organizations to flourish. Today's
economy affects various nonprofit organizations in a plethora of ways.
First of all, a nonprofit organization is defined as an organization that is set up to provide
a public service without the gain of a profit (dictionary.reference.com). In other words, a
nonprofit organization offers a service without charging patrons for the service. These
organizations have many obstacles that they must overcome in order to function successfully.
One such interference would be financing the nonprofit organization. Since nonprofit
organizations operate without actually gaining a profit, in other words without charging for the
service provided, they have difficulty obtaining funds. Nevertheless, the necessary funds are
possible to receive if the correct approach is used. According to Husock the “Government may
both fund and operate such programs” as nonprofit organizations (Husock 16). This is an
example of how nonprofit organizations acquire the assets that they need. Also, if a nonprofit
organization is failing, the government may take over the nonprofit organization and operate it
until the nonprofit organization can function on its own. Borrowing is another way for nonprofit
organizations to gain needed funds. “Loans can be a tool that can help their nonprofit grow and
succeed” (Hogye 142). Nonprofit organizations are able to obtain loans just as a business can.

2. These loans go toward covering the costs or expanding the outreach of the nonprofit
organization. Although these are effective ways to fundraise, different options are available.
As operative as government funding and loans are, alternatives to advance resources are
accessible. Philanthropy is another major way that nonprofits attain funding. Husock refers to a
quote by Olasky which states that a method centered around government interference does not
“[emphasize] the crucial role of truly compassionate individuals and groups in the long fight
against poverty” (Husock 17). Where government help is a successful approach, voluntarism is
considered a paramount strategy. When people volunteer, they give more than just money or
supplies, they give compassion. Donations provide a large portion of funding for nonprofit
organization. There is, however, another form of philanthropy used by some nonprofit
organizations called percentage philanthropy. This type of philanthropy is “when [donations are]
derived from tax revenue but the decision is individual within legal restrictions” (Hogye 141).
This is a reliable way for a nonprofit organization to acquire funding since it is in the form of a
tax. Taxpayers are also benefitted because, even though they are required to pay the tax, they are
allowed to choose the amount that they are willing to pay. Even with numerous ways to enlarge
funding, nonprofit organizations are affected by today’s weakening economy.
Since nonprofit organizations cannot set a price on their service and they can only obtain
funds from outside help, these nonprofit organizations can only fair as well as the economy.
Many nonprofit organizations “face challenges persuading middle-class people to give because
many of them are still struggling with unemployment, declining housing values, and other
economic woes” (“How Nonprofit Causes Fared in 2010”). People are unwilling to donate when
the economy is declining. Therefore, if the economy is failing, so are the nonprofit organizations.
Gose also declares “When grant discussions with Ford and Kellogg, longtime supporters of the

3. group, fell apart, the nonprofit organization decided to close rather than continue operating with
a skeletal staff” (Gose 9). Not only are people unwilling to donate, grants also decline when the
economy does. Some nonprofit organizations are even forced shut down when the economy
dwindles enough. Nevertheless, several nonprofit organizations find tactics to meddle through
the tough economic situations.
When economic times become problematic, not all nonprofit organizations dissolve.
Many nonprofit organizationsmay join together to combat the troubles of a failing economy.
Although, as Fioramonti states, “supporting such an alliance would require many foundations to
rethink their role in society and become not only more political, but also more critical of the
problems caused by our economic systems” (Fioramonti 42). It will take more than just joining
together for nonprofit organizations to survive the worsening economy. Nonprofit organizations
will have to be more aware of the problems that they actually face. Some organizations exchange
money donations for donations of time. “Cash-poor, time-rich volunteers…have every right to
believe that what they are doing is just as valuable as handing over cash. Indeed, the charity
world puts a cash value on volunteers' time--$19.51 an hour...” (Kadlec 1). Since this time is
volunteered, nonprofit organizations do not necessarily have to pay these workers and are
therefore saving money. The organization is getting its service produced without spending as
much, thus, time is as valuable, if not more so, as money. Even though nonprofit organizations
join together to help one another in a diminishing economy, they still have to compete with one
another for the funds that they need.
Nonprofit organizations assist each other during difficult times; however, they must
continue to contend for the funding of possible donors. Stiller suggests that, when it comes to
philanthropy, “The options are dizzying, and the results are difficult to evaluate” (Stiller 146).

4. Even in a failing economy, people still try to practice philanthropy. Although, these potential
philanthropists must figure out which nonprofit organizations are the most worthy of their
donations. Since these benefactors have to choose which nonprofit organization they prefer
contribute to, the nonprofit organizations must contest with one another for the donations. There
are various ways for nonprofit organizations to compete for the funds of donors, but some are
more beneficial than others. Hoye quotes Rinker in saying that, of all the methods to gain
funding, “Word of mouth is your best form of advertising” (Hoye 9). Nonprofit organizations
must advertise their goals in order to have a chance to obtain funds. If they make current donors
feel appreciated, those donors will tell other donors, and the chain of funding will reach the most
hospitable organizations. There are many effects of the economy on nonprofit organizations, yet
nonprofit organizations also affect the economy.
Many people are concerned with how the economy affects nonprofit organizations.
Nonprofit organizations, however, affect the economy as well. Lombardi quotes Marsh saying,
''so many nonprofits have gone around with a tin cup in their hand without really thinking about
how much they do give to the county, not only in the services they provide, but in terms of what
they do for the economy.” (Lombardi 1). Several nonprofit organizations do not realize that they
are affecting the economy. Nonetheless, the revenue that they bring in to help their cause,
because they are nonprofit organizations, is returned to the economy, in turn boosting the
economy. According to Perry, “Public Allies…applications…[provide] a stipend and an
education grant” (Perry 1). Nonprofit organizations receive applications from volunteers that
want to be trained. Chosen applicants are presented with education grants and, even though the
grant money is not repaid directly by the applicants, the money will eventually recirculate
through the economy. Also, any future jobs the applicants receive will add money flow into the

5. economy. Therefore, nonprofit organizations impact the economy just as the economy impacts
them.
The economy is influenced strongly by nonprofit organizations.Nonprofit organizations
provide services to society without charging for the product, however they still have costs. These
nonprofit organizations face numerous complications attaining the assets that they need in order
to sustain themselves. Some of the ways that they overcome these difficulties are through
government help, grants, and loans. Funding can also be provided through volunteerism. Another
type of philanthropy is that of percentage philanthropy, in which funding comes through taxes.
Although the donors can decided how much they want to provide for the tax. Another obstacle
imposed on nonprofit organizations is that if the economy begins to fail, so do they. People are
less willing to donate, and if they do donate it is not as much as when the economy is faring well.
The grants received by nonprofit organizations also begin to dwindle. When this begins to occur,
many nonprofit organizations may join together in order to survive. However, as these nonprofit
organizations start to unite they will have to alter their original goals. This can also include
accepting donations of time over money donations. Even if nonprofit organizations venture to
unify, they will still be forced to compete among themselves for funding. The best strategy for
nonprofit organizations to influence donors to assist their cause is to prove how appreciative they
are for their donors. If the donors feel valued they will tell others to donate to the nonprofit
organization’s cause as well. Also, the nonprofit organizations affect the economy as much as the
economy affects them. Nonprofit organizations increase the revenue supplemented to the
economy through grants given to some volunteers. The funding that they receive is also
implemented once again into the economy. Nonprofit organizations are effected by today’s
economy and the economy is also influenced by these nonprofit organizations.