Soaring inflation hurting nonprofits in many ways

HELPING HAND: Dr. Martin Luther King Jr. Community Center volunteer Susan Barnes, right, assists a customer in the nonprofit organization’s food pantry in Newport.
PBN PHOTO/DAVID HANSEN
HELPING HAND: Dr. Martin Luther King Jr. Community Center volunteer Susan Barnes, right, assists a customer in the nonprofit organization’s food pantry in Newport. / 
PBN PHOTO/DAVID HANSEN

Ask Heather Hole Strout what keeps her up at night and she answers without hesitating. “Housing. It’s a big issue. Many we help have lost their homes or are on the verge,” she said. “They have housing insecurity, food insecurity and sometimes mental health issues.”

Strout is executive director at the nonprofit Dr. Martin Luther King Jr. Community Center in Newport, which last year distributed 654,000 meals to Aquidneck Island residents. Many were forced to choose between putting food on the table or paying rent.

“We’ve seen more people coming to us in need of food assistance. The slightest increase in the cost of anything can put people over the edge,” Strout said. “Using our food pantry may help people stay in their homes. We’ve seen seniors who’ve become homeless recently. No one should have to go through that.”

Price increases caused by soaring inflation became a steady drumbeat during the summer: the consumer price index up 9.1% since June, the highest annual increase since 1981; one-bedroom apartments in Providence clocking in with a 13% annual increase in rent; and gas at the pump up 60% since June, the biggest 12-month increase since 1980.

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And although the CPI has eased slightly since then, the longer-term effects have taken a goll. One of the MLK Center’s most-valued employees gave notice. “She lives 45 minutes away and can’t afford gas prices,” Strout said. And filling positions has been difficult. “People are expecting much higher wages, which is very difficult for any business, let alone a nonprofit to do overnight,” she said. “This year we gave 4-5% increases to the staff. It’s not enough to compete with inflation, but more than that annually isn’t sustainable to a nonprofit like ours.”

Food prices have also shot much higher – in many cases, more than 10% higher than a year ago; some staples, such as poultry and eggs, have climbed even higher.

Perhaps no one in the nonprofit world has a clearer view of this than Andrew Schiff, CEO of the Rhode Island Community Food Bank. Last year, the food bank distributed more than 15 million pounds of food to local pantries, meal sites, shelters, youth programs and senior centers around the state. Some 53,000 needy Rhode Islanders received healthy fruits, vegetables, bread, beans and more through its services.

“In the past, we saw certain types of food increase in price,” Schiff said.

WAREHOUSE WALK: Rhode Island Community Food Bank CEO Andrew Schiff, left, and Director of Operations Jack Russell peruse the nonprofit’s food warehouse in Providence.
PBN PHOTO/
RUPERT WHITELEY
WAREHOUSE WALK: Rhode Island Community Food Bank CEO Andrew Schiff, left, and Director of Operations Jack Russell peruse the nonprofit’s food warehouse in Providence.
 / PBN PHOTO/
RUPERT WHITELEY

Eggs, for example, became so expensive that the food bank stopped sourcing them until costs dropped. That’s not an option now, with inflation across the board. “We’re relying on donors to help us,” Schiff said. The food bank is looking for more support from the public and the federal government, which provides one-third of the food bank’s inventory. Schiff says a recent increase of almost $2 billion in federal funding to food banks and school lunch programs across the country will help.

“That’s the message we’re trying to get across,” he added. “The public is aware of inflation, but the reminder they need is that this is a real crisis for low-income families and those on a fixed income. They’re experiencing food price increases in a different way from middle-income families.”

Rising energy prices have also pushed up the costs of moving food from wholesalers to the massive Providence food bank headquarters and then on to dozens of final destinations around the state. And while gas prices have eased since the summer, the same isn’t true for what we eat.

“We don’t think those costs will come down quickly,” Schiff said. “We anticipate in the next 12 months, they’ll stay high. Food prices are sticky, and once they go up, it’ll take time for them to come down.”

Inflated food prices have also indirectly affected how the Providence Children’s Museum does business. The museum is 17,000 square feet in the city’s Jewelry District, where kids can play in unstructured surroundings, far away from the lure of computer games and TV. “Our job is to be a joyful place for families,” said Caroline Payson, the museum’s executive director.

Like many museums around the country, the museum relies heavily on ticket sales and memberships to cover operating costs. And like many museums, it took a huge hit because of the COVID-19 pandemic, with admissions dropping to 47% of pre-pandemic levels. The museum was forced to close for six months in the early days of the surge, reopened, then closed again six months later, reopening a second time in July 2021.

As more of the Providence Children’s Museum’s visitors rely on the Supplemental Nutrition Assistance Program, more become eligible for discounted tickets. The museum isn’t always recognized as a nonprofit because middle-class families pay full ticket prices, Payson says. “But more than one-third of the visitors around them have either free or reduced admission,” she said.

Without a large endowment, the museum has become more flexible in hiring staff, whose numbers have shrunk to 37 from 52 before the pandemic. At the same time, it has worked hard to keep salaries and benefits on par with other New England museums. Recent grants have helped with funding and various projects, but the children’s museum still relies on corporate donors and the public to make up for admission decline. At the same time, employees have been asked to fill multiple roles to make up for the museum’s smaller workforce. “We look for staffers who can do more than one thing,” Payson said.

Responding creatively is also a familiar concept to Comprehensive Community Action Plan, the largest community organization of its kind in Rhode Island. CCAP has offered medical and dental care, substance abuse counseling, early childhood education and food assistance, among other services, to more than 40,000 clients, thanks in part to government funding and private donations.

URGENT NEED: Rhode Island Foundation CEO and President Neil D. Steinberg said “The case for philanthropic giving is as high as it’s ever been.”
COURTESY RHODE ISLAND FOUNDATION
URGENT NEED: Rhode Island Foundation CEO and President Neil D. Steinberg said “The case for philanthropic giving is as high as it’s ever been.” 
/ COURTESY RHODE ISLAND FOUNDATION

In the last year, more than 2,500 Rhode Islanders received heating assistance and still use its food pantry, and more than 18,000 visited CCAP health centers. And while CCAP hasn’t had to eliminate these critical services, it has felt the squeeze of pandemic-related inflation.

A big chunk of increased expenses includes a 4% raise to staff – roughly a cost of $800,000 – as well as an additional $100,000 in other expenses such as utilities.

“Many of our services are free and based on income, so we can’t refuse anyone for a lack of money,” said Joanne McGunagle, CCAP’s CEO and president. “We’ve seen a 1,000-pound drop in food and other donations. People can’t do it now and that’s OK,” she added. “We’ve looked for smaller donations from banks and foundations, $3,000 here or there. We still offer food, including 1,600 pounds from our garden to supplement, but the schools used to do huge food drives and they haven’t been able to do it in the last year or more. It’ll probably start up again.”

CCAP is planning a new health center and expanding dental services, but supply chain issues and the inflated costs that have bedeviled other building projects are affecting these as well. “The cost of construction is going up as much as 40 to 50% overall, and the dental center came in over budget. We have to rob Peter to pay Paul,” McGunagle said. “We’ve submitted funding requests to the state and federal agencies but haven’t heard yet.”

As the effects of inflation have challenged nonprofits to a dizzying degree, the Rhode Island Foundation has boosted its funding to agencies providing direct services to vulnerable residents. Case in point: its ongoing Basic Human Needs Grants, bumped up 50% to $7,500 to local agencies filling emergency food, clothing, housing, prescription, utility and transportation needs.

“We raise money and we have to keep stating the case. Some people think that because federal money is coming in, there’s less of a need, but that’s not true,” said Neil D. Steinberg, the foundation’s CEO and president.

“The war in Ukraine and a volatile oil market send a message that prices are unpredictable,” he said. “If the foundation receives a donation of 100 shares of Tesla, that stock might have been worth more last year and less this year. That affects our fundraising. The case for philanthropic giving is as high as it’s ever been.”

Despite the challenges facing the philanthropy world, however, Steinberg remains optimistic about the future. Nonprofits, as a group, will have to look at how they collaborate, and maybe merge, to come up with innovative ideas on how to offer preventative treatments, he says.

“If we can get ahead of the curve in how we provide services, it’s a lot less expensive than interventions later on,” he added. “It’s not doom and gloom. We’ve been through these economic cycles before, but it takes a lot of work and money to meet the challenges.”

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