Regional budgets are tightening, but nonprofits shouldn’t panic—yet

The media might be sounding the alarm on the economy, but Stephen Fuller says that the nonprofit community shouldn’t panic—not yet, anyway.  Fuller, director of the Center for Regional Analysis, recently discussed the region’s economic forecast with a group of Washington Grantmakers and Nonprofit Roundtable members.


The central concern for the nonprofit community is that a failing national economy will tighten government budgets, which will in turn restrict the funding of nonprofits, and consequently increase the demand on funders. While this is a logical projection, Fuller noted that government budgets lag about a year behind current economic conditions. As a result, nonprofits should not be affected in 2008.

Since 2009 budgets are being proposed right now, the real impact of a stumbling economy might not be felt until the 2010 budget cycles. The delay between real time economic behavior and government budget decisions gives nonprofits time to prepare for a shift in funding.

Following Fuller’s regional overview, Neil Bergsman (Maryland Budget & Tax Policy Institute), Ed Lazere (DC Fiscal Policy Institute), and Michael Cassidy (The Commonwealth Institute for Fiscal Analysis) discussed the budget processes in each of their respective jurisdictions. But even armed this knowledge, nonprofits and funders should be cautious of funding promises from local governments. “You have to question the numbers,” warned Cassidy. “The politics are there to bury the bad news and whistle past the graveyard.”

A few important notes:

  • In Maryland, funding for Medicaid, K-12 education, and public higher education will all increase in the 2009 budget.
  • The District’s 2009 budget, though as-yet-unannounced, will be tight. This leaves room for concern about schools funding to cover the Chancellor’s new initiatives, which were not previously anticipated.
  • Assuming Virginia maintains its current service level, the state’s existing revenue stream will not be sufficient. The result will be an estimated $1.2 billion deficit projected for the 2008-2010 biennium budget.