The time isn't right: Despite struggles of nonprofit groups in tough time, new nonprofits are on rise

CLEVELAND, Ohio -- Do what you love and the money will follow, they say. But out-of-work folks trying to elbow their way into the nonprofit field are learning this is a tough time to be a newcomer.

Melinda Gonzalez, 26, laid off a year ago from AT&T, spends her newfound free time drumming up board members and organizing a nonprofit venture she calls Teen Self Awareness. She's created the support group she wishes she'd had at age 16, when she needed to escape from an abusive relationship, she explained. "I'm trying to educate these girls."

Bob Kasarda, 70, launched a nonprofit too, in March, after business dried up for his video production firm. He and wife, Marianne, created Eastern Christian Media, to broadcast events at Byzantine churches and keep their religious community connected online.

They typify recession-era newcomers that David Holmes has been seeing more frequently at his grant-writing classes at the Foundation Center Cleveland. "We've had a lot of career changers," said Holmes. "Some are thinking, 'This is something I've always wanted to do, and now I have the opportunity to do it.' "

Yet leaders from the nonprofit world say this is no time for novices to leap idealistically into their sector.

With local funders tightening their belts and working aggressively to weed out duplicated services, it's tough for even seasoned charities to stay alive, experts say.

"I would advise people not to start nonprofits at this time," said Kristen Putnam-Walkerly of Westlake, who heads a national philanthropic consulting firm.

She said the recession has taken a toll on the industry. Most foundations have seen their assets drop by 25 percent to 40 percent, while being bombarded by a higher-than-usual number of grant requests.

"Few foundations are interested in funding anything new," Putnam-Walkerly said. Most are focused on fulfilling existing grants or propping up struggling familiar nonprofits.

Despite the dire picture painted by Putnam-Walkerly and others, new arrivals stream in. Since 2007, an average of 40 to 41 new Cuyahoga County groups per month have registered as nonprofit corporations with the Ohio secretary of state, up from 38 per month in 2006.

Lately, Lorain County has been an exceptionally fertile spot: Its 61 state-registered nonprofits launched in the first eight months of 2009 are on track to outpace the 63 recorded in 2008.

Launching a nonprofit now probably won't solve personal money woes, experts say. Today's tax-exempt organizations are scuffling for dollars, a soon-to-be-released study from Business Volunteers Unlimited and the Nonprofit Finance Fund indicates. Declining revenues have caused half of 100 local nonprofits surveyed this year to reduce either salaries or staff.

Experts predict the nonprofit sector may not rebound financially for two years after the recession ends, said Ann Kent, vice president of Business Volunteers Unlimited, which provides training and support to local tax-exempt groups.

Nonetheless, Kent said that she is hearing from many laid-off people hoping to parachute into the nonprofit world. Some are optimistic that if they build a nonprofit, donations will follow.

She calls these the "I-have-a-dream phone calls."

Kent hates to douse their ambitions but, like many leaders in the philanthropic community, she believes it's better to strengthen an existing nonprofit than to throw an upstart competitor into the mix. That is, unless the new nonprofit offers a unique and needed service.

"There's no need to reinvent the wheel," she tells newcomers. "Find out what other nonprofits share your mission and look to see if there's any way of combining your idea with what they're doing."

That's why, when Teen Self Awareness founder Gonzalez contacted Business Volunteers Unlimited for advice, Kent urged her to consider partnering with an existing anti-domestic violence group.

Gonzalez said she reached out to several such agencies, but "I haven't heard much from them."

She's given up on collaborating and has poured several thousand of her own dollars into a Web site (teenselfawareness.org) and other expenses.

If finding the right niche is the key to a successful nonprofit, the Kasardas believe they've done that. They've scouted the competition and found little to none for their Web site (easternchristianmedia.com), which broadcasts events of the various Eastern rite religions.

The site, they envision, will serve as a global meeting place for church members. "Within the Eastern Rite church, there's a big void for this kind of publicity," Kasarda said.

So far, they've pulled in about $8,000 in private donations. "This is well overdue," wrote an Illinois donor, who sent a check for $5,000.

For fledgling nonprofits that haven't attained federal tax-exempt status, foundation trends don't matter as much as their talent at coaxing individual supporters to open their wallets. About 75 percent of all money given to charities in 2008 came from individuals, not foundations, according to a Giving USA survey.

The recession -- and its effect on people's giving decisions -- will eventually sort out which nonprofits survive and which ones don't, said Elizabeth Stiles, director of John Carroll University's nonprofit administration program.

That's why she doesn't discourage new nonprofits from entering the fray. "People with fresh ideas can reinvigorate the sector," she said. "I think competition's good. It's not always comfortable."