People who rely on Alaska's nonprofit organizations -- and that includes just about all of us -- need to look at a recent report on the economic health of the sector. It's sobering and mirrors a broader issue that Alaska leaders have talked about for years -- the need to move away from heavy dependence on the oil industry and federal funding and set up systems that equitably balance the cost of providing needed programs and services.
Alaska's charitable nonprofit sector is diverse and includes organizations involved in health, human services, arts, education, conservation -- just to name a few categories. According to a recent study using the latest available data (from 2007), these 501c3s, as they're identified in the tax code, generated $3.2 billion dollars in expenditures and employed almost 11 percent of Alaska's workforce. They are a significant contributor to our economy.
This study, conducted by The Foraker Group and the Institute of Social and Economic Research, was the second comprehensive look at the economic impact of the sector in Alaska -- the first study used 2004 data. It also shows us, distressingly, that our charitable organizations are not set up well to meet the challenges of today's economy.
Charitable nonprofits primarily rely on their support from corporate, foundation and government grants, along with contributions from individuals. The news today on these revenue sources isn't good. For the first time since records have been kept, individual charitable giving in the U.S. is down. Corporate and foundation giving is also declining. However, the most troubling news is that government funding -- the lifeblood for many Alaska nonprofits -- decreased significantly from 2004 to 2007. With the lingering recession, the federal deficit and a new mood in Washington, we expect that trend will continue.
ISER reports that in 2007 corporate giving in Alaska, led by the oil industry, provided three times the level of support as corporations in other states! In addition, 60 percent of all income for Alaska charitable nonprofits came from the government -- that compares to the national norm of 29 percent. While that figure is down from 2004, we are still greatly out of proportion to the national trend and that places many of our organizations at risk. The report also shows that Alaska nonprofits receive far more support from foundations than organizations in other parts of the country. The Rasmuson Foundation alone provides almost the same percentage of funding in Alaska as all foundations combined provide in the Lower 48.
We've known for years that Alaska nonprofits depend too much on the oil industry and on the federal government -- a situation that is similar to our state budget. And just as our state's business leaders have preached about the need for a fiscal plan with an appropriate balance of revenue sources, we at The Foraker Group urge nonprofits to find a similar balance where no one source of income dominates.
For more than a decade, we have worked with nonprofits to help them become strategic and sustainable. We advocate for income streams that rely more on earned revenue and individual giving, which we know are more dependable in bad economic times, and less on government and corporate grants, which always drop when the economy does. The ISER study shows we're having some moderate success, with individual charitable giving increasing by 20 percent in the last three years. Still, we're nowhere near the balance that assures sustainability.
Alaska's future relies on a number of factors -- a good education system; adequate health care, sanitation, food and housing for everyone; a healthy environment; and a thriving arts and cultural community. Above all, our future relies on a strong economy with balanced sources of sustainable revenue. We will continue working with nonprofits to achieve this. We urge others to focus on areas they can influence, like the state's budget. Together we can push through this bad economy and become better positioned to face challenges that lie down the road.
Dennis McMillian is President and CEO of The Foraker Group, an Alaska nonprofit that works with other nonprofit organizations to increase sustainability through education and training, organizational development and shared services.
By DENNIS McMILLIAN