Last week Pennsylvania Governor Tom Corbett unveiled the proposed state budget for 2012-2013 of $27.1 billion. The budget included significant cuts in higher education funding for a second year in a row, revamped the process by which school districts receive funding and initiated reform to the Redevelopment Assistance Capital Program (RACP). The overall Pennsylvania budget decreased from $27.16 to $27.14 billion; however, state universities saw approximately 20% less in funding and some of the larger universities saw an even higher percentage decrease in state funding. One of the biggest challenges to nonprofits, in general, over the last few years, has been the lack of consistency from governmental funding sources.
Nonprofits have seen federal, state and local funding fall over the last several years and have been competing for available government funds as well as local foundation, corporate and individual donations. In response to funding challenges, nonprofits have focused on making programming and administrative changes and cutbacks, reallocating resources and improving efficiencies in order to adapt to changes in what were once relatively consistent funding sources.
Nonprofits that don’t primarily rely on government funding may have started to see increased donor funding, membership fees, and ticket sales as private sector job growth, stock market and the general business outlook have shown improvement over the last several months; however, organizations that rely on government funding will likely have to wait longer to see some improvements. In fact, they may even see further decreases, since American Recovery and Reinvestment Act monies were included in government funding since 2009 and are no longer available.
As the federal government continues to face record-high deficits, state and local governments and ultimately nonprofits who rely on government funding will continue to see funding cuts as the government reallocates available resources.
© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.