3 Ways Little Cuts Hurt Charities Most

My last post talked about charities closing their doors not due to a lack of need for their services or offering poor services, but simply due to a lack of funds.  It's also true that seemingly small changes, minor increases in costs, can have a disproportionate impact on charities.  Here are three key ways that "little cuts" can be painful in ways that are different from for profit organizations.

1. Increases in costs, say for example a new fee for garbage pick up, are hard for both charities and for- profit firms to absorb. However, while firms can "pass on" these increased costs to clients, charities have no such option. So for example when the City of Toronto imposes a new garbage collection fee on over 1,000 charities, there's no customer to pay more to offset this cost increase, just a decrease in services to those who can least afford it.
2. Charities have proportionately smaller voice for their size than their for-profit peers (#9 on my Top 10 list of differences). From Boards of Trade to business leaders that have worked within government (and vice-versa), businesses are simply better connected to government. Also, businesses are seen as providing jobs / tax revenue to all levels of government as opposed to perceived as begging from / costing money from all levels of government.  Not the case you say?  Well, in the example of the garbage fee the charities were denied the ability to protest: my bet is that business leaders wouldn't have been treated this way.
3. Another way cuts and increased costs hurt charities most is more philosophical in nature.  By definition charities help those most in need.  So when their revenue is reduced those who suffer from the reduction in services are those who are most at risk. And where charities are providing preventative and proactive supports, keeping people from "costing the system" even more down the road, these extra costs (touted at cost savings) can actually cost the rest of us a lot more in the future.

No doubt that new costs to any organization can be difficult to manage, but the charity and non-profit world is often hurt the most when this happens.