Financial Assistance Funds Drying Up

Citizen Wealth Financial Justice

moneyCutNew Orleans On a plane recently the window seat passenger next to me was a regional training manager for the largest consumer credit counseling outfit in America.  She told me they were cutting out a huge portion of their low income home counseling efforts because of cutbacks at HUD.  A recent article in the New York Times similarly detailed the significant cutbacks in philanthropy by Wall Street financial firms that will also directly impact available services by non-profits to lower income families.

In these days when some have argued that “social responsibility” programs, as they are called by many companies, are part of not only some corporate mission statements but also a clear part of their marketing, this should have been a wakeup call for any still under the allusion that any kind of corporate cavalry was on the way.  Over optimistic development directors need to read these sentences soberly:

“The changing nature of Wall Street giving has touched many corners of the nonprofit world.  While companies represent a small percentage of overall philanthropy, financial firms accounted for the largest amount of corporate cash donations in 2010….The pullback is most problematic for charities with a financial bent, like those that counsel low-income borrowers….”  [emphasis added!]

Citicorp Foundation in 2010 cut it’s giving to only $115000. The article claimed that was a 60% reduction from 2009.  It was startling to read that since as recently as 2007 as part of the ACORN – Citi agreement, our programs were getting $500,000 per year alone!  The cost of office and staffing likely exceeded the amount they granted in 2009.  And, yes, Citi has had some huge problems, but nothing that would serve as an excuse for such a measly giving program.  Worse, they are not alone with other companies discontinuing their programs altogether or in the case of Goldman-Sachs coupling giving with branded marketing.

The Congressional budget clawbacks in the name of deficit reduction in HUD assistance programs, the farcical foreclosure and homeowner assistance programs that left billions under the TARP table, and now the total retreat or slashing of corporate financial giving programs all add up to a wholesale abandonment of lower income communities and their prospects for citizen wealth via home ownership particularly.  Furthermore, the drying up of funds for financial assistance also signals much less capacity for any efforts to win financial justice for low-and-moderate income families.

These sobering truths have to create a paradigm shift of more creative nonprofit business models based on some form of fee-for-service or ability to provide financial justice services on backend payments and front side risk. Either that or abandon ship.