News item: Governor Rell proposes a new round of early retirement offers that would result in a net loss of 1,000 positions (2,000 out but 1,000 new hires) and save the state at least $65 million per year .
News item: Two century-old Greater Hartford charitable institutions — The Village for Families & Children Inc. and The Shelter for Women Inc. — have merged. Earlier this month, two downstate foundations merged.
There are some interesting lessons to be taken from the dual announcements of the economic chickens coming home to roost in government and nonprofit sectors.
Government is a trailing indicator. Its revenues, in the form of tax collections, dip only after everyone else feels the pinch.
Nonprofits, however, often are among the first to feel the pinch as contributors react to the first chilly economic winds by cutting back on discretionary giving.
Yet here we are two and a half years down the road from the Goldman Sachs collapse, the generally accepted trigger point for the economic swoon.
On one level, you have to feel for the people who are losing their jobs. It’s never easy. And both governments and nonprofits normally resist drastic action like layoffs for as long as possible. It’s in their DNA, for different reasons.
Sometimes they resist beyond the reasonable point and that’s what we’re seeing in these announcements.
The nonprofits have long been hearing that contributors value efficiently run operations where the highest possible percentage of donations goes right into the program rather than to overhead. Those nonprofits that figured out the management piece do better than those that don’t, give or take a compelling advertising campaign featuring a cute endangered animal or a malnourished child.
Similarly, government has been hearing from its money sources that they are tired of supporting ineffective programs and bloated bureaucracies. The difference here is that those revenue sources can’t withhold payment. They are captives on the ship of state. All they can do is raise havoc at the ballot box, which seems likely come November.
On a completely different level, both the surviving employees of the nonprofit and the still-working state employees will be left with the daunting challenge of trying to do more with less. A few years ago, that was a popular phrase in the business community and earnest speakers counseled attentive managers on both selling the idea of doing more with less to employees and the practical art of making it happen.
But a funny thing happened along that road. At some point, it stopped being possible to do more with less. Only doing less with less was feasible. And reconciling the expectations and the realities has been the focus of more and more businesses as we’ve moved through this recessionary cycle.
Cutting services is never easy.
In the case of the two charitable institutions in Hartford, some program overlap existed and will be resolved with the closing of one residential care center. Maybe that’s enough of a saving. Maybe it’s not. But it’s a start.
For the state, there are a lot of people wringing their hands about the need to cut costs. But the voices grow quiet when the subject turns to what programs to whack. It appears the state is determined to eschew the experience of business yet again and strike out on its own.
Democrats are already yelping about the loss of senior staff skills and institutional memory plus the cost of training new people. Wait until they experience the reality of trying to do more with less. Even maintaining the status quo with less is a neat trick.
What lies ahead for both the nonprofits and the governments are hard choices. Let’s hope they have the backbone to make the necessary hard choices.
