Originally published in the December issue of Board & Administrator, available electronically to current subscribers at publication.

Jeff Faux, founding president and distinguished fellow, the Economic Policy Institute, delivered a sobering message at the opening plenary of the BoardSource Leadership Forum about the economy and its future prospects.

Faux’s key message: Denial is not a strategy for nonprofit execs and their boards when it comes to charting a course for the future.

The cause of the continuing economic mess is related to the flattening of real wages between 1979 and 2007, at a time when consumers and the country went deeper and deeper into debt. “Eventually it all collapsed,” Faux said.

The net effect on people and jobs is that the country has 14 million unemployed and 16 percent of the workforce has given up on trying to find a job, Faux said.

“Banks aren’t lending because no one is creating new businesses and expanding,” Faux said.

Here’s Faux’s take on where we are heading as a nation and what action nonprofits should consider now:

• Expect slow growth for the next few years. Regarding the coming U.S. presidential election, it will not matter to the economy which party wins. “Four years from now we won’t be back to where we were pre-crash,” Faux said. The Economic Policy Institute estimates it will take 15 years to get employment numbers back to a healthy level, he said.

“It’s best to pay attention,” Faux said. “Under the best scenario, it’s going to be tough times, and more state and federal cuts. These will affect organizations from education to the arts.”

Faux said food banks especially will be under great pressure, with poverty numbers the highest they’ve been since 1993 and the rate of poverty the highest it has been since the Economic Policy Institute started tracking numbers. “Three-quarters of those below the poverty line are working, too,” he said.

• You can’t afford to bury your head in the sand. “Denial is not a strategy,” Faux said. “The country will need nonprofits now more than ever.”

State and federal governments will expect nonprofit organizations to take up the slack as the cutbacks in payments to nonprofits continue and for nonprofits to do so with fewer resources. “You can expect fierce competition for resources and for foundations to field more proposals than they can possibly hope to fund,” Faux said.

• Emphasize efficiencies. Faux said nonprofits will be forced to become more efficient and consider strategies they might have never considered before. “Ask yourself, ‘Does your city or state need three organizations doing the exact same thing?’” Faux said.

And while a merger might be the efficient move, it creates a nasty situation where execs are determining who keeps their job and who doesn’t, Faux said.

• You can’t go it alone. “If the country is to get back on track, there will need to be a sense of cooperation and self-help,” Faux said. “We need a value change. Dog eat dog individualism is not America.”
• Execs should ratchet up their job descriptions. Nonprofits should organize and join with others in the community and country. “You can’t afford to hunker down,” Faux said.
• Work at changing the national and community priorities. “We need to think about the future in a different way,” Faux said. “Start a conversation about what kind of country we want.”

For information, www.boardsource.org; www.epi.org.