Trouble at the Top Means Trouble Down Below

"Trickle-down economics" was initially coined to describe how tax benefits and other initiatives at the corporate level would eventually work their way down to the middle and lower classes, but the current economic climate seems to be shunting troubles, not advantages, down the drainpipe. According to the Republican-American of Waterbury, Connecticut, with the decades-long exodus of corporations from that region, major sources of funding for large nonprofits are becoming scarce. And that means the smaller nonprofits that the larger organizations fund are suffering, too.

The Naugatuck’s Y’s biggest benefactor, the United Way of Naugatuck and Beacon Falls — which supports 20 nonprofits and more than 10,000 people — has had to endure the closures of three major corporations in its area over the past decade, as referred to in the Y’s letter.

Consequently, donations to the United Way campaign are down almost $100,000 a year, from a high of $525,000 in 2000 to $432,500 last year.

Greater Waterbury, including Naugatuck, lost 29 percent of its manufacturing base from 2000 to 2005, according to a community needs assessment put out last year by the United Way of Greater Waterbury, which serves 120,000 people in 10 communities.

This point is one I’ve seldom heard mention in the debate over the effects of corporate cost-cutting. Firms have to stay lean to remain in business and thrive; without that, you have a lot more folks walking the unemployment line and a ton of 401(k) portfolios going in the dumper. Yet where do those often necessary steps — layoffs, outsourcing, moving to areas in which it’s cheaper to operate — leave the nonprofits that depend on their contributions? Where do you draw the line? | 501(c)