Darryl A. Jones Sr., CEO, Maryland Association of Nonprofit Organizations

A historically pleasant state faces a budget crisis of serious proportions.

Maryland, “the Land of Pleasant Living,” remains the best place in the world to live. We have the Chesapeake Bay, ocean beaches, and cool, scenic mountains. We have the excitement of downtown Baltimore and metro Washington. We have the calm of rolling horse country and azalea-filled upland forests. We also have the world’s best crab cakes.

Nonetheless, for nonprofits in Maryland—and for the vulnerable people they serve—things have gotten quite unpleasant. Nonprofits in Maryland face precipitous declines in government, foundation, and private funding, all while the demand for social services has reached new levels.

Recently I spoke to the head of a nonprofit that provides intensive supervision programs to youth in the juvenile-services system. This program serves high-need youth in the community at lower cost than the state’s detention centers can provide—and with much better recidivism results. Unfortunately, because of budget constraints, the state has cut back on this program’s contract. The program now operates in two jurisdictions instead of five and can supervise less than half the number of kids it did last year. The children left behind in detention centers will actually cost the state more.

I hear similar stories daily from groups that serve every slice of Maryland, from preschoolers to seniors, and from those that work in every kind of nonprofit, from arts to health care.

Today, Maryland’s state government faces a $2 billion budget shortfall. Budget cuts have affected services from the arts to zoos, child care to in-home aides for seniors, summer jobs for urban youth and environmental programs in rural areas.

In 2007, Maryland’s legislature met in special session to cure the state’s “structural budget deficit.” It devised a package that included budget cuts, tax increases, and legalization of slot machines at five specified locations. Many nonprofits disagreed with the package. The Maryland Association of Nonprofits—also known as Maryland Nonprofits—supported the plan as a whole because it would provide a sound and sustainable basis for the state’s finances.

Then the recession struck.

This economic downturn has been devastating to Maryland’s nonprofit sector. State and county budget cuts mean that services provided by nonprofits have been cut back. Reimbursement rates have been reduced and will be cut further. Because of investment losses in foundation endowments, grants have been greatly reduced. As individuals’ finances get tighter, individual giving has declined.

The budget now before the state legislature includes another $1 billion in budget cuts. Our elected leaders are clearly working to set priorities and preserve the safety net for the most vulnerable. Still, the cuts are widespread and seriously affect state operations. Adult protective services, for example, will receive just 75 cents on every dollar that these programs received in 2007. The recession affects local funding too. County health departments’ dollars from the state have been cut by nearly half. And they affect the grants and contracts that go to nonprofits.

Moreover, during 2008, nonprofit employment has grown for 16 consecutive years—even during 2008 when for-profit employment declined. But I believe that this employment streak has ended. When the 2009 and 2010 employment numbers come in, I believe that nonprofit jobs will reflect a decrease. As I talk to nonprofit managers, I find that most have cut expenses wherever possible, reducing staff and the scope of services. For most, the opportunities for doing “more with less” have been exhausted. They can do only less with less.

Still, the budget plan put forward by Governor Martin O’Malley covers less than half the shortfall in sustainable ways. The other half is covered by transfers from special funds and an assumed extension of American Recovery and Reinvestment Act dollars. The governor’s own projections cite shortfalls over the next four years of $1 billion to $1.5 billion and $2 billion to $2.5 billion. No one in the state believes that economic growth will be anywhere near sufficient to bridge this gap. Something will have to give.

If Maryland tries to close this gap entirely by cutting spending, the harm to the nonprofit sector will be devastating. More important, we will abandon commitments to education, health care, and safety in our communities as well as our commitments to the poor and disabled. We will abandon people in need and disinvest in our state’s future.

Over the next several years, Maryland needs to cut spending. The state needs to set priorities and make our government and nonprofit operations more efficient and effective. But Maryland also needs to raise the public revenue appropriate to educate, treat, and invest in the future of Marylanders.

Darryl A. Jones Sr. is the CEO of the Maryland Association of Nonprofit Organizations.