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OPINION: Communities coping with economy

They are known as pillars of the community.

They are the business leaders and others who provide financial support and other resources to community organizations, especially in times of financial trouble for the organizations they are involved with. Whether it is new lights for the Little League field, an organ for the church or a shortfall in the revenue of the local chamber of commerce, the pillars of the community have often stepped forward and saved the day.

Current economic conditions are such that organizations may not be able to rely on their pillars this time around. In this column, we will discuss some things that heads of local chambers of chamber, economic development organizations and other community organizations might want to consider doing to cope with the current recession. The message is to monitor economic conditions to discover trends in the community, identify the pillars that will be affected the most and then plan on how pending shortfalls will be handled.

A pillar is defined as a strong, upright support, usually a column or pier. A pillar is also referred to as an upstanding member. The pillar of the community is someone who helps to hold up a community, usually with financial support. Internet searches of the term will reveal that numerous community organization in the United States name their most prestigious awards as “Pillar of the Community.” This writer will never forget a revenue shortfall situation that just would not go away in an organization that provided a valuable community service that had lasting impact on future generations. At a certain board meeting, the members lamented the situation and began discussing alternatives to keeping open the doors. After the meeting, a certain pillar stepped forward and said that he would be willing to make up any revenue shortfalls for the next two years. Afterwards, he was privately asked why he did that. He laughed and said that he would never have done it, but that his business was going so well that he needed the tax deduction. He was being only half-truthful because he really believed in the organization’s work, but his comment made the point that communities are the beneficiaries when pillars are successful at their businesses.

So, if the pillars are having financial challenges and cannot give anymore, what’s an organization to do?

The first thing to do is to assess the situation by monitoring conditions, especially economic and social conditions. Sales tax collections are one of the better indicators of a community’s economic health. In Mississippi, monthly sales tax reports are generated by the State Tax Commission and are online at the agency’s web site. When the economy gets rough, consumers will usually cut back on their spending. Sales tax collections will reveal if this is the case in the community, although the data will be a month or two behind. To get a handle on more current economic conditions, direct personal contact with merchants is hard to beat. Nevertheless, sometimes merchants, being the positive people that they tend to be, will not admit that sales are down until it is getting close to the critical point. That is when “eyes on the ground” can be useful. Automobile dealerships are a case in point. One dealer revealed that there are two things to watch for: an obvious oversupply of vehicles on the lot, meaning that sales are slow; and, an obvious undersupply, an indication that the dealer is not replacing vehicles that are sold. This is especially important if the local vehicle dealer is the pillar of your community. Other things to monitor that might indicate a drop in the local economy include participation in the free school lunch program and changes in crime statistics, especially domestic violence cases.

By monitoring the above information, it can be discovered to what extent the local pillar is affected. Generally, the types of businesses most affected by recessions are retailers, and the retailers hurt worse are florists, building supply centers, liquor stores and clothing stores. Add to that any business that relies heavily on credit to finance their operations. As credit gets tighter and their sales go lower, these businesses are at the greatest risk of going out of business.

So, who are the new pillars? Maybe they will come from one of the businesses that do well in a recession. According to Sageworks, the following businesses will probably do better in recessionary times: dentists; accounting services; legal services; healthcare practitioners; credit intermediation services; and, insurance agencies.

The conventional wisdom is that for community organizations to survive, they must go wider instead of deeper, meaning that they cannot rely on just one or two community pillars. The must get the same amount of revenue from three contributors instead of one. They must rely more on volunteers. Finally, many community organizations must go back to the so-called old-fashioned ways of raising money.

In summary, leaders of economic and community organizations should identify their pillars, assess the impact of the recession on the pillar’s businesses, monitor local conditions and make plans to weather potential revenue shortfalls. Although revenue shortfalls may be difficult, they sometimes provide the best opportunities for organizations to discover their true missions and to see the best of their volunteers and supporters.

Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Contact him at phil@philhardwick.com.

About Phil Hardwick

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