Arizona nonprofits continue to struggle in the wake of the recession, but they are finding ways to adapt, state nonprofit leaders says.

Some are even seeing the return of individual donors, while corporate donors and government remain on the sidelines when it comes to providing money for nonprofits, they say. For those in Tucson, a new loan fund is being created to help with operating costs.

"It's been a rough four years for the nonprofit community," says Patrick McWhortor, president and CEO of the Alliance of Arizona Nonprofits. "We've been tracking that through annual surveys that tell us how the revenues are doing for nonprofits, how their services are affected by declining revenue and ultimately what it means for their organizations and their operations.

"For four straight years, nonprofits have across the board seen declines in revenues from all their major sources," he said in an interview for Arizona Week.. "They have seen demand for their services go up, and they have been largely meeting that demand."

McWhortor said nonprofits are running deficits, tapping into what reserve funds they have and operation under great stress.

Organizations providing basic human services such as health care with government funding have been hurt the most as governmental entities at all levels have cut back, he said.

In Tucson, nonprofits soon will be able to apply for loans of $10,000 to $50,000 to help them with operating costs. The Tucson Nonprofit Loan Fund is a collaborative effort of the United Way of Tucson and Southern Arizona, the Community Foundation for Southern Arizona and the Diamond Foundation.

"The idea is to establish a loan fund where we can offer affordable, market-rate loans to nonprofits for operating expenses," Kathy Wilson, senior director of seniors programs for the United Way, told Arizona Week. "So that should be up and running within the next few weeks."

Several nonprofit officials interviewed for Friday's Arizona Week broadcast confirmed that nonprofit arts organizations have been the hardest hit as resources have been shifted to human service needs.

Robert C. Booker, executive director of the Arizona Commission on the Arts, a state government agency, said significant adaptations have been necessary, including staff reductions at his own agency of 50 percent.

“Since the economic downturn, we’ve lost a significant portion of our state resources, including a $20 million endowment that was swept in it entirety by the Legislature,” Booker said. "Unfortunately, that endowment generated $1 million annually for grant funds. So where we were about a $5.7 million operation with a staff of 20, we're now a $2.2 million operation with a staff of 10."

The Tucson Pima Arts Council has lost 40 percent of its governmental funding, mostly local and county, in the last couple of years, Executive Director Roberto Bedoya said.

Booker and Bedoya were both upbeat about how their agencies and the arts community in general are dealing with the reductions. The hard times are leading to more collaborations, including some with human resources agencies, and even leading to creation of new art, they said.