The President’s new budget may increase funding for some nonprofit organizations. But many nonprofits have hit on hard times as a result of the worsening economy. A February 19 story in The New York Times reports an increase in the number of nonprofit organizations that are filing for bankruptcy.

The increase in bankruptcy filings seems to indicate two things. The obvious one is that it is becoming harder for some nonprofit organizations to make ends meet. Financial difficulties have arisen in many organizations.

But the other point that comes from this story is how many charities are operating more like their commercial counterparts. Over the years, most nonprofit organizations that have financial difficulties have simply dissolved. Now, it seems that more of them are taking the route of filing for bankruptcy under Chapter 7 (liquidation) or Chapter 11 (reorganization).

The Times article profiles several organizations that have gone through or are in the process of going through bankruptcy proceedings. One of those organizations, The American Musical Theater of San Jose, California, elected to go through bankruptcy due to the sheer number of creditors. The theater has 16,500 subscription ticket holders in addition to the usual vendors and bank loans. It will be unable to fulfill its promise to ticket holders for upcoming performances.

In addition to the effect that the economy is having on donations, one other factor seems to be affecting several of the organizations that have filed for bankruptcy. Many who rely on money from state governments have experienced significant cuts in their funding. Yet the demand for their services remains high and in some cases is even increasing.