Geoffrey Canada has spent decades building a strategy for saving poor children from crime-ridden streets and crumbling public schools.

His "Harlem Children's Zone" has attracted the attention of the new White House because of his charity's model: Instead of tackling problems here and there, the program envelops an entire neighborhood, with services ranging from parenting classes to health clinics to charter schools.

But Wall Street's meltdown and money manager Bernard Madoff's alleged financial fraud threaten the donor base that bankrolls Canada's work. His difficulties underscore the challenges facing nonprofits, which grew and proliferated amid the bull-market earlier this decade.

Today, the U.S. boasts more than one million nonprofits, up from about 774,000 ten years ago. Their biggest donations come from corporations, foundations and the ultra-wealthy. Many have been hit hard by the deepening recession. A drop in charitable contributions could shutter as many as 100,000 nonprofits over the next year, says Paul Light, a professor at New York University's Wagner School of Public Service.

Canada, a 57-year-old social worker, calls his strategy the "conveyor belt," because it aims to give children an intensive experience in a succession of programs until they graduate from college. Children in pre-kindergarten are taught foreign languages, for instance. From there, children enter Mr. Canada's charter schools with longer school days and a calendar lasting until the first week of August.

The approach is starting to deliver results, but a big part of Mr. Canada's revenue stream is now drying up.

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