Eight months after it hired an ambitious new director, Burlington’s Peace & Justice Center has hit the skids.

Last month, the liberal advocacy organization had to lay off two employees and decided not to replace its departing development director.

Donations from the year-end drive — the nonprofit’s biggest fundraising push — were down 15 percent from the year before. Holiday sales at the Peace & Justice Store were off 50 percent. And several recent grants — including one for $60,000 — haven’t come through.

At this rate, leaders of the 31-year-old institution say they’ll need serious near-term help from donors to sustain the center.

“We’re in dire straits,” says Nancy Lynch, who took over as executive director in May. “We’re not closing, but we’re in a tough time.”

Over the past eight months, the Peace & Justice Center hired Lynch and moved from its longtime basement offices on upper Church Street to a LEED-certified building on the Burlington Waterfront.

Putting the 2010 budget together, Lynch realized she couldn’t balance the books without serious cost cuts. She asked employees to accept “voluntary layoffs,” and two stepped forward: Kathy Bouton, who for years co-managed the store; and Jen Berger, a part-time employee in charge of education programs and the center’s allied assistance program. Soon afterward, development director Anise Richey departed to start her own business. The center’s remaining six employees will absorb the work of those who were laid off.

“We had a slower holiday season at the store,” says Hilary Martin, the center’s board chairwoman, who remains optimistic about the new location. “It could be because people don’t want to come to the lake when it’s cold out. It could be because of the economy.”

Lynch blames the center’s problems on the forces that are strangling all nonprofits. Recession-weary donors are writing smaller checks, and competition for a shrinking pool of grants is fierce. Even as Vermonters open their wallets to help earthquake-ravaged Haiti, local nonprofits are finding donor dollars scarce.

The center’s newly focused mission — on economic justice and economic development in Vermont — made it ineligible for certain funding this year, such as the few thousand dollars it received for counter-military recruitment from the Sisters of Mercy.

Rent at the new location is slightly more expensive — $3000 a month instead of $2800 on Church Street. But the center is saving $100 a month on its electric bill and no longer deals with flooding, sewage backups and broken elevators that plagued the subterranean Church Street space, says Wendy Coe, cofounder of the center and its longtime office manager.

The funding slump comes as the center is lobbying Montpelier for paid-sick-day legislation and seeking a bigger role in economic policymaking. Within weeks, it will release its latest report on the state of Vermont jobs, a three-part study that builds on its widely referenced “Vermont Job Gap Study.”

In response to the crisis, the center is moving up its yearly membership drive, normally spread out over several weeks in spring, to early February. A number of fundraising events are also planned, including a matinee screening of Robert Greenwald’s antiwar film, Rethink Afghanistan, at Merrill’s Roxy Theatre on Saturday, January 23.

Lynch and Martin hold out hope that summer will bring more customers into the store, when foot traffic returns to the waterfront.