Charities fear another down year
By Alan Clendenning
Associated Press
In Little Rock, Ark., a 75,000-square-foot warehouse that distributes food to 450 food banks is nearly half-empty. Corporate food gift cutbacks are to blame, and the donations that do come in are mostly junk food rather than eggs, cheese, canned vegetables and produce.
Associated Press
In Miami, a nonprofit support and education group for people with HIV and AIDS just lost $100,000 in government money, forcing it to solicit individual donations from people who say they can't afford to give.
Robin Henson, spokeswoman for the Arkansas Food Network, examines food baskets at the food bank's warehouse in Little Rock, Ark. The food bank gets its food through donations and distributes it to 450 food banks statewide, but corporate food gifts have declined and most donations are junk food.
And in Chicago, the local United Way chapter predicts its 2002-2003 campaign will bring in $7 million to $8 million less than last year's $93 million, a drop of 9 percent.
The shaky economy, stock market drop and government cutbacks have created a huge financing challenge for nonprofit organizations nationwide.
As they go forward trying to raise money, groups that depend on donations worry that charitable giving will decline this year for a second year in a row when adjusted for inflation. Fund-raisers and experts on charitable giving point to three key problems:
- Many foundations have had their endowments hit hard by the huge stock market decline, meaning they will have less grant money to dole out.
- Corporations are under intense pressure to improve profits.
- And individuals — who give 75 percent of all charitable donations in the United States — have had their wages frozen, lost jobs or seen their stock market holdings plunge in value.
"In recessions, what happens to corporate and philanthropic giving is the same thing that happens to family budgets," said Jon Van Til, an urban studies professor at Rutgers University at Camden, N.J., who follows trends in charitable giving.
"Charity and philanthropy is nice to do if you're in a time when you can comfortably do that, but you're not going to let it get in the way of paying mortgages or food bills," he said.
The trend started last year, when the economy went into a recession and the stock market tanked for the second year in a row.
Total giving by individuals, corporations and other groups was $212 billion, up 0.5 percent from 2000, according to an annual study conducted by Indiana University's Center on Philanthropy for the American Association of Fund-Raising Counsel.
But adjusted for inflation, giving dropped 2.3 percent because of the recession. The only reason the drop wasn't worse was because of an outpouring of charitable giving following the Sept. 11 attacks.
Now, as the stock market continues to wallow, experts worry that charitable giving might decline again in 2002 when adjusted for inflation. It would be the first back-to-back annual decline since the recession of 1990-91.
For Brian Hassett, the United Way president in Chicago, the fund-raising climate is similar to the dismal early 1980s in Cleveland, when he worked for the city's United Way and one big industrial manufacturer after another went out of business.
This year, one of the Chicago United Way's most important donors — accounting firm Arthur Andersen and its employees — essentially disappeared after the company was convicted of an obstruction of justice charge linked to the Enron scandal.
"Even with our stable employers, there's so much pressure on the shareholder value that you see many of the somewhat strong companies going through a reduction in force," Hassett said.
Nationally, a recent survey of 333 foundations and corporate donors conducted by the New York-based Foundation Center found most planned to maintain stable levels of giving in 2002 but were worried about their ability to adequately pay for programs in 2003 and beyond.
Nine of the country's top 10 private foundations saw their endowments shrink by a total $8.3 billion from Dec. 31 through June 30, mirroring the stock market decline, according to The Chronicle of Philanthropy.
Only the Bill & Melinda Gates Foundation, which is heavily invested in bonds and other nonstock assets, had an increase in its endowment, the publication said.
At the Pew Charitable Trusts, the loss amounted to $271 million. The foundation plans to reduce new grants to $160 million in 2003 from $180 million this year, said Rebecca Rimel, Pew president and chief executive.
