Economy's effect on donors threatens non-profits

April 14, 2009

4/14/09 USATD 4E

4/14/09 USA TODAY 4E
2009 WLNR 6926812

USA Today (USA)Copyright 2009 USA TODAY
April 14, 2009

Section: NEWS

Economy ' s effect on donors threatens non-profitsSetbacks are ' catastrophic ' for some across the USA
Oren Dorell and Tim Evans
Vital Life Services, a non-profit established in Oakland 24 years ago to assist low-income and homeless residents dealing with HIV/AIDS and related problems, is facing a do-or-die scenario, executive director Peggy Bush says.

Cuts in both government funding and private donations have left the organization struggling to make payroll and threaten the continuation of services to more than 400 clients. Government funding of the group was cut from half of its budget in 2007 to about a third in 2008, she says, and contributions have dropped a "catastrophic" 70% since last year. Its annual budget is about $750,000.

Bush says she has plans to start a barbecue catering business to support Vital Life Services, based on the model of Newman's Own, late actor Paul Newman's food product business that gives 100% of its profits to non-profits. She says the group needs $150,000 to launch the project and hasn't been able to raise the money.

"Unless we can locate funding to start up this business in the next couple of weeks," she says, "we are looking at shutting our doors for good in May."

The problems facing Vital Life Services are being felt, to varying degrees, by non-profit organizations large and small across the USA, as the down economy takes its toll on donations. Some groups predict the situation will get worse before the year ends.

The United Way, the nation's largest non-profit charitable group with $4.2 billion in annual revenue for 2007, forecasts that donations will drop 4% to 6% in 2009 over the previous year. The estimate is based on a survey of the 100 largest chapters, United Way spokeswoman Sally Fabens says.

Joblessness biggest factor

The biggest reason for the drop is the rise in unemployment, Fabens says. The United Way relies on donations pledged at workplaces and deducted from a worker's paycheck.

"People aren't going to meet their workplace pledge because they're not working," she says.

The climate also is making things hard for the American Red Cross and its chapters, national spokesman Jonathan Aiken says.

"Corporate sponsors and donors have told us cash donations will be down," he says. Aiken says fundraising expectations for 2009 are flat compared with last year but his organization has raised $85 million for disaster relief, nearing a $100 million target set in October.

"Overall, people tend to appreciate that when things are tight the need is greater," Aiken says.

Some organizations are trimming staff and investigating mergers with similar charities. Others are reducing services at the same time the struggling economy is generating a growing demand for help.

"I am hearing fundraisers say this is the most challenging time they have seen in their lifetimes, which includes the early 1980s and the period after the 9/11 terrorist attacks," says Michael Nilsen, spokesman for the Association of Fundraising Professionals. "And almost all of it is due to the economy."

The association's annual survey of charitable giving during the fourth quarter of 2008, conducted in December, found 53% of fundraisers reported they raised less than they did in the same period in 2007. Although final 2008 numbers are not yet available, a survey of charities conducted in November and December by the Center on Philanthropy at Indiana University, which focused on the giving climate for the first half of 2009, found the highest level of concern recorded in the survey's 10-year history, says Patrick Rooney, the center's interim director.

Foundations and corporations, which accounted for about 18% of total giving in 2007, also have been hit by the economic downturn, Rooney says. Nationally, the assets of foundations declined a median 28% in 2008, according to a survey of grant makers by the Chronicle of Philanthropy. More than half of the foundations that disclosed funding plans for 2009 reported they will decrease giving to charities.

Some exceeding goals

The news is not all bad. Some organizations report they are holding their own or exceeding fundraising goals despite the tough times.

*The Salvation Army says it took in a record $130 million during its Red Kettle Campaign during the four weeks between Thanksgiving and Christmas in 2008. The 10% increase over the $118 million raised in 2007 is the biggest year-over-year jump since 1997 for its main method of raising money.

*

Feeding

America

, which raises money from corporations and individuals to support more than 200

food

banks

nationwide, raised $56 million from the start of its fiscal year July 1, compared with $37 million over the same period in the previous fiscal year.

"Americans are very generous and when they see suffering they want to help," says Vicki Escarra, president and CEO of

Feeding

America

, which is based in Chicago. "It's good news, but we are struggling to keep in line with all the people who are coming for help."

*At Meals On Wheels, sponsors such as Wal-Mart, Subaru and Merck have committed more than $2.5 million this year to fund roughly 5,000 local programs to help feed seniors, surpassing the $800,000 in corporate money collected during all of 2008.

"Nowadays, everyone looks to corporations as the big bad guys, but there are corporations that are stepping up to the plate," Meals On Wheels Association of America President Enid Borden says.

"It's a blessing."

Traditionally, charitable donations drop 2.7% during recessions of eight months or more and grow 4.3% during non-recession years, Rooney says.

Groups that serve the poor with food, housing or other basic needs have been an exception.

"In past recessions, those organizations saw among the largest increases in philanthropy at a time that most other philanthropic organizations were seeing a decline," he says.

Salvation Army national spokeswoman Melissa Temme says a big factor in the overall increase in donations was recruiting the boy band the Jonas Brothers to promote the Red Kettle Campaign, which posts bell ringing volunteers beside a kettle outside stores during the Christmas shopping season.

The Jonas Brothers recorded a video promoting the drive that was aired on websites, Facebook and TV stations.

"They really mobilized their fan base, who are very young, but they brought along their parents," Temme says.

Younger donors are a surprising bright spot in "the toughest fundraising period" in years, Nilsen says.

Groups that belong to the association say young adults and young professionals are giving in higher numbers in part because they had less money in the stock market and thus fewer losses when it crashed, he says.

Some non-profit groups struggling with falling donations have looked at working together, or tried to find innovative approaches to make do with less.

Contributing: Drew FitzGerald, USA TODAY

---- INDEX REFERENCES ----
COMPANY: AMERICAN RED CROSS; AMERICAN RED CROSS GREATER ROCHESTER CHAPTER; SALVATION ARMY; WAL MART; MERCK AND CO

NEWS SUBJECT: (Non-Profit Organizations (1NO22); Social Issues (1SO05); Government (1GO80); Philanthropy (1PH09))

REGION: (North America (1NO39); Americas (1AM92); USA (1US73))

Language: EN

OTHER INDEXING: (AIDS; AMERICAN RED CROSS; ASSOCIATION OF FUNDRAISING PROFESSIONALS; ECONOMY; INDIANA UNIVERSITY; JONAS BROTHERS; MERCK; NEWMAN; RED KETTLE CAMPAIGN; SALVATION ARMY; THANKSGIVING; TV; UNITED; USA; VITAL LIFE SERVICES; WAL MART; WHEELS ASSOCIATION) (Aiken; Bush; Christmas; Drew FitzGerald; Enid Borden; Fabens; Facebook; Feeding America; Jonathan Aiken; Melissa Temme; Michael Nilsen; Nilsen; Nowadays; Patrick Rooney; Paul Newman; Peggy Bush; Rooney; Sally Fabens; Temme; Traditionally; Vicki Escarra)

Word Count: 1342
4/14/09 USATD 4E
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April 14, 2009

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