‘Uncertainty is the enemy of philanthropy’

Original Source By Barbara Hagenbaugh, USA TODAY WASHINGTON – It’s a challenging year for non-profits as a sluggish economy and rising prices make it more difficult for groups to raise money from cash-strapped families and businesses. Heading into the busiest fundraising time of year, non-profits’ optimism about their ability to raise money is lower than it was in December 2001, according to a recent survey of fundraisers from the Center on Philanthropy at Indiana University. Then, employers were cutting jobs as the economy was climbing out of a recession. The survey was conducted before the recent financial market turmoil, which has led to heightened economic uncertainty. “Uncertainty is the enemy of philanthropy,” says Patrick Rooney, the center’s research director. “It clearly is a more difficult fundraising environment today than it was a year ago.” The number of donors fell a median 3.8% in the first half of 2008 from a year earlier, while revenue declined a median 2.4%, according to an analysis of donations to 74 groups by Target Analytics, a consulting firm to non-profits. Though the number of donors has been falling for 2_ years, revenue had not declined since the first quarter of 2006 following a surge in donations after 2005’s Gulf Coast hurricanes. Charities in the animal welfare sector were the only ones to see both donor and revenue growth in the first half of the year. Historically, people are less charitable during downturns, according to the GivingUSA Foundation’s analysis of data since 1967, during which there have been six recessions. During recessions, giving decreased 1% after adjusting for inflation. In expansionary times, giving has risen an average 4.3%. Although a recession has not officially been declared by the National Bureau of Economic Research, Rooney notes consumers are confronted daily with ominous headlines on the economy. Stock prices are the single-biggest predictor of a household’s propensity to donate, followed by income, he says. So, with the S&P 500 stock index down about 25% in the last year, it’s no surprise people are scaling back. Donations were down 12% to the American Humane Association, which works to prevent cruelty to children and animals, in the fiscal year ended June 30. The group has been able to follow through with a planned expansion after receiving a $34 million bequest 18 months ago. “We’re proceeding as planned, but cautiously,” says Marie Wheatley, president and CEO of the American Humane Association. For charities, the expected decline in giving comes as demand for their services increases from people struggling with job losses and rising costs for staples, such as food and energy. Pinched in the middle Community Advocates, a non-profit that runs a variety of programs in Milwaukee, including a center for victims of domestic violence and an assistance fund for energy payments, sees demand for its services up 12% to 13%. People concerned about paying heating bills this winter were lining up outside the group’s doors during the summer, executive director Joseph Volk says. Meanwhile, donations to Community Advocates from foundations and businesses have fallen considerably in 2008. Government allocations, which make up approximately three-quarters of the group’s funding, have either declined or remained stagnant. “We are definitely feeling it,” he says. Expenses at Community Advocates and other non-profits are also rising, just as they are for their clients, making it more difficult to get by. The Nevada Cancer Institute eliminated approximately 50 of its 383 positions Aug. 7 by layoffs and not filling open jobs. The group, which conducts cancer research and treats patients at times free of charge, has seen costs rise while donations have dropped, spokeswoman Jennifer McDonnell says. Approximately 9.4 million people, or 7.2% of the U.S. workforce, worked for charitable non-profit organizations in 2004, the latest year of available data, according to the Johns Hopkins Center for Civil Society Studies. Stick with existing donors Jon Gann, founder of the DC Film Alliance, says getting corporate sponsorships for the organization’s DC Shorts Film Festival was particularly difficult this year. Instead of money, companies offered to donate products, but, “I can’t pay the theater rental in soda bottles,” he says. The film group got a grant from Washington, D.C., and tried to cut costs where possible for the week-long event last month. One of the events for the festival was held on the roof of an office building rather than in a hotel ballroom as in past years. “It’s worked out this year, but I’m concerned about next year,” Gann says. Others who rely on donations to run their organizations don’t expect things to get better anytime soon. Nearly two-thirds of fundraisers said the economy would have a negative impact on their ability to raise money six months down the road, according to the Center on Philanthropy at Indiana University. When times are tough, non-profits should focus on maintaining relationships with their existing donors rather than trying to find new donors through mailings and other means, says Chuck Longfield, founder of Target Analytics. “It costs too much money to go find those new donors,” he says. The company has seen an increase in interest in its business of trying to help non-profits analyze which of their existing donors may be most likely to increase the dollar amounts they donate. Copyright 2008 USA TODAY, a division of Gannett Co. Inc.