Fund Raisers See Glimmers of Hope and Tough Challenges in 2010
The New Jersey Performing Arts Center expects to raise $10.7-million this year, 5-percent more than in 2009. Peter Hansen, the center’s vice president of development, says he is grateful to be projecting an increase of any size. This is the harshest fundraising climate in his nearly 30 years in the profession, he says.
Donors are more willing to talk about making large gifts now than they were right after the stock-market plunge in the fall of 2008, he says. But “the economy clearly has not recovered, and there is the overhang of the housing crisis and unemployment,” he says. “The sense is that, yes, it’s going to be a long haul to get through this recession.”
Nonprofit groups of all types and sizes share Mr. Hansen’s view. They see tentative signs that the worst of the economy’s downturn is over, but plenty of fund-raising challenges remain. Most organizations, including those that raised more in 2009, are still not bringing in nearly as much as they did before the recession.
Many groups have lost longtime donors. The arts center, for example, lost $100,000 in annual sponsorship fees from General Motors, which filed for bankruptcy last year. And Citigroup pulled a $15,000 grant it had given the center in each of the past three years. With controversy swirling over high pay at companies that benefited from the federal bailout, Citigroup has instead decided to shift much of its giving to aid low- and moderate-income people, helping them avoid home foreclosures and offering financial education.
Giving Less
Nearly 40 percent of Americans have reduced their charitable giving during the recession, with almost one in four now giving nothing at all, according to a new survey of 1,000 adults released by Dunham+Company, a fund-raising consulting firm that works with Christian groups.
That may be one reason why so many fund raisers say they’re having trouble attracting new donors. Just as difficult: persuading donors to make big gifts that take many years to pay off.
“Donors are giving less with shorter time frames,” says Rebecca Girvin-Argon, chief philanthropy officer at the Nature Conservancy, now in the third year of a campaign to raise $1.6-billion. “Progress is slower than expected,” she says. “Donors are making a two- or three-year pledge rather than a five-year pledge for a larger amount.”
St. Helena Hospital Foundation, in California, is struggling to find new donors to replace people who stopped giving. The foundation, which raises money for a local hospital, had 939 donors in 2009; that is 181 fewer than in 2008. In the last quarter of 2009, it raised $2.9-million, down from $3.9-million in 2008 and $4.5-million in 2007.
“It’s harder to get new donors,” says Elaine John, the foundation’s president. And people are taking longer to pay money they promised to give.
By December 31, several weeks after the organization’s annual November gala, the foundation still had not collected $167,000 from donors who had placed winning bids on items auctioned at the event. After the 2008 auction, it had only $16,000 left unpaid by year’s end.
Bequests 'a Lifeline’
Other charities reported a surge in donations in late December because donors waited until the last minute to make a year-end gift. In a Chronicle poll of 140 nonprofit officials last month, nearly half said end-of-year gifts were more than 10 percent higher than they had expected.
The Salvation Army reported early last month that donations to its 2009 holiday drive appeared to be down by 11 percent. But in recent weeks, as officials have totaled donations made late in the drive, they found that gifts actually rose 4 percent, to $135.5-million.
With slower and smaller donations, many fund raisers now rely more heavily than ever on bequests and other planned gifts to meet their goals.
Ms. John of the hospital foundation says that contributions to her organization would have declined last year, had it not been for an 85-year-old woman who decided to leave $8-million to the hospital at her death. That gift pushed total contributions for 2009 to nearly $12-million, up from about $6-million in 2008.
“One of the things that truly carried us last year was gift-planning activity, cash coming in from estates,” says Scott Lumpkin, associate vice chancellor at the University of Denver: “Bequests and planned gifts were a lifeline.” (The university raised a little more than $40-million last year, compared with more than $75-million before the recession, and the institution has extended the quiet phase of its capital campaign.)
Mr. Lumpkin describes a recent encounter with a donor who had pledged $1-million but felt unable to make the gift because of the economy. Instead of losing the gift, the university persuaded the donor to create a bequest leaving $500,000 to the institution in his will and pay the remaining $500,000 over five years.
“We are seeing many more of those,” says Mr. Lumpkin of the gift. “This is definitely a trend that will continue through the foreseeable future.”
But such prolonged gifts could be a problem for colleges, which saw an 11.5-percent drop in donations after inflation last year, according to a study released last week.
Restricted Gifts
To be sure, not all charities are raising less than they did before the recession. But even organizations that are raising more now say they still face financial problems.
At Save the Children, for example, private donations reached $139-million last year, up from $117-million in 2007 before the recession hit. The charity is troubled, however, because unrestricted gifts declined by 21 percent in those three years, while earmarked gifts rose by nearly 35 percent. That means Save the Children has less and less money that it is allowed to use for administrative purposes.
Last year the charity laid off 100 out of 450 employees, including a third of its fund-raising staff. Most of the 37 fund raisers who lost their jobs had worked on seeking big gifts from wealthy people.
Save the Children also trimmed the mailings it used to find new donors. “We’ve had to cut back in acquisition, and I know from previous cuts in this area that it can cause a hole down the line,” says Ann-Marie Grey, vice president of resource development. “But it is harder and harder to justify losing money.”
To save money on fund raising, some charities are reaching out to smaller groups of people and trying to make better use of their existing connections.
At the Denver Foundation, where contributions increased by 4 percent to $64.4-million last year, officials say they redoubled their efforts in 2009 to work with board members and other volunteers who invited friends and colleagues to “audience-widening” events.
For example, a donor whose business was affected by the recession hosted an event for 25 people in his home. He told them how he had been able to keep giving through hard times because he had set aside a personal charitable account known as a donor-advised fund at the foundation many years ago.
“As a result, a new $110,000 donor-advised fund was opened and several others are in the pipeline,” says Barbara Berv, the foundation’s vice president of philanthropic services. “I see a lot of nonprofits working with their boards to get supporters now because things have gotten so tight. This is one good thing I hope will continue as things get better.”
'We Are Not Blooming’
Like the foundation, other organizations that offer donor-advised funds are finding that, despite raising more money last year, they need to work harder to find new donors. That could have future repercussions for nonprofit organizations nationwide: Donor-advised funds control billions of dollars worth of assets that are set aside for charity each year.
At the biggest of the funds, the Fidelity Charitable Gift Fund, donations rose by nearly 5 percent least year, after plummeting by 40 percent in the previous year. Other funds reported similar results.
But Fidelity struggled to attract new donors, who must pay at least $5,000 to create a fund. It had 3,100 new donors last year, down from 3,900 in 2008 and 6,700 in 2007.
Meanwhile, the number of people creating a fund at the Vanguard Charitable Endowment, which requires a minimum gift of $25,000, fell from 456 donors in 2008 to 281 last year, even as total contributions grew by nearly 9 percent.
“We saw some little green sprouts in the summer of 2009,” says Ben Pierce, Vanguard’s executive director. “Now the sprouts have stems, but they do not have flowers. We are not blooming like we have in years past.”
Mr. Pierce says he is “really worried” about the next 12 to 18 months. “The fact that we have fewer participants does not bode well,” he says. “It has been nice to see this growth, but we still need to be wary.”
>From the Chronicle of Philanthropy, Feb. 9 2010
