Most Charities Fare Poorly in Crucial End-of-Year Giving Season By Holly Hall December 16, 2009 Americans are buying more holiday gifts this season than last, but that same spirit of generosity has yet to reach most charities. In fact, a Chronicle poll of 395 charities conducted over the past week finds that one-third of charities expect donations to decline by 10 percent or more by year's end. Another 21 percent also expect donations to decline, although by smaller amounts. Charities of all sizes seem to be affected by the downturn: • The Salvation Army, which last year raised nearly $1.9-billion, more than all but the total raised by United Ways around the country, reports that donations to its year-end Red Kettle drive are 8 percent below where they were at this time last year. • Catholic Charities USA, which last year raised a total of $771-million nationwide, is now running $2.6-million behind its goal to raise $7.1-million by the end of this year for the work of the national office in advocacy in behalf of the poor, professional training of staff members, and coaching to help workers respond to disasters. • At the Massachusetts Institute of Technology, gifts to the annual fund are running $250,000 behind where they were at this time last year. Already the institution has reduced it goal for this year's annual fund from $50-million to $44-million, after donations sank by more than 20 percent last year. • American Friends of ALYN Hospital, a New York charity that raises money for an Israeli children's hospital, says proceeds from its November bikeathon, which raises as much as $3-million in good years, are "down considerably" again after having dropped by a third last year. • Urban Alliance, which helps high-school students in the District of Columbia find jobs, has so far raised just $4,250 in response to a mailing it sent out a few weeks ago, compared with $11,750 from a similar mailing in the same period in 2008. While most charities are struggling, some organizations that serve those hardest hit by the recession say giving is on the rise. Feeding America, the national network of more than 200 food banks, expects donations to grow by as much as 25 percent this year, on top of a similar-size increase in 2008. Behind the gain is an aggressive effort by the charity to court businesses eager to gain visibility by helping Americans fight hunger. For example, through a promotion, Feeding America is conducting with the television show The Biggest Loser, General Mills and other companies promise to provide 14 cents for every pound lost by viewers who record their weight battles online — exactly the amount that the charity spends on each pound of food. The challenge, which will end in July 2010, has so far paid for 560,000 pounds of food. A Mixed Report Interviews with fund raisers nationwide conducted by The Chronicle suggest that many charities are doing better in obtaining large gifts from some of their wealthiest donors and in persuading more people of modest means to give. But that is not enough to stave off a decline in overall contributions. "When we look at major gifts, $25,000 and up, the dollar amounts are up, but the number of donors is down," says Bill Sturtevant, senior vice president for principal gifts at the University of Illinois Foundation. "Yet when we look at the broad base of donors under this level, the number of donors is up and dollars are down." Mr. Sturtevant speculates that during hard times, middle-income or poor people are often moved to make cash gifts to help others, but they aren't so likely to give as much as they did in the past. Meanwhile, upper-income donors who give stock or real estate — or base their donations on the state of those investments — are more likely to hold off altogether in making any donations in an uncertain economy. But those who feel secure enough to keep making big gifts are often inclined to give more in recognition of extraordinary economic needs. For example, Louise Dieterle Nippert, the widow of a Procter & Gamble Company heir, announced last week that she has established an $85-million fund to support struggling classical music groups in Cincinnati. Changing Solicitations As charities try to persuade donors to give, many organizations are adjusting their approaches to soliciting. For example, the Salvation Army has introduced ways for people to use their iPhones or Facebook pages to give to its Red Kettle drive and to encourage friends and relatives to donate. And JCPenney has created an online version of the Angel Giving Tree program, which has for the past 40 years collected money in the chain's stores to provide gifts to the Salvation Army that go to children from needy families and poor older adults. Catholic Charities has plastered a plea to help the poor on a billboard in New York's Times Square for the entire month of December. The billboard asks people to donate and provides a toll-free number and a Web site they can use to make a gift. While such publicity would probably have been out of the charity's reach in years past, the downturn in advertising made it easy for the charity to get the space at a deeply discounted rate. Paralyzed Veterans of America has also taken advantage of recessionary price cuts, winning a 50to 60-percent discount on a service that ensures that its Web site is the first thing people see when they use Web search engines to look up words like "paralysis" and "veterans." Normally, says Mark Dowis, an associate executive director at the charity, Mark Dowis, "we could not support doing that, but now we can afford it. As the economy turns around, having a foot in the door in these mediums is good." Donations so far this year, he notes, have grown by about 4 percent after having declined by 5 percent in 2008, 'Incredible Revival' Some charities are benefiting from an upturn in the stock market, especially as donors who bought stock in the past year seek ways to avoid capital-gains taxes. Last year, so many stocks had lost value, there was little financial reason for Americans to give stock instead of cash. The Indiana University Foundation, for example, has seen "an incredible revival" of stock gifts, says Eugene Tempel, its president. Less than two weeks into December, he notes, the foundation processed $3.8-million in stock gifts, compared with $850,000 worth of appreciated securities in all of December 2008. The UJA Federation of New York says stock gifts have increased modestly — but not enough to offset a decline in cash contributions. Still, the charity takes it as a sign that better times are ahead. "This year it looks like there is a floor. People weren't sure what the floor was last year, and there was real hesitancy," says Paul Kane, the federation's chief fund raiser. "We are at the beginning of recovery, but it is still rough out there." Signs of Life Another charity that gets a lot of stock gifts, the Schwab Charitable Fund, is also seeing signs of a recovery. The fund, which allows people to set up charitable accounts known as donor-advised funds, saw contributions plunge by nearly 50 percent in the recession, to $482.4-million at the close of its fiscal year on June 30. But the amount donated to the fund grew about 12 percent this October and November compared with the final quarter of 2008. One reason: Schwab has received assets worth about $21-million from nine family foundations whose leaders have found managing the funds too difficult or time consuming in the bad economy. By transferring their foundations' assets to Schwab donor-advised funds, the leaders can recommend grants from their donor-advised accounts, while Schwab takes care of managing the assets and administering the grants. Schwab is now in discussions with officials at 22 other foundations who want the same arrangement. "You've got executives going 80 hours per week to keep their companies afloat, and they don't have time" to run a family foundation, says Kim Wright-Violich, Schwab's president. No matter how challenging this fund-raising season has been, even fund raisers reporting decreases are betting that individuals will be more willing to give in 2010. At the University of Illinois Foundation, where donations are down by about 7 percent after having fallen by the same percentage last year, Mr. Sturtevant says he is heartened by a recent modest increase in donated stock, negotiations over some big gifts that are still "in the pipeline," and reports that alumni in certain parts of the economy such as the Silicon Valley technology industry are doing well. "We will get through it," he says of the downturn. "We are seeing signs of life, but it may be a slow climb out."