Despite Strong Gains in 2011, Big Charities Predict Flat Giving

Many of America’s biggest nonprofits have officially left the Great Recession behind, but the slow economic recovery continues to dampen results at even the most sophisticated fundraising organizations.

Over all, the 400 groups that raise the most from private sources achieved a median 7.5-percent gain last year, the third straight year of median gains for nonprofits in The Chronicle’s Philanthropy 400 rankings. That’s much better than for the rest of the nonprofit world: “Giving USA” said charitable giving over all grew less than 1 percent last year.

But the outlook among the top 400 charities is far less optimistic for 2012, with nonprofits forecasting a median gain of less than 1 percent.

The Philanthropy 400 is a bellwether of giving trends because the charities on the list collect $1 of every $4 donated by individuals, corporations, and foundations.

Better Than Before

The enormous variation in who’s emerging from the downturn and who’s still struggling can be seen just by looking at the top of the Philanthropy 400 rankings.

Eleven of the top 20 are raising more money than they were before the financial crisis erupted in 2008. Among the most striking gains was achieved by Fidelity Charitable, the organization that houses more than 52,000 donor-advised funds.

Donations to Fidelity jumped 31.3 percent, to $1.7-billion, last year, allowing it to take second place in the rankings because it raised more than any other organization except United Way Worldwide. And the fund says it chalked up an 85- percent gain from 2011 when it closed the books on its 2012 fiscal year in June.

Fidelity says it is benefiting from the growing number of wealthy people who have chosen to skip setting up their own foundations and instead rely on Fidelity to take care of all their administrative work. A healthy stock market also has helped, since many donors give securities to the fund.

Fidelity, which marked its 20th anniversary last year, displaces one of the oldest charities in America, the Salvation Army, which fell from No. 2 to No. 3 after donations dropped 6 percent.

Still Struggling

Still, at the very top of the list, United Way Worldwide says it is struggling to rebound in raising the sums it collected before the recession.

Donations grew 1.2 percent in 2011, but the $3.9-billion the organization raised last year is still 8 percent below what it was collecting before the recession, after adjusting for inflation. Rick Belous, vice president for research at United Way, says, “It’s still difficult times,” adding, “We’re certainly nowhere near back in the 1990s, with double-digit growth.”

Organizations that did the best in fundraising in the past year relied heavily on the wealthy, pursuing big gifts and promoting bequests and other planned gifts. Many of the groups are also cultivating young people and overseas donors as well as creating inventive ways to connect with donors emotionally.

The focus on reaching the rich seems to be growing: At least 20 organizations on the Philanthropy 400 said they were putting more emphasis on pursuing big gifts.

But such groups may be in for a rude awakening. A survey sponsored by Bank of America this month reported that half of the 700-plus wealthy donors who responded don’t plan to increase donations over the next five years, while 9 percent plan to decrease their giving by 2017. Only a quarter of the people who had $200,000 in income or $1-million in investable assets plan to give more.

Among the groups rising to the top ranks is Feeding America, which leapfrogged from No. 14 to No. 6, with a 71.6-percent increase in donations from 2010.

Most of the increase reflects a doubling in the value of donated food products, officials say, as Feeding America forged new agreements with Wal-Mart and other retailers while making a concerted effort to procure more fresh produce.

Donations of food, as well as medicine and other noncash gifts, fueled the growth of many of the groups on the list: At least 40 organizations raised more than 50 percent of their contributions from noncash donations.

Biggest Gainers

The groups with the sharpest rise in donations focused on a broad range of causes.

The two organizations with the biggest gains were the Huntington Library, Art Collections, and Botanical Gardens (No. 121 on The Chronicle’s list), with a 480.1-percent increase in donations, and the Rhode Island Foundation (No. 295), with a 396.8-percent rise.

The Rhode Island Foundation attributed its gains to a higher profile with donors as it took a more public stance on supporting public education and primary health care and in absorbing $23-million in assets from a private foundation, which liked the grant maker’s more active role on those issues.

The Huntington Library benefited from a one-year extension of a fundraising campaign it began in 2004, with an original goal of raising $175-million by 2010. The drive had so much momentum that the library kept pressing donors to give more, and by 2011 it had garnered $244-million.

The library says its donations last year also benefited as money from bequests poured in, in some cases from donors the institution had been cultivating for more than a quarter of a century.

Lured by Campaigns

Other nonprofit institutions also decided to capitalize on donor excitement about campaigns.

Oregon State University (No. 258) is now trying to raise $1-billion by 2014, after announcing publicly in 2007 that it wanted to raise $625-million by 2011. Last year’s contributions to the university grew 9 percent.

“We’ve got a lot of momentum, and we want to maintain it, rather than take a break and start all over again,” says J. Michael Goodwin, the university foundation’s president.

This year, he says, the institution is emphasizing fundraising among alumni who live in Asia, as well as parents of graduates and students who live in the region. In September, a university fundraiser and a provost went to Hong Kong, Jakarta, and Taipei to get in touch with people who might be interested in giving.

Boston University (No. 238), another institution in a billion-dollar campaign, is also relying heavily on overseas donors, who have provided $80-million of the $420-million raised so far.

Five of those contributors have donated money toward the university’s new “Century Challenge,” an effort to persuade supporters to give at least $100,000 to endow scholarships for students who are studying in fields that interest the donors. For example, a donor can choose to support history or biology students.

Like other endowed scholarships, the university invests the donors’ money when received and pays out 4 percent every year from the endowment.

But Boston University has added a twist: It is matching the 4 percent dollar for dollar with its own money to provide more scholarships to students in the fields selected by donors.

“It is really a tip of the hat to the donors, saying that we respect your preferences,” says Scott Nichols, vice president for development. The scholarship pitch, he notes, has already attracted $7-million.

“I would be very surprised if others don’t pick up on this,” he adds. “We are already getting calls.”

A growing number of the institutions running such drives aren’t the traditional colleges and hospitals that run ambitious building and endowment campaigns.

Harlem Children’s Zone (No. 102), the antipoverty group that provides services to young people, got a 235-percent boost from 2010 to 2011 by raising money for its $400-million endowment. It has $100-million left to raise before the campaign ends in 2015.

“It’s going very well,” says Mindy Miller, vice president for development. “We’re fully two years into the campaign, and we’ve secured many multiyear gifts.”

New to the List

Breaking into the ranks of the top fundraising groups in America is especially challenging in a down economy. But 24 groups managed to do so, including the Zoological Society of San Diego (No. 385).

After facing challenges in 2009 and 2010 during the sluggish fiscal recovery, the nonprofit that supports the San Diego Zoo came out firing.

It adopted a new name and image, calling itself San Diego Zoo Global as a way of emphasizing that the organization isn’t just a zoo but also does wildlife and conservation work in 35 countries.

The zoo conducted research and discovered that 10,000 supporters were affluent and good targets for seeking large donations.

Such efforts helped the zoo increase giving by 37.7 percent to $51-million in 2011. “One of the things that’s a real benefit for us is our worldwide brand,” says Mark Stuart, president of the Foundation of the Zoological Society of San Diego. “For many people, a trip to the San Diego Zoo is on their bucket list.”

The zoo takes pains to make a behind-the-scenes tour a memorable experience for wealthy donors, such as Conrad Prebys, the San Diego construction and real-estate mogul.

Potential donors get a chance to see giraffes and pandas up close. Two weeks later, they receive a handmade booklet of pictures shot by an in-house photographer to personalize the experience even more.

Such visits are prompting big gifts, like the $15-million from Mr. Prebys in 2011, the biggest donation the zoo has ever received in its history.

“Our scrapbooks make corporate CEO’s weep,” says Mr. Stuart, who has one staff member who devotes her time to scrapbooking. “They’re treasured. I call it our secret weapon. Our scrapbooks win for us time after time.”