Economy’s Downturn Forces Charities to Change Tactics

The Great Recession is over. For America’s largest charities, now comes the ponderously slow thaw.

Donations to the 400 charities that raise the most from private sources are expected to eke up by a median of just 1 percent this year, meaning that half expect to do less well and half anticipate doing better. That is a big improvement over 2009, when donations tumbled by a median of nearly 6 percent, but still a long way from the sums most groups were raising before the economy failed. Many nonprofit officials anticipate that 2011 won’t be much better and are planning for a 2- or 3-percent gain.

Fund raisers say wealthy people are talking again about making big new commitments, galas and other events are pulling in slightly more money, and gifts of stock are a little more plentiful. But caution still reigns.

“It was like a river that froze over in 2008 and 2009,” says C. Barton Landess, senior vice president for development and planned giving at the Foundation for the Carolinas (No. 194), in Charlotte, N.C. “Now it’s running more freely, but it’s still slow.”

Contributions to the community foundation fell by nearly 70 percent in 2008, to $78-million. In 2009 they picked up a bit, to $101-million, and this year are expected to reach $170-million, a hefty increase but still short of the $233-million raised in the year before the stock-market crash.

That rocky scenario has played out at nonprofits across the country. To cope, charities continued to cut their budgets and staffs in 2009. Sixty groups in the survey of 400 organizations said they had laid off staff members last year; 86 told The Chronicle in last year’s poll that they had been forced to take that step.

Making Adjustments

Fund raisers, meanwhile, are feeling the heat. Some are taking new approaches they hope will connect with donors as the economy recovers.

WNET.org (No. 182), the public television station with headquarters in New York, is focusing on doing a better job of explaining the difference public broadcasting makes in people’s lives. That message hasn’t been getting through: Gifts have been on a downward spiral since 2008, and WNET cut a quarter of its staff in 2009.

Kerry Kruckel Gibbs, who was hired as the group’s chief fund raiser this spring, combined the communications and development departments, with the goal of making storytelling a key part of its fund raising. WNET has filmed short videos that will air year-round, not just during pledge season; in one, a chef talks about how watching Julia Child on public television fed her childhood fascination with cooking.

The group is also making a push to befriend more wealthy donors. In May, WNET announced a $15-million gift from James Tisch, the chairman of its board and chief executive of the Loews Corporation, in New York, and his wife, Merryl. The gift is the largest from individual donors in WNET’s history. Ms. Gibbs says she has asked five other donors since then to make $15-million commitments and plans to approach another five by year’s end. Only one person has turned her down outright so far, she says.

“People are a little surprised that we’re being as ambitious as we are,” she says. “But I’m not getting the sense that we’re out of the ballpark.”

New Commitments

Big gifts and grants are also propelling a recovery at Boy Scouts of America (No. 35), which raised 2 percent more money last year and expects a strong 2010. The organization in Irving, Texas, which has in the past mostly left fund raising to its local councils, unveiled a national fund-raising effort at the beginning of this year.

The initial focus has been on approaching donors to support a facility in West Virginia, a 10,600-acre site where kids can hike, climb rocks, and explore the outdoors. The ambition of the project has appealed to wealthy people: The charity has received a $50-million commitment from the foundation of Stephen Bechtel, co-owner of the Bechtel Corporation, an engineering and construction company, a $15-million grant from Consol Energy, in Canonsburg, Pa., and $10-million from an anonymous donor. It is poised to announce several $10-million gifts later this month. Circle Ten Council, the Boy Scouts council that serves Dallas, also recently won a big gift, $25-million, from the foundation of Trevor Rees-Jones, an energy magnate, and his wife, Jan. (See article.)

Conservation International (No. 234) is betting that a new mission, unveiled this year, will help turn around two years of steep declines. Donations to the charity slumped by almost 63 percent in 2009, to $82-million, following the end of a billion-dollar capital campaign in 2008.

The 23-year-old nonprofit is expanding its work beyond the conservation of land and animals to tackle climate change, the lack of clean water, and other threats to the planet. The nonprofit hopes that message will appeal to a larger number of donors.

Some foundations are already stepping up. The Bill & Melinda Gates Foundation, in Seattle, recently made a $400,000 grant to support agriculture work, its first contribution to the group, and is talking about other awards. The John D. and Catherine T. MacArthur Foundation, in Chicago, has made a grant of $300,000 for Conservation International’s climate-change work in Cambodia, and the group hopes to get more.

But the charity’s new message hasn’t been enough to win big gifts from many wealthy individuals, at least not yet. Tom Wackman, the group’s acting head of development, says that before the recession, it took just nine to 12 months to complete a deal for a major gift; now it takes a year to a year and a half. To nudge giving higher, Conservation International is contemplating another capital campaign related to its new mission.

‘Donors Are Cautious’

Indeed, many nonprofits have yet to see their efforts pay off. Another sign of that: Charities had to raise just $41.3-million in 2009 to qualify for The Chronicle’s list of the most successful fund-raising groups, 15 percent less than in 2008.

Groups that are in the midst of capital campaigns are struggling to meet their goals as big donors postpone payments on pledges and put off decisions about new gifts.

Baylor College of Medicine (No. 241), in Houston, is on track to complete the shell of an eight-story, 246-bed hospital by the end of this year. The building is being financed by the college’s $1-billion campaign, now in its seventh year.

But an infusion of cash, or perhaps a partnership with a university or a health-care system, will be needed to finish the project. Shortly after construction began in 2007, costs rose by 30 percent, and then the economy fell.

“Donors are cautious,” says Lisa Kennedy, vice president of development and advancement. “They don’t want to make multiyear pledges and then have to renege.”

But there are some positive signs: Seventeen of Baylor’s 43 board members have pledged a total of $15-million over two years.

Last month, Dana-Farber Cancer Institute (No. 82), in Boston, wrapped up a $1-billion capital campaign to support patient care and medical research. The campaign overshot its mark by $180-million.

As the economy declined, Dana-Farber’s fund raisers concentrated more on luring small donations through such events as golf tournaments and an annual bikeathon. In 2009 the group increased the number of fund-raising events by 20 percent and this year will hold nearly 12 percent more, with 588 events scheduled.

“We produced athletic events more than high-end black ties,” says Susan Paresky, senior vice president for development. The institute, which expects only modest growth in giving this year and next, is increasing its fund-raising staff. She’s not expecting a return to fund-raising levels of previous years even after the economy’s eventual recovery. “The face of philanthropy will be different,” she says. “Different people will have money. New industry sectors out there are building new pockets of money.” As an example, she notes the $100-million gift that Facebook chief Mark Zuckerberg gave last month for a foundation to help Newark, N.J., public schools.

Brighter Days

Nonprofits that rely on middle-income people are also still feeling the economy’s strains.

Gifts to the Jewish United Fund/Jewish Federation of Metropolitan Chicago (No. 147) fell by 15 percent last year; 2010, similarly, is “a struggle,” says Michael Kotzin, executive vice president. Last year, the nonprofit cut hours, laid off employees, and didn’t fill positions. A total of 771 donors stopped giving to the group in 2009, and many who have remained are giving less.

Still, for many groups, this year has been brighter than last.

At the March of Dimes Foundation (No. 87), fund raisers approached 2010 with caution. Donations the previous year, 2009, had fallen by more than 10 percent, to $197-million, and the charity was forced to lay off 17 percent of its employees and pare back on the research it does into child health.

But corporate sponsorships to the charity’s big spring fund-raising event, March for Babies, grew 7 percent this year, after being flat in 2009. The number of people who participated in the walk was about the same, but walkers, and the friends and relatives who sponsored them, donated slightly more.

Jane Massey, chief operating officer, credits the slightly better economy and the charity’s ability to connect with the marketing arms of companies, which see the March of Dimes as an avenue to tell customers about their commitment to children’s health. “We’re feeling pretty positive,” she says.

The Museum of Fine Arts, Boston (No. 332), also fared poorly in 2009, its donations down by two-thirds, to $53-million, following the close of a capital campaign the previous year. The annual fund met its goals, but corporate gifts were off by 20 percent, and big, multiyear pledges were down significantly, too.

But the story since July has been strikingly different. The museum has been pulling in big gifts totaling more than $33-million, including five donations of at least $2-million apiece to endow curator positions and a $10-million contribution from Bank of America, half in cash and half in works by Ellsworth Kelly and other artists.

Patricia Jacoby, deputy director of external relations, said the museum sensed that people were starting to recover from their capital-campaign fatigue and were feeling a little better about the direction of the economy. The museum’s director was called in to close the discussions.

Since then, says Ms. Jacoby, “It’s been gift after gift after gift.”

Marisa López-Rivera and Alex Richards contributed to this article.