Holiday Giving Season: A Chronicle Spot Check of How Charities Are Faring

While the charity ended a capital campaign last year, that is only part of the reason donations have declined so much this year: Fund raisers say donations and pledges have dropped, and they have not received grants they expected because of the dowturn.

Foundation officials say that sharply declining contributions this year show that both individuals and companies are pulling back because of the stock-market slide and the recession.

Contributions to the charity’s annual holiday appeal dropped 50 percent from last year and local corporations and credit unions have withdrawn cash support for the center’s December food drive. However, Lisa Lee, the center’s director, says the group is seeing growth in its thrift store — both in revenue and in donations of goods and furniture.

A $500,000 estate gift received in 2007 accounts for a significant share of the decline. But the group has also had to work harder to recruit more companies to bring in the same number of corporate dollars as in past years, says the nonprofit’s executive director, Carol Fitzgibbons, and so far the social-services group has seen a slow response to its December holiday mailing.

The organization was unable to find corporate sponsors for its annual golf tournament fund-raising event and is trying to offset weak direct-mail returns by purchasing lists of potential donors for a low cost e-mail appeal. The charity has one bright piece of news: Its newly opened ReStore, which sells donated building materials, is doing brisk business from customers seeking low-cost construction and renovation products.

The foundation received two unusually large gifts in 2007; if those two gifts are excluded, contributions in 2008 would be unchanged from last year.

While many donors have stuck with the charity this year, its executive director, Tim Baker, says that attendance at the organization’s annual spring fund-raising event was far lower than in the past, and some foundations have made smaller-than-expected grants or are not giving at all this year.

The organization has managed to raise nearly as much in direct-mail contributions this year as in 2007, but officials say that they are concerned that donations will decrease more next year and in 2010.

The figures do not include a $65-million pledge from Minnesota Masonic Charities, since no money has yet to be received; fund raisers say they do not see much economic impact from the recession so far.

Officials say that giving is flat this year if they subtract a large contribution of $43.5-million in products provided by Vitamin Angels, another nonprofit organization that provides food supplements to people in developing countries.

The charity has received new foundation grants for its work to help families avoid losing their homes to foreclosure.To help compensate for anticipated losses next year, the organization’s board members have pledged to triple their contributions.

The charity has seen modest growth in giving this year but anticipates a decline in corporate support–which accounts for 27 percent of its revenue–in 2009. The organization has cut expenses by 10 percent through layoffs and reducing leased office space.

The charity has started a holiday giving catalog and is also benefiting from taking over a business that sells Christmas wreaths. Figures do not include products, services, or other noncash donations.

Unlike other organizations that rely primarily on attracting money to donor-advised funds, the foundation has seen a slight increase in contributions. It says donors are responding to its messages about the increased needs facing others.

While donations have increased, officials say that they have received no multi-year pledges so far in 2008 and are worried because donations of groceries and other items have dropped by nearly 30 percent this year.

The organization says that, despite the bad economy, direct-mail and online donations from individuals have continued to pour in this year.

Individuals have donated more to the foundation this year, partly in response to a new fund-raising event, but corporate support has waned. At a spring event, companies gave $757,600,compared with more than $1-million last year.

Fund raisers say that donors have so far responded generously, especially to the charity’s pitches that emphasize its work to relieve poverty among people who were, until recently, members of the middle class.

While donors have responded generously to help people hurt by the bad economy, the charity is concerned that it will be unable to keep up with the demand for services next year. The charity has seen requests for food double in 2008, and it is housing 50 percent more people in its shelters than it did last year.

SOURCE: Chronicle of Philanthropy reporting