December 17, 2007 | Read Time: 8 minutes
As charities enter the final stretch of the busy year-end giving season, a divide between wealthy organizations and other nonprofit organizations is growing more stark.
Even as many wealthy nonprofit institutions — like museums and universities — are reporting record increases in contributions, other charities, especially those that provide direct services to the poor, are struggling to get donations and keep up with rapidly escalating demands for aid. Some veteran leaders of organizations that serve the needy say they have not faced such a tough time before in their nonprofit careers.
In interviews with nearly 70 charities, The Chronicle found several success stories. Among the organizations that have fared well this year is the Cincinnati Ballet. In the five months ending in December, the ballet raised nearly $1.1-million, as much as it did in its entire previous fiscal year.
At the National Philanthropic Trust, which manages donor-advised funds, officials had projected a 15-percent increase in contributions before learning of two donations totaling $130-million that fund raisers hope to receive by December 31.
And at the UJA-Federation of New York, where contributions have risen by $4.4-million in the past six months, compared with the same period a year ago, wealthy investors donated $21.6-million in a single evening this month at the charity’s Wall Street Dinner, and gifts are still rolling in.
“It amazed me, and I have been in this field for a long, long time,” says Paul Kane, the federation’s senior vice president for financial resources development.
But such fund-raising returns are in sharp contrast to the situation at other charities.
At Casa Familiar, in Ysidro, Calif., close to the border of Mexico, the annual fund-raising dinner generated $100,000, half of what it did last year, and the charity has failed to receive any donations for its drive to raise $5,000 to buy toys for needy children.
At Lighthouse Ministries, which serves needy people in Lakeland, Fla., giving in November and December has declined by 15 percent from the same period last year — even as the number of families who requested Thanksgiving food baskets nearly doubled.
And amid the ballooning mortgage crisis, Lutheran Social Service of Minnesota, in Saint Paul, has seen the number of families asking for help because they are in danger of losing their homes triple since 2004, to 10,000 households this year. The charity cannot keep pace with requests for help from clients dealing with house foreclosures and other problems.
“We’ve been bleeding to keep up with the demand,” says Dan Williams, manager of financial services.
Unprecedented Demands
Charities that provide social services have traditionally lagged behind the fund-raising achievements of institutions like colleges, hospitals, arts organizations, and community foundations.
What’s different now is that so many of those larger organizations have obtained record increases in donations at the same time that growing numbers of social-service groups are facing a big drop in giving and unprecedented demands. By contrast, during the economic downturn after 2000 and in the recession of the early 1990s, charities of all types had a hard time raising money.
“There are two tiers of income, and donors are in one tier or the other,” says Melissa S. Brown, associate director of research at Indiana University Center on Philanthropy. “Charities with donors in the top tier see big increases, and nonprofits whose donors are squeezed by lost income are feeling the pain.”
Economists and fund-raising experts point to several reasons for a growing economic divide among charities.
Colleges, hospitals, arts organizations, community foundations, and other wealthy institutions have in the past decade built their endowments and reserves to insulate themselves from economic fluctuations. In addition, such organizations have been hiring many new fund raisers to focus exclusively on seeking big gifts from wealthy people.
And wealthy donors overwhelmingly prefer those types of institutions: A study released this month of more than 8,000 gifts of $1-million or more to 4,000 nonprofit organizations found that the largest share of those dollars, 44 percent, went to higher education, followed by hospitals and other medical institutions (16 percent), and arts and cultural organizations (12 percent). Social-service groups received just 5 percent of the dollars, according to the study by the Institute for Jewish & Community Research.
Despite critics like the billionaire investor Bill Gross — who wrote on the Web site of his investment company, Pimco, that with today’s dire social needs, “it is hard to justify the umpteenth society gala held for the benefit of a performing-arts center or an arts museum” — the trend is unlikely to change soon. The stock market, while volatile this year, has remained vibrant, and wealthy donors have continued to make multimillion-dollar gifts to their favorite institutions.
Government Spending
Meanwhile, demand at charities that serve the poor is rising especially fast in states with economic troubles. Declining tax revenue in Arizona, Michigan, Minnesota, and other states has prompted government officials to cut grants that many social-service groups have relied on to provide basic services such as reduced-cost child care to working parents at or near the poverty line. At the same time, as the cost of gas, food, and other necessities has steadily increased, more and more formerly middle-class families are seeking aid from charities to make ends meet.
“We are seeing demand for services go up, and not just in high-poverty neighborhoods,” says John Ziraldo, chief executive officer of Lighthouse of Oakland County, a Pontiac, Mich., charity that has provided emergency financial aid, transitional housing, and other services to some 25,000 families this year. “More than a third of our clients this year had never come to us before. They tell us they’ve never had to ask for help before.”
In Auburn, Me., the Good Shepherd Food-Bank has raised $2-million, about the same as it did last year, but that’s not enough to meet a 25-percent increase in requests for food by needy families this year, says JoAn Chartier, the charity’s public-relations coordinator.
“Gas prices and heating oil are a factor. There are so many things people are up against that it is causing real hardship,” she says. “Many more elderly are coming out to get help, but we realize they are swallowing their pride to do this.”
Meanwhile, the rapidly increasing number of mortgage foreclosures is causing panic among homeowners nationwide and putting a strain on the charities trying to help them.
In Florida, Family Foundations, a Jacksonville social-service group, is struggling to cope with a more than 30-percent increase this year in the number of calls it receives from desperate families on the verge of losing their homes.
“We are having a foreclosure crisis here,” says Martha Cox, vice president of resource development. “When a family is in a situation where they cannot meet their obligations, they are mortified and terrified.”
Because Family Foundations cannot meet in a timely fashion with all the families that need its help, it has started holding hourlong sessions once or twice a week for a dozen families or more. The goal: providing information to educate them about their options and telling them what paperwork they need to bring when they finally get to meet with one of the charity’s financial counselors.
Even though some social-service charities have received increases in donations, they say those gains are not enough to keep up with demand. Catholic Charities USA, for example, projects that contributions are up 6 to 8 percent this year, although the organization had to turn away 31,000 people from its shelters last year, and officials expect that number to be even greater this year.
The YMCA of Metropolitan Los Angeles expects to see contributions rise by 4 percent this year, over the $12.8-million it brought in last year. But Dyan Sublett, executive vice president for financial development, says she is not pleased with those results. “We are not experiencing the growth we need to serve our underserved community,” she says, noting that among the YMCA’s 24 local branches, nine are in poor areas in which residents are struggling.
Other charities in Los Angeles are facing an even tougher time. Beyond Shelter, a Los Angeles charity that has focused on moving homeless families out of emergency shelters and into permanent homes, is struggling to meet payroll next month while trying to help a homeless population that has exploded in size in the past two years, according to Tanya Tull, the charity’s president.
Ms. Tull says she has watched government support decline, while foundations that provided support in the past are making smaller and smaller grants to her charity because they are deluged with requests from other social-service groups.
“Every agency we speak to is turning families away, and the shelters have been full all year,” she says. “I am seeing families with children sleeping in their cars, riding the bus all night, sitting in fast-food restaurants, just to have a place to be. This is a very, very sad thing to experience, after so many years when we thought we were getting a handle on the problem.”
In her 25 years of working with the homeless, Ms. Tull says, “this is the worst I have ever seen in terms of the numbers of homeless families and the fact that the safety net is gone.”
In years past, a family on welfare or earning minimum wage could afford a tiny apartment in a poor neighborhood, she says. But now, that same family is getting a monthly welfare check of $524 and some food stamps, but the monthly rent is $950 for the worst apartment in a bad neighborhood.
Ms. Tull says she finds it frustrating that so many elite nonprofit organizations are getting multimillion-dollar gifts, while social-service charities working to provide direct services get so little.
“Every day I open the paper, and I see $60-million donated to the cancer institute and $10-million to the art museum,” she says. “Can’t they give just 10 percent of that to serve people in poverty?”
Elizabeth Schwinn contributed to this article.
