A Rosy Forecast

Many nonprofit groups expect strong fund raising in 2006

After New Orleans was flooded in the wake of Hurricane Katrina, the Louisiana Society for the Prevention of Cruelty to Animals rescued nearly 9,000 animals.

But saving the organization’s

fund raising has been a far greater challenge.

The storm completely destroyed the charity’s shelter and caused most of its 40,000 donors to flee the city. “Donors are gone, and we are reliant on the generosity of outsiders,” says Laura Maloney, the society’s executive director.

Even so, Ms. Maloney is optimistic about this year’s finances. With a $3.7-million grant from the Humane Society of the United States, the charity is back in business, operating a shelter in a refurbished coffee warehouse.

Another $2-million from the American Society for the Prevention of Cruelty to Animals is covering expenses, including the salary of an assistant director hired by Ms. Maloney.

“We will come out of this stronger than ever,” Ms. Maloney says.

Strong Returns

Like Ms. Maloney, many charity leaders — even those whose organizations did not see any of the more than $3-billion donated to hurricane-relief efforts — predict that 2006 will be a year of strong growth.

Their confidence is underscored by last year’s better-than-expected contributions for many charities. A Chronicle spot check of 57 nonprofit organizations found that fund-raising returns for many far outpaced last year’s 3.4-percent inflation rate.

Charities say that as the economy has grown stronger, donors are stepping up their giving. What’s more, a new law passed after Hurricane Katrina prompted many donors to make big gifts to take advantage of special tax breaks for donations made before 2005 ended. Many charities say that online gifts, as well as donations from corporations, are rising especially quickly and that new efforts to tailor appeals to donors’ interests and to reach out to young people are also working well.

And despite the widespread fears of “donor fatigue” after the tsunamis, hurricanes, and other natural disasters, few charities faced a big drop in gifts.

“We thought with Katrina we would see high-level gifts diverted, but we’ve had the opposite experience,” says Suzanne Mink, senior vice president for development at the World Wildlife Fund, which raised more than $77-million last year.

The organization is now six months into its 2006 fiscal year, when it hopes to raise $80-million. So far, Ms. Mink says, it has received 500 percent more from corporations than it had expected by this point, due in large part to the charity’s efforts to persuade U.S. companies with global operations to support its wildlife projects around the world. Foundation grants are 154 percent higher than the group forecast, and gifts of $25,000 are 159 percent more than projected.

At Goodwill Industries of Orange County, in Santa Ana, Calif., “only two donors told me they were unable to give because they had given to hurricane-relief efforts,” says Nicole Suydam, director of development. “No other donors have said they couldn’t give. I was pleasantly surprised.”

She estimates that the organization surpassed its annual fund-raising goal of $1.3-million by nearly 35 percent last year, beating 2004’s total by 15 percent.

“We are just not seeing donor fatigue,” says Edith Falk, president of Campbell & Company, a Chicago fund-raising consulting firm. “Organizations are bullish about the economy.”

Katrina Aftermath

Still, not all charities emerged unscathed after Americans donated unprecedented sums to help victims of natural disasters.

Some United Ways, for example, say their annual fund-raising campaigns are lagging because companies delayed employee-giving drives in the wake of the hurricanes.

“Several campaigns ran later to distance themselves from the disaster,” says Elise Buik, president of the United Way of Greater Los Angeles. The organization, now halfway through its yearlong drive to raise $55-million, has raised $15.9-million so far. That is $800,000 less than at the same time one year ago, says Ms. Buik.

Mary Ann Sprinkle, director of development at the National Parkinson Foundation, in Miami, says that contributions from direct-mail appeals have faltered. Mailings normally produce $1.2-million each year, but much of the money comes from Florida residents, many of whom were affected by Hurricanes Rita and Wilma.

“We’re running about $230,000 behind where we were last year,” says Ms. Sprinkle.

The organization is now considering whether it can offset the loss of revenue by mailing appeals to fewer people — sending invitations for special events only to people living close enough to attend, for example.

Some charities that received large sums for hurricane victims say raising money for other needs has been more difficult. The American Red Cross chapter in Denver received $13-million in eight weeks, all of it earmarked for Gulf Coast relief work. But individuals decreased their donations for other purposes by 25 percent last year, says Christine Benero, chief executive officer.

“If donors were going to give $25 to the Red Cross, they directed that to the hurricane fund instead of our chapter,” says Ms. Benero. “We have to say to donors, ‘You are amazingly generous, but we need you to remember your neighbors here.’ We are concerned that our fund raising is going to be very tight the next six months.”

More than three dozen Red Cross chapters have joined a campaign called Project Red to persuade people who made tsunami- and hurricane-relief donations last year to support other projects such as helping needy people and preventing home fires. Project Red plans to operate through 2007 with mail appeals and other solicitations to tell donors what was accomplished with their gifts and encourage them to donate for other needs.

“When you get the first gift, you don’t really have a donor, you have a qualified prospect,” says Roger Craver, an Arlington, Va., direct-marketing consultant now advising the American Red Cross and other charities such as Habitat for Humanity on how to keep donors who made their first gifts after the tsunamis and Hurricane Katrina.

He says research conducted by his company has found that a donor who makes a second gift within 90 days contributes eight times more than a person whose repeat gifts come later. “The big issue will continue to be retention, how do you hold onto new donors,” he says.

Increasing Accountability

Some fund raisers say that the natural disasters have made the fund-raising climate challenging in other ways.

News-media scrutiny over how groups handled gifts after the tsunamis and hurricanes has prompted donors to ask for more details about how their money is spent and to inquire about accounting methods and fund-raising costs, says Paul Nelson, president of the Evangelical Council for Financial Accountability.

“Donors are more demanding,” Mr. Nelson says. “The whole idea of outcome-based reporting is a trend in the fund-raising world.”

Children’s Mercy Hospitals and Clinics, in Kansas City, Mo., is one group that has figured out how to give donors more specifics.

The hospital set up a “Wishlist,” a print and online catalog featuring photographs of medical equipment that the hospital needs, along with the number it wants and how much each item costs. The catalog will be updated quarterly to show which pieces of equipment donors have helped buy.

Davoren Tempel, the hospital’s vice president of resource development, says that although final figures are not yet available, the catalog increased online giving by about 20 percent last year. Ms. Tempel estimates that now, halfway through the hospital’s fiscal year, total contributions are about $5-million ahead of where they were at this time last year. The hospital brought in more than $24-million in fiscal 2005.

Corporate Giving

Several organizations have seen a big uptick in corporate giving, in part because corporate profits have been rising and businesses have more to give away.

Kids in Distressed Situations, a New York charity that serves homeless children, raised $40-million last year, compared with $28-million in 2004.

Much of the increase came from new alliances with companies such as Lands’ End, the mail-order clothing company, Maggie Moo’s Ice Cream and Treatery, Kohl’s Department Stores, and Madame Alexander Dolls, which encourage their customers to make cash and product donations to the charity.

Wal-Mart Stores helped lift fund-raising returns for the Salvation Army’s Western Territory, which represents local branches of the charity in 13 states.

In those states, because of the charity’s concern that donors would be tapped out from making disaster-relief gifts, the retail chain doubled the number of days volunteers were allowed to solicit its customers for the annual Salvation Army red-kettle drive. As a result, Wal-Mart kettle contributions in that region increased by more than 100 percent last year, to $3.2-million.

Appealing to local businesses is a goal of several community foundations, which are making special efforts to reach out to local corporations and family-run businesses. The foundations want businesses to set up charitable funds at the foundations; the companies and the foundations will then work together to select recipients of the money.

For its new Center for Corporate Philanthropy, the Columbus Foundation, in Ohio, which raised more than $65-million in 2005, has spent the past year doing research, creating marketing materials, and running advertisements in BusinessFirst, a local weekly paper covering central Ohio. “The idea is that businesses should outsource their philanthropy, and we have knowledge of community needs,” says Philip T. Schavone, the foundation’s vice president for donor services. “We can help businesses identify their philanthropic objectives given their business interests, form criteria for grant making, and do grants analysis to be more cost effective and tax efficient.”

Changing Approaches

Some charities found that changing the way they operate helped improve fund raising.

Among them: The John P. McGovern Museum of Health & Medical Science, in Houston, raised $1.5-million last year, 24 percent more than in 2004. The museum combined its public-affairs and development departments, giving some of its publicity officials new fund-raising duties, says R. Nicholas Espinosa, a museum fund raiser.

For example, he says, “we had someone from PR who is good with corporate donors, so they took over corporate giving. We have someone good at membership benefits so she is focused in individual fund raising and membership. This is more of a team approach as opposed to having a development director and several direct reports.”

The museum has already secured more than a third of the $1.7-million it wants to raise this year, he says.

Many groups are cutting back on mass mailings. Increases in postage rates and other costs have made it expensive to use that approach, especially because attracting repeat donors through the mail has become tougher.

Direct-marketing experts say that today as many as two-thirds of direct-mail donors stop contributing after the first year. Five years ago, only 50 percent of such donors stopped giving after the initial year.

But even with all the challenges, some groups have found that mail solicitations are worth expanding.

The Clean Water Fund, a Washington environmental group, has spent the past 18 months perfecting mailings to people it formerly contacted only through door-to-door canvassing and telemarketing campaigns.

The charity now has 15,000 direct-mail donors, says Jon Scott, its development director, and about two dozen of those who gave $50 to $250 in the past are now donating $1,000 or more.

“The conventional wisdom is that direct mail is drying up, but we are finding this isn’t true at all,” he says. “We have relied heavily on door to door, and direct mail helps legitimize us because people like to see things in writing. When we use mail in combination with telemarketing or a meeting, we get more and larger gifts.”

Expanding the approaches it uses to communicate with donors is helping WHYY, a Philadelphia public TV and radio station, achieve big gains.

Over the last three years, the station has strived to make its programs available in multiple formats and link them to other experiences such as gatherings for donors or arts performances.

For example, a morning radio show featuring an interview with a popular composer was made into an audiocast for the station’s Web site and filmed for two TV shows.

The station arranged for the composer and musicians to give a live performance and invited donors who had said they were interested in the arts to the concert. The concert was also filmed and made into a video that members could download or purchase.

Such efforts to tailor appeals to donors’ interests are one reason WHYY has increased gifts from members by 18 percent, to more than $12-million, over the last five years. At the same time, gifts from members of the nine largest public broadcasting stations in the United States grew by less then 5 percent, on average.

Says Bill Marrazzo, WHYY’s president: “The future of broadcasting is making it possible for audiences to select the programming they want when they want it.”

In addition to programming changes, WHYY has formed an agreement with the Philadelphia Orchestra and other local arts organizations to promote each other’s causes on the air or in written materials such as playbills. That simple arrangement, which costs the participating groups little or nothing, has brought the station many unrestricted gifts of $1,000 or more from individuals, says Mr. Marrazzo.

“When we do focus groups with new major donors,” he says, “we find that some of them have never tuned into a broadcast. But when they see our name on the program, they are grateful for the support we give the symphony.”

Some nonprofit organizations are also attracting large gifts from people in their 20s, 30s, and 40s. Last year, the United Way of the Texas Gulf Coast, in Houston, raised $2.5-million — $400,000 more than in 2004 — from donors 45 or younger who give $1,000 or more to belong to a “Young Leaders” group. Officials say that holding regular social events has helped the group, which now numbers 1,500 people, grow steadily.

In January 2005, Minnesota Public Radio started a new station featuring contemporary American music, news, and commentary aimed at people under 35.

“We bring bands in to perform live. We do some interviews. We have a journalist reinterpret news for a younger demographic,” says Jon Gossett, senior vice president of development. “We wanted to nurture the creative culture and economy. This makes a young person want to stay in Minnesota and actively engage in civic activity.”

The new station has recruited more than 9,000 members, and their average age is 33. Those donors gave nearly $1.2-million. “It allowed us to have the best membership year in history,” Mr. Gossett says. “The response has been incredible.”

Brennen Jensen and Suzanne Perry contributed to this article.