October 27, 2005 | Read Time: 7 minutes
While charitable donations are stronger than they have been in years, many nonprofit fund raisers still
anticipate formidable challenges.
Hurricane Katrina and its effects on fuel prices and other costs are a big part of the concern for several charities in the Philanthropy 400, The Chronicle‘s list of the charities that raise the most from private sources.
At Habitat for Humanity International (No. 24), which has raised nearly $50-million to help hurricane survivors repair and rebuild their homes, officials say contributions may not go as far as they would normally. The reason: The cost of lumber, cement, and other building materials is going up in the Gulf region, due to high demand for those materials and a slowdown in production caused by Hurricanes Katrina and Rita and earlier storms.
In addition, if states and localities pass new building codes, as they are expected to do along the Gulf Coast, construction costs could rise.
Many charities are also worried that fuel costs, which have been rising in the wake of the storms, will not only curb donations but also hurt their operations.
“This is a very big issue,” says Peter Marzio, associate director of development at the Museum of Fine Arts, Houston (No. 45). “Museums are enormously high consumers of energy because of their large buildings; they generally have to have a relatively fixed humidity and temperature. Higher energy costs will hurt in two ways: Energy bills will double or more, and the cost to patrons to visit will go up.”
Peter Hansen, director of external affairs at the Nelson-Atkins Museum of Art (No. 223), in Kansas City, Mo., says the price of gas could cause fewer people to visit the museum, which attracts 25 percent of its visitors from places outside the city, up to a five-hour drive away.
The American Kidney Fund (No. 222), in Rockville, Md., is expecting a “double hit,” says Carol Lynn Halal, managing director of programs. Rising energy costs could dampen donations while also increasing requests from patients who receive financial aid for medical treatment. The group devotes a large percentage of its money to helping people pay for transportation to and from dialysis, she says.
At the National Trust for Historic Preservation (No. 375), in Washington, Nancy Perkins, vice president of resources development, says she is not worried about the effect that high energy bills will have on donors who give $5,000 or more each year. She is concerned, however, about the 4,500 members who give less than that amount but provide more than 30 percent of unrestricted gifts to the trust. “The challenge is the larger member base of donors,” she says. “Our largest contingent is the $250 to $4,999 donor. If we lose too many lower-level donors, we could be hurt.”
Postal Increases
Many charities are also bracing for an increase in postage. The U.S. Postal Service is expected to seek a postal-rate increase of 5.4 percent in January, followed by another rate increase in 2007, which would be a significant expense for charities that do a lot of mailings.
The increases would follow a time when some charities are getting sluggish returns from direct-mail appeals. The declining response, they say, may be a sign that donors are tapped out from giving to recent disasters.
Donations to Campus Crusade for Christ International (No. 22), in Orlando, Fla., were $383-million last year, higher than for any other religious charity. But direct-mail appeals to recruit new donors have done so poorly that the group has suspended most of those mailings until next year. Elvin Ridder, development coordinator, says Hurricane Katrina is probably partly to blame. “We’re wondering if it will pick up,” he says, “but with the Pakistan quake, who knows?”
At Girls Incorporated (No. 306), in New York, which saw a 16-percent decline in giving last year, “we’re all bracing for the impact of Katrina,” says Jan Roberta, chief development officer.
The organization has removed donors in Alabama, Georgia, Louisiana, and Mississippi from its mailing lists because they may have been affected or are making gifts to help victims of Katrina and Hurricane Rita. “Soliciting those donors,” she says, “would not be appropriate.”
Prison Fellowship (No. 265), in Lansdowne, Va., raised $500,000 less than projected last month, a development that Alan Terwilleger, senior vice president of ministry relations, calls “the Katrina effect.” However, he says he is optimistic that giving will revive soon, as it did after a brief dip following the tsunamis.
While most fund raisers hope the Katrina effect will not last very long, others worry about longer-term issues. A growing number of donors are placing restrictions on how charities can spend their gifts, often leaving little money for general operating costs and other expenses.
“The challenge is achieving a balance between donor-advised funds and the discretionary funds we have to meet pressing needs in the community,” says Joe Lumarda, executive vice president of the California Community Foundation (No. 204), in Los Angeles, where 70 percent of assets are in donor-advised or other restricted funds.
One charity has managed to persuade donors to give money with few, if any, restrictions.
Unrestricted donations to the United Negro College Fund (No. 77) rose to $52.3-million last year, up from $47.4-million in 2003. It was the first time in recent years that such donations went up.
The growth resulted from the fund’s decision to “go back to its roots” in encouraging unrestricted support for its 39 historically black colleges and universities instead of scholarship gifts, which had become more popular with donors but caused a shortage of money for overhead needs, says John P. Donohue, executive vice president of the Fairfax, Va., charity.
He says his organization worked to persuade business executives that making a gift to the fund would help increase the number of qualified workers in the country. Historically black colleges, the fund reminds donors, produce one-quarter of all black college graduates.
Young Donors
Charities are also finding it increasingly challenging to attract young donors.
Borrowing a technique used in Europe, some international organizations such as CARE (No. 73), in Atlanta, have taken to the streets, placing fund raisers in subway entrances and other areas with a lot of foot traffic and asking young people to sign up for monthly donations. Since starting the solicitations in October 2004, the charity has persuaded nearly 6,000 people, age 31 on average, to make monthly gifts averaging $19.
The fund-raising arm of Children’s Hospital Boston (No. 217) has reached a new and younger audience by replacing its annual telethon with a two-day radiothon that asks listeners to call in and pledge monthly contributions. The first radiothon, in 2003, grossed $460,000, and the one last year more than doubled that amount to $927,000.
“Traditional live telethons are dinosaurs,” says Mark Cummings, senior director of annual support programs. The radio station the hospital enlisted for its broadcast, he notes, is a contemporary-music station that attracts younger listeners, including a lot of young mothers. “We’re attracting a younger donor who will grow with us,” he says.
Seeking Fund Raisers
As the frenzy to attract bigger and bigger gifts from wealthy donors continues, and the growth of charities stiffens the competition, charities in the Philanthropy 400 find it increasingly difficult to find qualified fund raisers, particularly those skilled at obtaining large donations from individuals.
At Duke University (No. 39), fund-raising positions that took six months to fill five years ago are now taking closer to nine months, says Lisa Worster, who oversees hiring efforts in the university’s main development office. What’s more, she says, salaries in her office, which has eight people who specialize in soliciting major gifts, have grown significantly. The median annual salary is close to $100,000.
The American Cancer Society (No. 4), in Atlanta, during the past year added 65 major-gifts officers, who helped bring in a dozen donations worth at least a million dollars each. But the group had hoped to attract 10 more fund raisers to work on large gifts by now, says Anne Isenhower, national director of media relations. She blamed heavy competition from top nonprofit groups for a limited pool of “the best and the brightest.”
The proliferation of nonprofit organizations, now numbering more than one million nation-wide, “is always going to be a challenge,” says Laurel Price Jones, vice president of advancement at George Washington University (No. 309). “You would think that the number of fund raisers would be increasing, but it is not,” she says. “There is a limited number of people who can do this work.”
Suzanne Perry and Elizabeth Schwinn contributed to this article.
