A Banner Year for Big Charities

America’s top non-profit groups see largest increase in gifts since 1991

This article was written by Debra E. Blum, Paul Demko, Marilyn Dickey, Holly Hall, and Domenica Marchetti.

Donations to the nation’s most popular charities rose nearly 13 per cent last year, according to The Chronicle’s annual Philanthropy 400 survey.

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The Philanthropy 400: the complete list, other facts and figures, and related stories

That is the largest percentage increase since the survey was started in 1991. The gain far outstripped the 2.3-per-cent inflation rate. The Philanthropy 400 ranks organizations by the amount of support they receive from private sources.

While many charities say they fared well last year because of the strong economy, some are less optimistic about 1998. Fund raisers fear that the volatility of the stock market is making donors less willing to give during the year’s final quarter — the time when many charities get the majority of their donations.

“The stock market keeps changing so rapidly that people aren’t sure how they’re supposed to feel,” says David W. Lawrence, chief fund raiser at the Mayo Foundation, in Rochester, Minn., which ranked No. 34 on this year’s list.

“We have a lot of people who are reeling from the current market position, and this has caused a catch in the breath of a lot of people, as we talk to them about pledges.”

There was little evidence of such hesitation among donors last year. The Salvation Army raised more than it ever has, bringing in nearly $1.2-billion. The social-services group, which has held the No. 1 spot on the Philanthropy 400 since 1991, saw donations rise by 16 per cent.

The Salvation Army took in more than twice what the No. 2 charity — the YMCA of the USA — raised. At the YMCA, donations climbed by 45 per cent, to $493.9-million.

Officials attributed the increase in part to improvements in their ability to keep track of donations to local Y’s. But beyond the accounting changes, officials say donors have responded to the the charity’s new push to help more inner-city teen-agers by making sure that YMCA services are available to them, regardless of their ability to pay. To support that effort, local Y’s are working to increase their fund-raising returns by 10 per cent each year over the next four years.

The YMCA’s increase helped it knock the American Red Cross to the No. 3 spot from No. 2 last year.

The Red Cross raised $490.2-million and was followed by the American Cancer Society (No. 4), which raised $488.5-million.

The Fidelity Investments Charitable Gift Fund (No. 5) earned a spot for the first time among the top 10 fund-raising organizations. The fund has grown rapidly since it was established in 1992; it was No. 11 on last year’s Philanthropy 400.

The Charitable Gift Fund, which raised $456.2-million last year, is one of several tax-exempt funds set up by financial-services companies to help their customers give to charity. While the funds are a hit with donors, they have their share of critics, who see them as competing aggressively — and perhaps unfairly — with community foundations.

Rounding out the top 10 are Harvard University (No. 6, with $427.6-million); Catholic Charities USA (No. 7, with $425.3-million); Second Harvest (No. 8, with $400.6-million); Boys & Girls Clubs of America (No. 9, with $382.8-million); and Stanford University (No. 10, with $312.3-million).

Altogether, charities on the Philanthropy 400 raised a total of $29.3-billion last year. To be included on the list at all, groups had to raise a minimum of $21.3-million. Last year, when the minimum figure was $18.5-million, organizations on the list reported raising a total of $26.3-billion in 1996.

Gifts to the charities on the 400 list accounted for one out of every five dollars donated to non-profit institutions last year. In 1997, a total of $143.5-billion went to charities, according to Giving USA, an annual report that estimates total charitable giving. Charities on the list also did significantly better than the average 7.5-per-cent increase in giving for all charities reported by Giving USA.

The Philanthropy 400 get a larger share of charitable dollars than smaller groups, and their fund raising appears to be much more effective. Many charities on the list, for example, have large enough budgets to be able to spend money on new fund-raising strategies to offset the growing costs and declining returns associated with direct mail and special events.

As those methods of fund raising have become less and less effective, many Philanthropy 400 charities have seen handsome returns because they expanded the size of their fund-raising staffs and increased the number of meetings they held with donors.

In addition, many groups have undertaken ambitious campaigns to build their endowments. Such efforts helped many find new sources of income, win larger gifts, and get repeat contributions from donors last year.

Following are details on how key groups in the Philanthropy 400 fared. The overall percentage change in giving for each category is based on the contributions reported for 1996 and 1997 by organizations on this year’s Philanthropy 400, even if they did not qualify for the list last year.

Social-services groups. Charities that provide social services among the Philanthropy 400 saw a 17-per-cent increase in donations last year. The median amount raised by the groups — meaning that half got more and half received less — was $94.1-million, the largest for any of the categories in the survey.

Officials at the Salvation Army attributed the group’s success in 1997 to its ability to meet the changing needs of poor Americans. “The Army continues to be flexible and meet emerging needs in communities, like AIDS and drug abuse,” says Lieut. Col. Tom Jones, the charity’s national community relations and development secretary. “All over the country, the Army has changed and is adapting to meet those needs.”

Mr. Jones says efforts to publicize the charity’s work, and to let donors know that its fund raising is not limited to its red-kettle appeal at Christmas time, have also helped.

At other social-services groups, including Volunteers of America (No. 215, with a 34-per-cent increase) and Goodwill Industries International (No. 29, with a 31-per-cent jump), officials say that their organizations realized big dividends from stepped-up publicity efforts.

David Barringer, director of marketing and public relations at Goodwill, says the national charity, which operates thrift shops all over the country, now makes information about the group’s work available in its stores. “The more educated the charitable consumer is, the more likely they are to make educated decisions, and some of that’s rubbing off on social-service agencies,” Mr. Barringer says.

Goodwill is also making it easier for people to donate clothes by opening up more drop-off centers and by making more house calls.

Only one human-services charity on the Philanthropy 400 — the Lions Clubs International Foundation (No. 391) — saw its donations drop in 1997, from $24.2-million to $22-million. Officials say the decrease came because the charity was winding down last year from a $140-million campaign to raise money to fight blindness.

Arts. Contributions to museums and libraries increased by 28 per cent, while arts groups saw donations soar by 51 per cent.

“There’s definitely a support of the arts in general that’s nationwide,” says Michael Margitich, deputy director of development at the Museum of Modern Art in New York (No. 111), where contributions rose from $29.1-million to $74.2-million. One reason for the big increase is the museum’s capital campaign, which has not yet been announced to the public. In 1997, the museum raised more than $55-million for the campaign.

Despite their campaign successes, many arts groups say they are having to work harder to secure donations, particularly from corporations. Many companies are no longer interested in contributing philanthropic dollars, preferring to enter into marketing relationships with charities that provide publicity or other benefits for their support.

“They are looking for opportunities for corporate entertaining, and they want to find ways to maximize their sponsorship here,” says Kristen Schleifer, assistant director of development at the Lyric Opera of Chicago (No. 191). “We in development find ourselves thinking much more about marketing.”

In fact, she adds, the opera now has one employee whose job is entirely devoted to working with corporations on marketing partnerships.

International relief. Donations to the charities on the Philanthropy 400 that work overseas rose by 18 per cent, although one fewer international group qualified for the list this year than last.

For many international charities, a hefty increase in donated goods like drugs, medical supplies, food, and clothing was the primary reason for their rise. MAP International (No. 42), for example, reported a 77-per-cent increase in private support, most of which was the result of a large donation of polio vaccine.

Some international groups attribute their success in 1997 to finding a particular fund-raising project that holds strong appeal for donors.

At Samaritan’s Purse (No. 179), the 53-per-cent increase in giving last year, officials say, is mostly due to Operation Christmas Child. That project solicits shoeboxes filled with donated toys and other items, such as shampoo and toothpaste, from donors, who also pay $5 per box for shipping. The program started in 1993 with 30,000 boxes; last year, the charity shipped 1.6 million boxes to needy families overseas.

Other international-aid groups are struggling to get repeat gifts from donors who tend to make one-time gifts in response to a natural disaster or other emergency. CARE USA (No. 182), which had a 7-per-cent increase in contributions, got 85,000 such donors to make a repeat gift last year. Using direct mail and telephone calls, the charity told donors about its continuing work in the country aided by each person’s initial gift.

Youth. Youth groups raised 12 per cent more in 1997 than in the previous year, as all eight organizations on the Philanthropy 400 saw their gifts rise.

Many youth groups received a big lift from the Presidents’ Summit for America’s Future. At the conference in Philadelphia, held in April 1997, President Clinton and three of his predecessors challenged businesses, government agencies, and national charities to help recruit thousands of volunteers to help two million poor children.

For the Boys & Girls Clubs of America (No. 9), the call translated into 22 new corporate donors to the charity, and significant increases in contributions from 10 additional corporate donors. Over all, donations to the charity went up 19 per cent, to $382.8-million.

But if the summit trained a spotlight on the need for more volunteers, it also increased the competition among youth groups trying to raise money to help provide mentors and other resources to children.

“There are now more organizations involved in mentoring and more or less chasing the same dollars,” says Alvin M. Wadler, comptroller at Big Brothers Big Sisters of America (No. 55), which matches underprivileged children with adult mentors.

Nevertheless, the charity fared well, taking in $120.5-million in 1997, 16 per cent more than in 1996.

Environment. Environmental charities on the Philanthropy 400 reported 12 per cent more in gifts than they did last year.

Several organizations have been conducting national capital campaigns for the first time, building endowments, or dramatically increasing their membership ranks.

Ducks Unlimited (No. 139), which saw contributions rise by 9 per cent last year, publicly announced its Habitat 2000 campaign in 1996. The campaign, which seeks to raise $600-million by 2000, has already passed the $400-million mark, largely by attracting gifts of $10,000 or more from individuals. Ducks Unlimited counted 580 such gifts last year, up from 323 in 1996.

Health. Contributions to the top health organizations were up 12 per cent from 1996 to 1997. Charity officials say donations are growing because of new programs to seek major and planned gifts. In addition, efforts to find new sources of income are paying off. Hospitals and medical centers brought in 12 per cent more in gifts last year than in 1996.

Not a single health charity among the Philanthropy 400 reported a decrease in giving. That does not mean that all of them are doing well, however. Fund raisers at Gay Men’s Health Crisis (No. 381), in New York, which saw donations rise by 4 per cent, say that the increase was entirely due to an especially successful fund-raising gala. Since then, the charity has had to cut its budget, from $30-million down to $25-million. It has also laid off several staff members.

Like many AIDS organizations, Gay Men’s Health Crisis is suffering from a decline in giving as its client base has shifted from affluent gay men to less wealthy individuals, such as intravenous drug users. And new treatments have changed AIDS from a certain death sentence into a chronic, more manageable disease, thereby blunting the urgency that once galvanized donors.

“With every medical advance, we see a falling off of support,” says Ed Boland, director of major gifts.

Community foundations. The pace of giving to community foundations, which raise money and make grants in a single geographic area, slowed somewhat in 1997 after soaring in past years. Although 24 foundations qualified for the list, up from 19 last year, overall gifts to such funds rose by only 7 per cent.

But at least one community foundation saw a massive increase.

The North Dakota Community Foundation (No. 345) posted the single biggest increase among all of the charities on the 400 list. Gifts to the fund rose from $1 million to $25-million following an outpouring of donations to help victims of severe flooding in Grand Forks. The McDonald’s restaurant-chain heiress Joan Kroc alone gave $15-million to victims of the disaster.

Kevin J. Dvorak, president of the community fund, says that the role that his foundation played in the disaster helped to raise its visibility and attract new gifts.

“Our activity level today is much higher than it was prior to the floods,” he says. “When I call a potential donor, they have already heard of us.”

Colleges and universities. Spurred by fund-raising drives and eight- and nine-figure gifts, contributions to the largest colleges and universities grew by 11 per cent last year. Harvard’s 38-per-cent increase, for example, was fueled by its $2.1-billion capital campaign, scheduled to end next year.

With $427.6-million in contributions, Harvard regained its place as the top fund-raising university, surpassing Stanford and Emory Universities (Nos. 10 and 70), both of which raised more than Harvard the previous year.

Other universities achieved dramatic gains because of one large gift. Rochester Institute of Technology (No. 245), in New York, raised $34.9-million last year, or 178 per cent more than in 1996. The reason: a $20-million donation of software from Synopsis, a Mountain View, Cal., technology company.

The donation was secured, in large part, not by a professional fund raiser but by a computer-engineering professor, Kenneth W. Hsu.

“A fund raiser is not an expert in computer engineering or electrical engineering,” says Mr. Hsu, “so they really don’t know what to ask for.”

Religion. Religious charities reported a 6-per-cent rise in gifts from 1996 to 1997.

With their heavy reliance on individuals rather than on foundations, corporations, or government, many religious groups worked hard last year to shore up declining direct-mail returns and increase major gifts.

At the American Bible Society (No. 250), which reported a 26-per-cent rise, fund raisers focused on efforts to bring in gifts of $5,000 or more. Since 1992, the charity, which is based in New York, has expanded the number of fund raisers who work in other cities from three to 10, and plans are under way to hire four more by the end of next year. Last year, the society received $1.8-million in donations of $5,000 or more. In 1992, it received no such gifts.

The charity has also worked to improve its direct-mail program. By tailoring appeals to specific groups of recipients, and mailing less frequently to some donors, the society has substantially trimmed costs. Mailings now go to 120,000 recipients, down from one million.

Jewish federations. While three fewer Jewish federations qualified for the Philanthropy 400 this year than last, the groups on the list reported an 8-per-cent rise in contributions from 1996 to 1997. United Jewish Appeal-Federation of Jewish Philanthropies of New York (No. 43) once again raised the most money, $142.6-million, or 2.3 per cent more than in 1996.

Some federations saw considerable gains last year, most notably the Atlanta Jewish Federation (No. 183), which saw donations climb by 140 per cent, to $48.8-million.

In recent years, many Jewish federations have seen little growth in their annual campaigns, which support area non-profit groups and are the backbone of fund raising at most federations. But the stagnation has been offset in part by increased giving to endowed or reserve funds. Such funds often allow donors to earmark money for specific purposes.

At the Jewish Community Federation of Cleveland (No. 155), for example, at least 20 new donor-advised funds are started at the federation each year.

And the Jewish federation in Detroit (No. 140) saw the amount of money in endowment funds rise from $135-million to $163-million last year.

United Ways. Among the 35 local United Ways on the Philanthropy 400, gifts grew from 1996 to 1997 by about 3 per cent — the same increase reported over all for those years by the United Way of America. Five fewer local United Ways qualified for the list this year than last.

Of those on the Philanthropy 400, the United Way of the Saint Paul Area (No. 319) saw the biggest gain, from $19.9-million in 1996 to $26.2-million in 1997. The 32-per-cent increase was due in part to three gifts to the United Way’s endowment that totaled $5.2-million, says Julie L. Neville, director of finance.

Officials at some United Ways are still waiting for increases in giving they hoped to see this year.

At United Way of Greater Milwaukee (No. 394), fund raisers set a goal of raising $27-million for the current campaign, nearly $1-million more than last year. But so far contributions have not measured up to the goal, which is probably attributable in large part to donors’ concerns about the economy, says Dennis Sell, the group’s controller. “The envelopes haven’t been coming in as fast as we would have liked.”