Donations to Charity Rise 7.5%

Americans gave $143.5-billion in ’97; international causes did best

The robust economy helped fuel a 7.5-per-cent increase in donations to charity last year, with gifts totaling $143.5-billion, according to a report released last week.

The increase was the largest since 1989, and it marked the third year in a row that the growth in donations easily outpaced inflation, according to Giving USA, an annual report that measures the state of American philanthropy.

In a turnabout from previous years, contributions to international-aid groups rose sharply in 1997, while donations to arts and culture organizations declined, and health organizations — particularly hospitals — saw only a minimal increase. Health and arts groups had seen the biggest growth of all types of charities in 1996, while international groups had seen donations falter in that year and in 1995.

Giving USA is published by the American Association of Fund-Raising Counsel Trust for Philanthropy, in New York. The association represents companies that advise charities on how to raise money. The report estimates private donations only and does not include money that charities receive from such sources as the government or fees for services.

The continued strong performance of the stock market helped bring in numerous gifts of securities last year, said fund raisers, and was a big cause of the 1997 increase in giving.

In addition, they said, many donors decided to make big gifts last year after hearing about some huge individual contributions: Ted Turner’s $1-billion pledge to the United Nations, a $500-million contribution by the financier George Soros to programs in Russia, and a $200-million donation by Bill Gates, the Microsoft founder, to establish the Gates Library Foundation.

“More prominent people are making more splashes with their gifts, talking about the importance of giving back,” said Laurie Robinson, director of development at Cornell University. “They’re setting good examples. People like to follow leaders.”

Because Giving USA figures are estimates, each edition of the report revises figures for previous years as more reliable data are gathered. A year ago, Giving USA said $150.7-billion went to charity in 1996. Now the report says $133.5-billion was raised that year.

New data were not the only reason for the drop in the numbers: Giving USA has made changes in the way it measures giving by people who do not itemize deductions on their income-tax returns and has said that it had overestimated the amount such people contributed in 1996 and previous years.

Giving USA has also changed the inflation figure it uses to measure fund-raising performance. In past years, it used the value of all services produced in the nation to calculate the rate of inflation. But in the edition released last week, it used the Consumer Price Index, the most common measure of inflation, which rose by 2.3 per cent last year.

For the second year in a row, the largest increase in giving came from foundations, whose contributions went up largely because the stock market caused their assets to rise sharply, the report said.

Foundations distributed $13.37-billion, 11.4 per cent more than what they parceled out in 1996.

Giving USA’s estimates are equal to about 5 per cent of foundation assets — the minimum that grant makers are required by law to distribute annually. According to the Foundation Center, in New York, grantmakers’ assets soared by 18 per cent in 1996, to $267.6-billion.

Individuals gave away $109.3-billion, an increase of 6.8 per cent. It was the second year in a row in which individual giving increased by nearly 7 per cent — the most since before the 1990-1991 recession, Giving USA said. Individual donations made up 76.2 per cent of all 1997 contributions. When bequests are counted, individuals gave 85 per cent of all donations.

Despite the nation’s sunny economic picture, many Americans did not appear especially eager to part with their dollars. Giving by individuals, not including bequests, amounted to just 1.6 per cent of personal income for 1997, a rate that has remained steady since 1994 and that has gradually decreased over the past three decades.

Ann E. Kaplan, the editor of Giving USA, said that was probably because “there are plenty of people whose income didn’t go up, or went up but not at a staggering pace.”

Companies, meanwhile, contributed $8.2-billion to charity in 1997, 7.5 per cent more than in 1996. But that figure amounted to just 1.1 per cent of corporations’ pre-tax income — a rate that has dropped considerably since 1986, when companies gave 2.3 per cent of their pre-tax income to charity, according to Giving USA.

Here is how various types of charitable organizations fared last year, according to Giving USA:

International. International-aid groups saw the biggest increase. Donations to such charities rose by 15 per cent. Their performance was in sharp contrast to the previous two years, when they fared worse than any other category. Donations had dropped by 4.6 per cent in 1996 and by 6.6 per cent in 1995.

Press attention to global issues, such as the coverage of Princess Diana’s charitable work in the wake of her fatal car accident and the awarding of the Nobel Peace Prize to the International Campaign to Ban Landmines, probably helped spur the increase, said Kathy Bremer, senior vice-president for external relations at CARE.

Contributions to the international-aid charity rose 6.8 per cent in 1997, to $52-million, she said.

“The environment was supportive for international giving,” Ms. Bremer said. “We had the global consciousness of Princess Diana, Mother Teresa, and [U.S. Secretary of State] Madeline Albright. There had been a lot of naysaying in Congress about whether international work was effective. In Madeline Albright we found someone who talked about international aid needing to play a role.”

Mr. Turner’s gift to the United Nations also shined a spotlight on international charity, she said. “What that said was, ‘This is important.’ ”

CARE also benefited from the booming stock market, she said, receiving several large gifts and grants, including $1-million from a wealthy donor to support the group’s work in Africa, and a $2-million foundation grant to work with the federal Centers for Disease Control and Prevention on health programs in Africa.

At Amnesty International, giving was up by more than 10 per cent in 1997, to $22.9-million, said Kay Burch, deputy executive director for development.

The group was especially successful in its direct-mail appeals, which Ms. Burch said generally do better when international causes get substantial press coverage. The publicity surrounding Amnesty’s involvement in obtaining the release from prison of the Chinese dissident Wei Jingseng probably helped the group raise money, she said.

Amnesty also saw a 30-per-cent in crease in large gifts from wealthy donors.

“The stock market and increased economy have certainly been helpful factors,” Ms. Burch said. “People, in addition to being committed, are feeling more generous. It’s very definitely a nice fallout for us.”

Education. Donations to educational institutions, including colleges and universities, schools, and libraries, increased by 12.3 per cent, to $21.5-billion.

Stanford University, which saw donations rise from $240-million to $312-million over the last three years, attributed the increase in large part to several big contributions, including a $60-million gift in 1996 and a $50-million gift last year.

Randy Holgate, vice-president for development and alumni relations at the University of Chicago, which has seen double-digit growth every year since 1993, attributed the rise in giving to the growing sophistication of the institution’s fund raisers.

“We’ve done a better job in involving individuals in the life of institutions,” she said. “We’re more in touch with a larger number of people who are capable of supporting the university than in the past. We invite them back to campus for an insider’s look at what’s going on.”

United Ways and public-interest groups. Donations jumped by 10.8 per cent to United Ways, civil-rights groups, consumer-protection groups, and scientific-research institutions, which Giving USA classifies as “public and society benefit” organizations.

At United Ways, which raised a total of $3.25-billion in 1997, a 3.2-per-cent increase, much of the growth can be attributed to a push to bring in donations of $1,000 or more.

At the United Way in San Diego, gifts from individuals increased from $18.8-million to $19.4-million, said Joe Passaretti, the campaign director. Most of the increase can be attributed to a 20-per-cent rise in donations of $1,000 or more. Gifts in that category totaled $3.6 million.

Mr. Passaretti ascribed the rise to more volunteers making personal solicitations and a series of breakfasts the United Way held to encourage big gifts.

Environment. Giving to environmental and wildlife organizations rose from $3.81-billion to $4.09-billion, a 7.4 per-cent increase.

Such groups fared better than in 1996, when their increase amounted to just 1.6 per cent. The National Audubon Society, in New York, saw giving rise by $1-million, to $23-million, last year.

Christopher Kelley, director of major gifts at the society, said one reason for the growth was that donors have been favorably impressed as environmental groups have become less confrontational in efforts to promote their cause. In the past, groups like his were quick to use legal means to push companies and land owners to adopt more ecologically sound practices, but now environmental groups try to work with business and real-estate officials on preservation efforts and consider lawsuits only in cases where there is little other choice.

“Frankly I think a lot of donors are tired of being caught in the middle of environmental battles instead of seeing solutions,” he said.

Seeing organizations reach solutions amicably is more likely to inspire generosity from donors, Mr. Kelley said.

Religion. As in previous years, churches, synagogues, and other religious institutions received the biggest share of the total amount contributed in 1997: 47 per cent. Such groups raised $75-billion last year, a 6.1-per-cent increase over the previous year.

Foundations and Donors Interested in Catholic Activities, a Washington association that advises donors to Catholic organizations, said that an increase in volunteer service at Catholic parishes may have contributed to a jump in donations.

“We’re seeing more of the rank and file in the parishes stepping forward and becoming more active in their churches,” said Francis J. Butler, president of the association. People who volunteer are more inclined to donate money as well, he said.

Although giving had been steady among Catholics, Mr. Butler said, “we’re beginning to see measurements that show some growth.”

An annual drive that the National Religious Retirement Office runs every year to raise money for retired nuns, priests, and other members of the clergy, brought in $29-million — up from $25-million last year.

Annual fund-raising drives run by Jewish federations saw modest increases, on average, last year. Over all, contributions to annual campaigns in more than 200 federations in the United States and Canada grew by just over 1 per cent, to $757-million last year, according to the United Jewish Appeal, which helps many federations raise money.

Social services. Donations to social-services groups rose by 4.1 per cent last year, slightly more than the 4-per-cent increase they saw in 1996. It was the second year in a row that such groups saw an increase in giving, following two years of declines.

Leaders of social-services organizations said that the end of the Congressional debate over how to overhaul the welfare system may have had a positive influence on giving.

“During the welfare-reform debate, the message was given that poor people are not worth your tax dollars, so perhaps people decided they weren’t worth charitable dollars either,” said Gordon Raley, ex ecutive director of the National Assembly of National Voluntary Health and Social Welfare Organizations, which represents some of the largest social-services charities.

“These days, we’re not watching the news every night and hearing about these issues. Maybe the country is beginning to turn its attention to the business of helping those who are less fortunate.”

Still, he and others said, a 4-per-cent increase is not enough to relieve the growing burden on charities that serve the poor.

At the Salvation Army, donations were up about 4 per cent in 1997, said Lieut. Col. Tom Jones, a national spokesman for the organization.

“Our support certainly is not decreasing,” he said. “The problem we’re experiencing is the number of people coming to see us for help is increasing faster than the giving is increasing.”

Health. Hospitals and other health charities saw a mere 1-per-cent increase in giving in 1997. When adjusted for inflation, the figure actually represents a 1.3per-cent drop. The disappointing performance followed several years of increases of at least 5 per cent, and a 10-per-cent gain in 1996.

But giving varied widely among individual health charities, said Ms. Kaplan, Giving USA’s editor. She attributed the slow growth to the public’s reluctance to make big or long-term commitments to hospitals at a time when many are being purchased by for-profit companies. Other types of health charities, such as groups that fight diseases, saw significant increases, she said.

“It’s very hard for consumers to understand where their dollars matter in the larger health-care systems,” said Linda B. Miller, president of Volunteer Trustees of Not-for-Profit Hospitals. “It’s very confusing, particularly when you see the large dollars that the systems deal in, hundreds of millions of dollars in revenues.”

In addition to their concerns about mergers and buyouts, donors to hospitals are also feeling frustrated by their own experiences in trying to obtain high-quality health care at a time when insurance plans often seek to curtail costly health-care services and maximize profits, said Robert A. Adams, vice-president of Tri-City Hospital Foundation in Oceanside, Cal.

“When patients are having difficulty accessing care or getting appropriately reimbursed,” said Mr. Adams, “their frustration is often targeted at the innocent bystander, which is the hospital.”

Tri-City has not experienced a decline in giving, he said, in part because it is the only non-profit hospital left in San Diego County. In fact, the foundation has used the institution’s local roots and independent status as a pitch to donors, he said, and they appear to be responding. Gifts increased by 28 per cent in 1997, to $1.5-million.

Meanwhile, health charities that fight specific diseases appeared to fare well, Giving USA said.

At the American Cancer Society, donations rose 14.5 per cent last year, to $488.5-million.

“Cancer is a relevant disease to most people,” said Marjorie Ashburn, director of income-development operations for the charity. She said that is especially true as baby boomers age and are more likely to have to face the disease themselves.

At the American Heart Association, contributions were up by 8 per cent, to $285-million.

Steve Strucely, director of major-donor programs at the heart association, said the charity had benefited from an effort to attract more wealthy donors. He also said that a campaign to warn women about the risks of heart disease had also helped bring in dona tions.

Arts. Arts groups were the only type of organization that saw an overall decline in contributions in 1997, Giving USA reported. Giving to the arts dropped by 2.8 per-cent, after increasing 9.6 per cent in 1996, although there was wide variation among individual organizations.

Many established institutions, in fact, saw increases in giving. But their good fortunes were not shared by smaller groups.

“Just like in the larger society, the rich are getting richer, and the poor are getting absolutely clobbered,” said John Munger, director of information services at Dance USA, a Washington group that represents professional dance organizations nationwide.

He said that at 23 ballet companies and modern-dance troupes represented by his organization, gifts rose by an average of 11 per cent from 1996 to 1997. But, he said, many choreographers who had created small dance companies to perform their works had been forced to shut their groups because of fund-raising difficul ties.

Large symphonies and operas, however, fared well. The Seattle Opera saw unrestricted annual support increase from $4.8-million in 1996 to $5.2-million last year, in part, due to a doubling in the amount of gifts received in the form of stock.

At the Cleveland Orchestra, contributions to the annual fund increased 8 per cent, to $6.8-million. The Boston Symphony Orchestra saw its annual fund drive grow from $10.5-million in 1996 to nearly $11.6-million last year.

“I cannot see how, with the market going up the way it is, you could be declining,” said Nancy Perkins, director of development at the Boston symphony. “Either your base is very thin or your strategies need some work.”

Some leaders of arts organizations said that no matter how much they tried to adjust their approaches to bringing in money, they still could not balance their budgets.

In Chicago, the Randolph Street Gallery announced that it would close after nearly two decades in operation. Over the years, the non-profit artist-run organization produced and presented artwork by thousands of visual and performing artists. But in February, its board decided to close the organization.

The gallery said it could not find ways to overcome shortfalls in foundation, corporate, and government grants. In 1996, foundations and corporations provided $117, 000 of the group’s budget; in 1997, that figure dropped to $56,000.

Copies of Giving USA are available on computer disk for $135 plus $6 postage and handling. The print version will be available in July for $49.95 plus $6 postage and handling. To order a copy, contact the American Association of Fund-Raising Counsel Trust for Philanthropy, 25 West 43rd Street, Suite 820, New York 10036; (888) 544-8464. An order form may also be downloaded from the organization’s World-Wide Web site at http://www.aafrc.org.

Debra E. Blum, Marina Dundjerski, and Vince Stehle contributed to this article.