Donations to Social-Service and Environmental Groups Rose in 2005

By Debra E. Blum and Holly Hall

Following is a summary of how different types of groups fared in their fund raising last year, according to Giving USA, the

yearbook of American philanthropy released last week, plus a look at how they are doing in 2006:

Social services. Donations to human-services organizations rose by 28 percent, to $25.4-billion, the report said. The increase was largely fueled by gifts to aid disaster victims, but even when those donations are subtracted, giving to social-services groups still rose by 11.3 percent.

Several charity officials attribute the big increase to the effect that Katrina and other hurricanes had in making people aware of the need to help poor people nationwide, not just in the disaster- affected areas.

“Katrina brought the face of poverty into the living rooms of America for more than three months, a reminder of the poverty that still exists all over this country,” says Melissa Temme, a spokeswoman for the Salvation Army.

Months after the hurricanes, giving remained strong, Ms. Temme says.

The charity’s traditional red-kettle drive raised a record amount in year-end donations in the 2005 holiday season: $111-million, up from $102-million in 2004. Ms. Temme attributes the rise partly to a decision by Wal-Mart, the retail giant, to allow the charity to raise money on its premises for 28 days, double the number of days it had in 2004.

Environment. Groups that work on environmental and animal-welfare issues raised $8.9-billion, an increase of 12.6 percent. About $30-million went to rescue pets after the Gulf Coast hurricanes.

But even when those gifts are not counted, contributions to environmental groups rose by 12.2 percent. The surge in donations reflects donors’ growing concern over issues such as global warming, fund raisers say.

Kalman Stein, chief executive officer of Earth Share, a Bethesda, Md., organization that runs on-the-job campaigns to benefit environmental groups, says more and more Americans are becoming aware of human consequences related to the health of the environment.

“When people think of the environment it is no longer just about pristine wildernesses and exotic species, but about the human toll of environmental problems,” Mr. Stein says. “People are making connections between the environment and the rise in asthma, how mercury and other chemicals are in our food and water.”

Climate change is not a centerpiece of the National Audubon Society’s work, but that issue is helping rouse supporters and draw new donors for all types of environmental causes, says John G. Byrne, the New York charity’s chief fund raiser.

Giving rose by 16 percent at Audubon last year, and Mr. Byrne estimates that giving will increase by 10 percent in 2006.

Much of the rise, he says, came about because the charity has moved some its fund raisers out of its national headquarters and put them into Audubon’s 22 state offices. The organization has also started using more-sophisticated software to manage its donor records and tailor solicitations to supporters’ interests and capacity to give.

“We are continuing to reform our business model,” Mr. Byrne says. For environmental groups, he adds, “this is a great feel-good time to do it.”

Public-society benefit. Charities such as United Ways and Jewish federations raised $14-billion last year, a 4.7-percent increase that included some $260-million in disaster-relief gifts.

At United Way of America, Rick Belous, the director of research, says that his organization is still tallying the results of 2005 giving campaigns held by its 1,326 affiliates, but that he expects an increase. “And going into 2006 looks good also,” he said.

United Ways have struggled over the past several years to offset controversies involving compensation of top executives, and to persuade donors that a gift to United Way, which funnels money to local charities, is better than simply giving to the organizations directly. But many local United Ways say they are holding their own and raising more in 2005 and 2006.

At United Way of New York City, Larry Mandell, the organization’s president, says he expects an 8- to 10-percent increase in contributions this year, over the $107-million raised in 2005.

Mr. Mandell says he believes donations are rising because of his United Way’s shift three years ago from raising money for specific charities to focusing on solving specific problems, such as homelessness and the lack of affordable health care. That change has led the group to diversify its sources of income, obtaining more money from private foundations, government agencies, and other sources.

The Greater Twin Cities United Way, in Minneapolis, raised $85.8-million last year, an increase of about 3 percent, barely keeping pace with inflation, but “we are pleased with the results considering what was going on with Katrina and because the prior year had been flat,” says Kathy Blegen-Huntley, director of workplace donor relations.

She expects a 5-percent increase this year, partly because the charity’s development officers have been spending more time at the companies where campaigns are held.

“Our fund-raising team is away from the office 80 to 90 percent of the time, getting employees to volunteer and getting them engaged,” says Ms. Blegen-Huntley. “This is resulting in higher donations.”

Religion. As in past Giving USA surveys, churches and other religious organizations captured the largest share of total contributions, 35.8 percent. Such charities raised $93.2-billion last year, an increase of 2.5 percent. That included an estimated $431-million for disaster relief. Not counting those gifts, religious donations grew by 2 percent.

Young Life, a Christian charity in Colorado Springs that serves adolescents and teenagers in 1,100 locations nationwide, raised 9.8 percent more for its operations last year, or $129.2-million, on top of raising more than $19-million for capital expenditures.

Bill Hautt, Young Life’s chief development officer, says that the charity achieved big gains from both foundation grants and planned gifts. Young Life’s grants increased by more than 20 percent last year, to $16.4-million from 1,900 foundations.

To obtain more grants, Young Life hired several proposal writers four years ago; they work with the charity’s local offices, which previously raised very little from grants. This year, he says, the charity has so far raised 18 percent more from foundations than at the same time last year.

Bequests and other planned gifts to Young Life grew by 31 percent in 2005. Mr. Hautt says that was largely because of the organization’s close alliance with the National Christian Foundation, in Atlanta, a religious community foundation with 22 affiliates around the country.

The foundation assists Young Life with the technical and legal expertise it needs to help donors create planned gifts, while the charity’s fund raisers concentrate on identifying and communicating with people who may be interested in such gifts.

International. Contributions to charities that work internationally rose by 15.6 percent, to $6.4-billion, largely because of an estimated $1.1-billion in disaster- relief contributions. Without the disaster donations, giving to international groups fell by 5.1 percent.

Gifts to American Jewish World Service, in New York, grew from $14-million in 2004 to $27-million in 2005, including $9-million earmarked for emergencies. And donations so far this year are outpacing those of 2005. Among the reasons for the group’s recent success is its advocacy work calling attention to the crisis in Darfur, Sudan, including helping to organize a Washington rally in April to urge the Bush administration to do more in Darfur.

The Mennonite Central Committee, in Akron, Pa., expects giving to rise this year, as it continues to woo donors who supported its recent disaster-relief efforts. Out of 15,000 donors who contributed to the organization for the first time after the Asian tsunamis, about 30 percent have made another gift, says David Worth, the organization’s chief fund raiser. “This is our prime opportunity to increase our donor base,” he says.

Education. Gifts to colleges, universities, and other educational organizations rose by 9.4 percent, to $38.6-billion last year. Those contributions accounted for 14.8 percent of total estimated giving, the second-biggest share behind donations to religious organizations.

Texas Lutheran University, in Seguin, says it is benefiting from doing a better job of getting small, annual gifts from alumni. Total donations rose by about one-third last year to $6.2-million, including a record take from two student phonathons held every year.

The percentage of people who made gifts during the phonathons, which raised $246,000, nearly doubled from the previous year to 42 percent. Betsy Clardy, Texas Lutheran’s vice president for development, says the institution has done more to tailor appeals, so that school athletes, for example, call alumni who played sports.

It stepped up its response to gifts so that donors receive e-mail confirmations of their gift the morning after the drives, and it also had students make a second round of calls, simply to thank donors.

Health. Gifts to hospitals, medical centers, and other groups that fight disease declined slightly last year, by 0.7 percent, to an estimated $22.5-billion, following a 2.3-percent increase in 2004.

Hospitals and medical centers appear to be doing better than other health charities that raise money for research, public-awareness campaigns, and other efforts to fight disease.

Hospital giving in 2005 increased by 16 percent, to $7.1-billion in cash and pledges, according to a survey to be released later this month by the Association for Healthcare Philanthropy, which represents 4,200 hospitals and medical centers.

William C. McGinly, president of the association, attributes the increase partly to the growing recognition among hospital CEO’s that bolstering their fund-raising operations makes it possible to finance items their organizations couldn’t otherwise afford, such as state-of-the-art medical equipment.

Nevertheless, Mr. McGinly describes the current fund-raising climate as “tricky.”

Many potential donors, he says, are confused by the role of nonprofit versus for-profit hospitals, with many people regarding all hospitals as big businesses that provide services that individuals pay for with medical-insurance premiums.

Other types of health charities struggled to raise more money last year, but succeeded by making changes in how they solicit funds.

The American Lung Association, after several years of declining fund-raising returns, has been trying to centralize fund raising among its chapters while also merging several of the local units. As of July 1, the charity will have 38 local chapters, down from 55 one year ago.

Even so, the charity reported a 7-percent rise in contributions last year over the $111.2-million it raised in 2004, a hard-won increase, says Karen Wertheimer, the organization’s chief development officer.

She attributes the increase to the organization’s success in persuading chapters to stop doing their own direct-mail appeals in favor of more-cost-effective solicitations produced by the charity’s headquarters, and to hiring regional fund raisers who help chapters secure bequests and other planned gifts.

Arts and culture. Donations to arts groups dropped by 6.6 percent, to $13.5-billion in 2005, following two years of modest increases. Giving to the arts as a percentage of total giving also declined, from 5.6 percent in 2004 to 5.2 percent last year. And fund raisers for cultural organizations are not sanguine about this year’s prospects.

Some arts groups expect budget deficits this year. For example, the Houston Grand Opera, which ends its fiscal year on July 31, may close its books with a $2.5-million deficit.

Ticket sales and other types of “earned income” dropped by $800,000 and contributions were $1.7-million lower than the $9.8-million it had projected.

Lynne LaMarca Heinrich, who heads the arts and culture group at Marts & Lundy, a fund-raising consulting company, says that arts organizations must build a more compelling case for support in an increasingly competitive fund-raising environment.

“It’s natural disasters, it’s international issues, these are the kinds of things that demand urgency,” she says. “People think that if they drop their support to arts and culture for a year or two, they won’t suffer,” she adds. “These groups need to get the message out about what is lost. Do galleries close? Do education programs get dropped? They have to focus on letting donors know why their gifts matter, and why now.”

A few arts organizations are managing to achieve fund-raising increases, however.

The National Civil Rights Museum, in Memphis, has recently worked on improving communications with its donors, publishing a quarterly newsletter for the first time this year and sending out regular e-mail announcements.

The museum’s visibility was also raised last fall when Public Broadcasting Service broadcast the institution’s annual awards ceremony for the first time.

Giving to the civil-right museum for the fiscal year that ends this month is expected to be up by about 3 percent over the $1.8-million it raised last year.

“It is a matter of us being able to tell our story to a broad-enough audience,” says Alisa Smallwood, the museum’s development director. “Support is out there.”

GIVING TO CHARITIES IN 2005 Where the Money Came From Total: $260.28-billion How Donations Fared Over Past Two Years, by Charitable Cause Percentage change after inflation, 2004-05 Percentage change after inflation, 2003-04 Human services: 28.0% – 1.1% International affairs: 15.6% – 1.8% Environmentand animals: 12.6% 4.2% Education: 9.4% 3.5% Public/societybenefit: 4.7% 4.0% Religion: 2.5% 1.3% Health: – 0.7% 2.3% Arts, culture, and humanities: – 6.6% 3.9% SOURCE: Giving USA Foundation