April 3, 2011 | Read Time: 9 minutes
At Loaves & Fishes, a network of 18 pantries in the Charlotte, N.C., area, the number of people seeking food has risen every month since the economy went into free fall in the fall of 2008. But total giving to the charity remained flat in 2010, and the average gift actually dropped slightly, to $211.
Beverly Howard, the charity’s executive director, says the organization benefited when donors “pared down their giving to the essentials” during the early days of the recession. But as the economy recovers, the charity’s donors are now slowly migrating back to the education and arts groups that they rebuffed during the recession. Ms. Howard worries that her charity may one day not raise enough money to feed the 11,000 people who visit its pantries each month.
“Folks are now spreading their benevolent dollar a little further,” Ms. Howard says. “We’re concerned that this trend will get worse.”
Greater Competition
It’s said that nothing quite rings the register at the American Red Cross like a high-profile natural disaster, and the same logic applies to charities that serve the nation’s poor. As the recession deepened in 2008 and 2009, nonprofit groups that provide basic needs like food and shelter received more attention from donors and foundations.
But if bad times can be good for fund raising, what happens when the overall economy improves? As the nation emerges from the recession and the stock market continues its two-year climb, are donors shifting their attention away from charities that serve the poor?
Interviews with executives at more than a dozen shelters, pantries, and food banks, as well three national and regional surveys, suggest that fund raising at charities that serve the poor may have slightly lagged the fund-raising performance of other charities in 2010.
Yet even charities like Loaves & Fishes that say they see signs of “donor fatigue” aren’t facing a large drop in support, and other charities that help meet basic needs say their donors are maintaining or increasing contributions. The heads of such charities say continued private support is essential, since many expect declines in revenue from state and federal grants and contracts. All the charities say they continue to face strong demand for their services, thanks to persistently high unemployment rates.
“People really are still getting it,” says Brad Meuli, president of the Denver Rescue Mission, which raises $14-million in cash gifts each year. “They know their friends and neighbors are still out of work, and they’re saying, What can I do to help?”
The charity, which provides shelter to as many as 925 people per night, has seen donations increase at a rate of 5 percent per year since the recession hit.
Last month, the Greater Boston Food Bank completed a $35.3-million capital campaign for its new facility, which will enable it to distribute a record 35 million pounds of food this year. The food bank is also on track to raise $9-million for operations in its fiscal year ending this October, up from the $8.6-million in the prior fiscal year.
“Our supporters recognize that the need for food assistance isn’t going away,” says Suzanne J. Battit, the food bank’s acting development director.
But some executives at charities that serve the poor say they see increasing competition for gifts and grants.
Human Solutions, a Portland, Ore., charity that runs a shelter and provides assistance with energy and avoiding evictions, is working twice as hard to raise the $500,000 in private support it needs each year, says its executive director, Jean DeMaster.
The charity, whose total budget is $7-million, is facing increasing competition from fund-raising organizations at the six school districts near its offices in eastern Portland. State cuts in education spending have hammered school budgets for arts and music programs, and the districts are seeking private funds to keep those programs intact, Ms. DeMaster says.
“A donor who might have given us $100 in years past is still giving $100, but he now divides that amount between us and the Gresham-Barlow School District,” Ms. DeMaster says. “More than donor fatigue, we’re getting the donor who is stretched too thin from being asked by too many groups.”
Disturbing Trend
A survey conducted in January of 325 charities in Oregon and southwest Washington found that 45 percent of the social-service groups reported a modest decline in gifts, and another 17 percent reported that gifts had “decreased greatly.” That adds up to nearly two-thirds of the 91 social-service charities reporting declines—far more than any of the 10 other types of organizations in the survey, which included health, environmental, and recreation groups.
The trend is disturbing, says Kevin Johnson, the study’s author and a principal at Retriever Development Counsel, since many social-service groups face state and local budget cuts and some are facing late payments under state contracts.
“If individual gifts continue to decline, the financial resilience of many groups will be at risk,” Mr. Johnson says.
Some national data also suggest giving to charities that serve the poor is suffering relative to other types of groups.
In a survey of 1,845 charities released last month by the Nonprofit Research Collaborative, 36 percent of the human-service organizations in the study reported a decline in contributions, a bigger percentage than any of the other seven categories except for arts groups (which saw a 38-percent decline). Just 38 percent of human-service organizations reported an increase, the smallest percentage of any of the categories in the study.
Meanwhile, Russ Reid, a fund-raising consulting firm that works with more than 79 rescue missions and 73 food banks in the United States and Canada, says direct mail, e-mail, and other campaigns for those organizations dropped by 1 percent in 2010, after climbing 4 percent in 2008 and 5 percent in 2009.
John Ashmen, president of the Association of Gospel Rescue Missions, which has more than 250 members, attributes the drop to a desire by donors to resume broad-based giving, even though they know the needs at shelters remain great.
“What I believe happened is that we reached a new normal,” Mr. Ashmen says. “Families are saying, ‘It’s not any better in 2010 than in 2009. Yes, we want to help feed and house the homeless, but we’ll cut back on what we’re giving to rescue missions so we can give elsewhere. We can’t go two years without giving to these other groups.’”
Donors More Optimistic
As donors get back on their feet, arts, environmental, and education groups are beginning to start new campaigns. Robert I. Evans, a fund-raising consultant in Willow Grove, Pa., says his company was hired last month by a small New York art museum for a capital campaign that the charity had postponed during the economic crisis. Donors are warming up to brick-and-mortar projects after focusing on programs during the downturn, Mr. Evans says.
“That doesn’t mean that feeding the homeless or providing support for low-income Americans is a lesser priority,” Mr. Evans says. “It just means that there are other competing needs that are being presented to donors.”
Some groups continue to hit their fund-raising targets, even amid fluctuations in the type of gift. The Gathering Place, a drop-in shelter for women and families in Denver, received strong support from foundations throughout the recession, even as the grant makers cut back their support for charities that don’t focus on basic needs, according to Brenda Roush, the charity’s vice president for development.
But this year, some of the foundations have indicated to her that they plan to diversify their grant making. “Therefore, they’re giving us less money,” Ms. Roush says.
But the decline in foundation giving has been offset by bigger gifts from individuals and a pickup in new donors.
“What we’re hearing from our individual donors is that they’re feeling optimistic about their economic future,” Ms. Roush says. “They’re still suffering, but they’re not in a panic phase like they were over the last few years.”
The Los Angeles Mission, which provides shelter and food assistance in the area known as Skid Row, is seeing contributions from the small donors who supported the mission throughout the downturn drop a bit, says Herbert Smith, its president. But the bigger donors—those who have historically given the mission $1,000 or more—are beginning to resume their giving.
“They’re not back at their old levels by any means, but they’re coming in with something, whereas before it was, ‘Don’t call me,’” Mr. Smith says.
Telling the Story
Experts use the term “donor fatigue” to explain why individuals and foundations eventually return to supporting a wider set of causes after focusing their giving on a narrower group—like charities that provide basic needs—in the immediate aftermath of a natural disaster or economic collapse.
But some experts say the term “donor fatigue” is a cop-out. A food bank that saw a big influx of money during the recession—and is now seeing such giving wane—has only itself to blame, says Penelope Burk, a fund-raising consultant and the author of Donor-Centered Fundraising.
“They likely weren’t communicating effectively with donors prior to the recession,” Ms. Burk says. “They got all this new money—yet failed to learn how to communicate with donors—and now they’re paying the inevitable price.”
Some charities say they have been successful by reminding their donors that the rebounding economy hasn’t yet done much for the country’s poorest residents.
The Lincoln Park Community Shelter, a Chicago charity with 35 beds, raises its entire $500,000 budget privately. The shelter is now receiving more donations each year than it did in 2007, before the financial crisis, according to Erin Ryan, its executive director.
The shelter’s waiting list has tripled in recent months. Some people who have been out of work for 18 months are only now finding their way to the shelter, Ms. Ryan says.
“We just have to keep telling that story to our donors and let them understand that while things might be rebounding, small businesses in particular are still not hiring,” Ms. Ryan says.
Catholic Charities of Central Texas has found two $10,000 sponsors for a forthcoming fund-raising event; last year, it had just one. The number of new donors is also up, says Melinda Rodriguez, the charity’s executive director. She credits I Live Here, I Give Here, a three-year-old Austin organization focused on elevating philanthropy in the city, with spreading awareness about groups that serve the poor.
“Austin is a beautiful-looking city,” Ms. Rodriguez says. “It’s easy to escape the fact that there’s still poverty here.”
