Few Signs of ‘Donor Fatigue’ Appear as Year-End Appeals Wrap Up

As charities prepare for the busiest fund-raising weeks of the year, most nonprofit officials expect 2005 to end with record-setting donations.

Despite news reports that Hurricane Katrina and other natural disasters may have exhausted donors’ ability to donate to other causes this year, many charities have recently received donations of at least $10,000, with some in the multimillion-dollar range.

The big donations are prompted in part by a new tax law — passed by Congress out of concern that Katrina would hurt some charities — that expanded the tax breaks available to wealthy donors.

Charities that depend on more-modest gifts also say they have seen giving revive after a couple of slow months just after Katrina struck, and their fund raisers expect to raise at least as much by the end of 2005 as they did last year.

The new tax law was passed in September to encourage donations to both hurricane-relief groups and other charities that might otherwise face struggles.

Americans have contributed more than $3.6-billion this year to provide relief to victims of the South Asian tsunamis and the hurricanes in the United States, and some lawmakers worried that donors would feel tapped out by those gifts.

The legislation allows donors to deduct up to 100 percent of their income — up from 50 percent — for cash donations made from August 28 through the end of 2005.

The prospect of the tax breaks has persuaded some donors to step up their giving. Frank Wendt of Southport, Conn., a retired investment banker and regular contributor to Bates College, the Metropolitan Opera, and other charities, says that he will give more this month than he has all year long because the more-generous deductions allow him to offset other tax liabilities.

“By having another 50 percent that I can use to offset capital gains and so on, I decided this would be the year to make some special grants to the causes I care about,” he said.

Other wealthy people have decided to change their giving plans to take advantage of the tax break before it expires in January.

At Baruch College, in New York, William and Anita Newman had planned to create a charitable trust that would generate $5-million for the college over the next decade but provide them with little in the way of an income-tax deduction. Given the new law, the couple has decided instead to give $5-million in cash to Baruch this year; in return, they can take a tax deduction for the entire amount.

David Gallagher, vice president of college advancement at Baruch, says it has been a “hard sell” to persuade people who haven’t previously made big gifts to take advantage of the new tax break. But he says many loyal donors have been quick to see why the tax break is worthwhile, “especially those who have outstanding pledges.”

Many other groups have benefited from the tax law. The Arkansas Sheriffs’ Youth Ranches, in Batesville, a residential facility for troubled youngsters, sent a letter about the law in late September to 450 donors who are older than 59.

So far, a woman in her 70s has donated nearly $100,000 from her individual retirement account, and her husband is considering a much larger gift from his own retirement plan, to avoid the taxes on those assets that the couple’s estate would be charged at their death. Meanwhile, another donor nearing 60 is negotiating a six-figure gift to the charity from his retirement account. “We will get at least two nice gifts out of this, maybe three,” says Mike Cumnock, the group’s chief executive officer.

Anxiety at Some Groups

But even with signs that the economy is vibrant — and therefore charitable giving is likely to be strong — some charities are nervous about contributions. Many charities get half of their donations or more in the final weeks of the year, as donors inspired by the holiday season and tax deadlines do a lot of their giving.

Among those with the biggest concerns are groups that operate in areas ravaged by the hurricanes. Virginia Emmons, executive director of Educate Tomorrow, a youth group whose Miami office was destroyed by Hurricane Wilma, said that her organization had a poor response to its annual October fund-raising event, which raised 40 percent less than projected this year. Due to last-minute schedule shuffling by local charities, Educate Tomorrow was competing with four other fund-raising events on the same night.

“I always hope that we’ll do well during the giving season, but we’re still feeling a lot of aches and pains,” Ms. Emmons said. “We still don’t have windows in our office.”

Fears about an uncertain fund-raising climate in the last quarter of the year were also reflected in a GuideStar online survey of more than 3,900 charity officials conducted in October.

Thirty-eight percent of charity leaders said they believed donations in October, November, and December will be lower than last year’s; only 4 percent thought holiday contributions would be higher than in 2004. Another 41 percent said year-end giving would remain the same, and 17 percent said they did not know.

But other, more-recent polls suggest that donors won’t curtail their giving this year. A Wall Street Journal Online/Harris Interactive poll conducted last month found that more than 80 percent of Americans contributed to charity in the past year, and nearly 80 percent of those donors either gave the same amount to charities not involved in disaster relief as they did in 2004 or gave more to such organizations. The poll interviewed 2,000 donors.

Another poll of 1,000 people conducted last month by Roper found that almost half of Americans reported giving more to charity this year than usual, with one-third saying that they had donated more because of the natural disasters.

News Coverage

Some charity officials said the disasters have helped underscore local needs in regions far from the devastation of hurricanes and tsunamis.

Milton Little Jr., chief executive officer of the United Way of Massachusetts Bay, in Boston, for example, believes that his organization’s fund-raising campaign will raise more this year than in 2004, partly because of news-media coverage of natural disasters.

“Those challenges — the hurricanes, the tsunamis, the earthquake — have helped sensitize people to help meet needs that occur locally,” he said.

Other charity officials said that while contributions dipped slightly immediately following the hurricane season, they rebounded in November.

Jack Marks, director of development at St. Mary’s/Westside Food Bank Alliance, in Phoenix, says his organization did well after the hurricanes because donors wanted to help those who were harmed, including people who left the New Orleans area to move to Arizona. Donations lagged in October, he said, but gifts in November more than made up for the dip, and the organization continues to do well in its fund raising.

The Crohn’s and Colitis Foundation of America, in New York, faced a post-Katrina downturn in its direct-mail campaign, but Roger Koman, vice president of new enterprises, pointed out that part of the decrease was due to slow mail service throughout much of the region damaged by the storm.

“I don’t think we will be affected long term,” he said. “Given our niche market, a lot of our donors will not divert from trying to find a cure.”

A free version of the GuideStar survey is available online at http://guidestar.org, or from GuideStar’s director of communications, Suzanne Coffman, at scoffman@guidestar.org or (757) 229-4631, ext. 27.

Results from the Wall Street Journal Online/Harris Interactive poll can be found at http://harrisinteractive.com.

The Roper Reports Public Pulse survey is available to subscribers to the polling service. Send an e-mail message to info@gfkamerica.com or call (800) 274-3577 for more information.