Giving Takes a Beating

Donations to nearly every type of charity faltered in 2008, as contributions declined by 5.7 percent last year after inflation — the steepest decline Giving USA has reported since it started estimating donations in 1956.

And the situation is growing even worse this year, according to The Chronicle’s interviews with fund raisers from 65 institutions. Forty of the fund raisers said giving was on the decline this year, and 21 said donations had decreased by more than 10 percent.

Some charity executives say they will be fortunate if contributions simply stagnate, rather than decline, this year.

Several months ago, Lutheran World Relief projected a 5-percent rise in unrestricted gifts, which totaled $7.6-million in 2008, for the fiscal year that ends in September.

“We’re probably not going to reach that goal,” says Fran Troxler, the charity’s director for mission advancement. “The good news is we’re doing about the same as last year. Flat is the new up, right?”

Social-Service Groups Suffer

Americans contributed a total of $307.7-billion to charity last year, Giving USA reporteddown from $314.1-billion in 2007. The only other decline as large occurred in 1974, when donations dropped 5.4 percent.

Social-services groups were hit the hardest, suffering a decline of nearly 16 percent. Religious organizations and umbrella charity campaigns like those run by United Ways and Jewish federations were the only ones that received an increase, but those gains were small — less than 2 percent.

The decrease for 2008 was much less than some fund-raising experts had expected, said Del Martin, an Atlanta fund-raising consultant who chairs the Giving USA Foundation, which publishes the annual survey, because the first half of last year was relatively strong for many charities. “The economy didn’t really start scaring us so much until the fourth quarter,” she says. The continued economic problems mean “we’re going to see declines again next year,” she predicted.

Among key findings from this year’s Giving USA report:

• Individuals donated $229.3-billion last year, a decrease of 6.3 percent. Giving through bequests also dropped: $22.7-billion was contributed through people’s wills, a 6.4-percent decline. Altogether, gifts from individuals, including bequests, accounted for 82 percent of all charitable giving in 2008.
• Corporate donations totaled $14.5-billion in 2008, an 8-percent decrease, accounting for 5 percent of all giving.
• Foundation grants decreased only slightly, 0.8 percent, to $41.2-billion. Grants from private, community, and operating foundations made up 13 percent of the total contributed to charity last year.
• Contributions to foundations, however, dropped by 22.2 percent last year. Those gifts, which totaled $32.7-billion in 2008, accounted for 11 percent of all giving.
• Giving to international-aid organizations dropped by 3.1 percent, while donations to environmental, arts, education, and health organizations all fell by 9 or 10 percent.

While those declines have hurt, the toll on social-services groups is perhaps the most striking.

A poll of 228 such organizations conducted by Giving USA to accompany the survey found that 54 percent reported an increase in need for their services in 2008, but a drop in contributions and other revenues was prompting 60 percent of the groups to make cutbacks, including curtailing services or laying off employees.

The recession’s ravages on individuals and families last year were clear at many charities around the country. But at many organizations, donors were responding generously to the growing need.

As the economic crisis peaked and winter set in, for example, Energy Outreach Colorado, which provides assistance with heat and utility bills, began receiving unprompted calls from donors who wanted to increase their gifts.

“There’s a lot of ‘It could be me, I need to help out,’” says Lisa McDonald, the charity’s development director. She says she even received a $500 check in December from a recently unemployed woman who told her: “I can afford to ride this out, but some of the people who were laid off with me can’t.”

And thanks in part to 800 new donors who, in a year-end campaign by the charity, agreed to add a small monthly gift to Energy Outreach onto their utility bills this year, contributions are now up by 13 percent over last year.

The recession has also brought new visibility and support to the Macon, Ga., Goodwill Industries, which works to retrain and create new jobs for unemployed people. “Honestly it has helped shine the light on the need for people to become employed,” says Meredith Stiff, a fund raiser there. And people are so eager for bargains that sales at the group’s thrift store, for example, have boomed.

A College Rivalry

But Goodwill still faces many challenges. The number of cars donated to its auto-repair program dropped off abruptly — meaning fewer opportunities for Goodwill clients to practice repair skills, and less revenue from the cars’ resale.

In June of last year, the local Goodwill created a separate fund-raising arm to seek money from foundations and individuals and has raised $1.4-million in cash and product donations in its first 12 months — largely, Ms. Stiff believes, because the charity has been able to demonstrate how it is making a difference to the local economy.

As many donors reduce their giving because of the economy, most fund raisers say they are relying on their most loyal and generous supporters to fill gaps caused by reduced foundation grants and diminishing gifts from lower-dollar donors.

To offset declines in the money invested in its endowment, Millsaps College, in Mississippi, has turned to individuals who endowed scholarships and professorships, says Vernon King, director of development. The college is asking those individuals to make an extra payment equal to 5 percent of the endowment they created, both this year and next, so the university can start to rebuild the funds.

And, in a year when giving to Hamilton College, in New York, has dropped by 30 percent, the institution sought to spur gifts from alumni by creating a playful rivalry with neighboring Colgate University.

Hamilton organized a contest to see which institution could generate the most gifts from alumni in April. Hamilton promoted the idea through direct mail and e-mail solicitations, student phonathons, and a dedicated Web site that tracked each institution’s progress.

“It struck me in a difficult environment with daily headlines about a plummeting economy that something that might inspire fun would be helpful,” says Jon Hysell, Hamilton’s director of annual giving.

The April contest raised $547,000 from 1,308 donors, a 388-percent increase over the number of donations Hamilton usually receives during that period, says Mr. Hysell. In fact, Hamilton received gifts from more donors during the last two days of the challenge than it had during the whole of April 2008.

The competition even prompted gifts from 158 alumni who hadn’t made an annual-fund gift in five years, and from a handful who had never previously given at all.

Then there was the satisfaction of beating Colgate, which received 1,211 gifts.

Gala Cutbacks

The recession has caused a growing number of charities to cut or tone down their galas and special events and emphasize their charitable missions instead.

After struggling to sell tables for two big fund-raising dinners, the Breast Cancer Research Foundation, in New York, this year opted to forgo its usual auctions of luxury items at those events and auction time spent on cancer research instead.

Although lower attendance meant the group’s New York event in April raised about $1-million less than the $4.9-million it garnered in 2008, the foundation generated $267,500 that evening with an auction where people were asked to donate $1,000 to $50,000 toward one $250,000 grant to finance a cancer-research project for a year.

Foundation officials hope to increase giving by expanding the give-money-for-research idea among people who typically give small sums. To that end, it is conducting an online campaign that gives supporters the chance to sponsor small blocks of time for cancer research, starting at $25 to pay for half an hour of a scientist’s time.

“The idea is to concretize the impact small gifts can make,” says Margaret Mastrianni, the foundation’s deputy director.

But even with such efforts, the organization is still struggling. When it ends its fiscal year this month, it expects a decline in gifts of as much as 20 percent, down to $32-million.

Other fund raisers are finding new ways to solicit money to cover administrative expenses. At Furman University, in South Carolina, where donations to the annual fund have dropped 10 percent, fund raisers are taking a new approach, says Mike Gatchell, the university’s vice president for development.

Furman plans to tweak its annual-fund appeals to let alumni direct their gifts to pay for administrative costs such as financial aid or faculty salaries. Mr. Gatchell hopes this “directed annual giving” will appeal to younger alumni who like to know the impact of their contributions.

Taking a similar approach is the Rainforest Alliance, in New York, where officials now planning for the 2010 fiscal year are “ready for the fact that keeping the budget flat might be a challenge,” says Lara Koritzke, the group’s associate director of development. The organization, she says, had years of double-digit increases in contributions before the recession hit.

While the charity has already exceeded its fund-raising goals for several projects this year, Ms. Koritzke says she is concerned about the impact of low attendance at the charity’s special events, which provide a portion of its operating funds. “That’s why we get a little nervous, even when they’re off 5 percent,” she says.

Now, to defray the administrative costs of several international projects supported by government and foundation grants, Rainforest Alliance will soon begin to ask some donors who make large gifts to earmark donations for office rental or support services associated with overseas projects.

“We used not to talk about these things much to donors,” says Ms. Koritzke. “We thought: ‘It’s boring.’”

The complete Giving USA report may be ordered by calling the Giving USA Foundation at (800) 462-2372 or from the organization’s Web site. It is available in both print and electronic formats at costs ranging from $75 to $270.

Holly Hall and Sue Hoye contributed to this article.