Health Charities Try to Turn Mergers Into Fund-Raising Gains

John H. Graham IV, chief executive of the American Diabetes Association, believes that overhauling his charity’s management and financial structure will help spur fund raising to new heights.

“I’m certain that we will be successful and that we will grow,” he says. “It’s just a question of how fast.”

Mr. Graham’s optimism is shared by executives at other big health charities where major reorganizations are under way. Among them are the American Cancer Society and the American Heart Association, as well as the diabetes foundation, all of which are merging affiliates, streamlining accounting and administrative duties, and shifting control of assets to boards that are larger and more powerful than in the past.

But some fund-raising experts say that while the re-engineering trend could have positive effects, it also could alienate volunteers and donors and undermine the money-raising potential of health charities.

“To the extent that volunteers become disenfranchised by the new structure and feel they are losing control over fund-raising efforts, you may find volunteer falloff, which over the long term may mean donor falloff as well,” says Penelope A. Scarpucci, an Atlanta fund-raising consultant.

Concern about fund raising is not the chief impetus for reorganization, many charity executives say. Indeed, donations to most big health charities were rising as the reorganization plans were being forged, according to data from the Philanthropy 400, The Chronicle’s annual compilation of the nation’s largest charities.

The American Cancer Society and its affiliates raised $427-million in private support in fiscal 1996, up 12 per cent from 1995. The American Diabetes Association and affiliates raised $80.6-million in fiscal 1996, an increase of 18 per cent. The American Heart Association and affiliates raised $274-million, up 7 per cent.

But it remains a matter of debate whether reorganization plans will hurt fund raising in the future.

Advocates of reorganization insist that it won’t. For one thing, they say, relations between donors and volunteer fund raisers tend to be forged at the grassroots level, and that practice will continue.

Not only that, most volunteers and donors are committed to a charity’s cause no matter where the organization’s decision makers are located, proponents say.

“We found that people first and foremost are volunteering for the American Diabetes Association,” Mr. Graham says. “Rarely do they care that it’s the A.D.A. of Memphis, Tenn. Nobody lives at a state. People live in communities.”

And donors are more concerned about how a charity spends its gifts than where the administrative decisions are made, argue proponents, who note that the national offices of most big charities have always received a share of donations made to their affiliates.

Reorganization advocates also say that merging affiliates into big regional groupings creates a bigger pool from which to attract the most-competent and best-connected board members and the biggest donors. A charity ball that covers four states may draw big-name celebrities and million-dollar contributions, making a larger splash than a smaller local or state ball.

But many fund-raising experts are wary of the reorganization trend.

Some worry that merging state affiliates will erode the morale of fund-raising volunteers because donations they bring in could wind up being spent in other states while local programs get short shrift. Donors could be scared away for that same reason, critics argue.

Some critics also fear that as charities move to consolidate affiliates, national executives may impose fund-raising methods on local offices that are ill-suited to the culture and traditions of a particular region.

What’s more, organizing big fund-raising events can become more cumbersome in a regional setup, they say. Volunteers may have to travel 100 miles or more to get to a planning meeting, instead of going across town or to the state capital as they used to.

And when volunteers in a particular city or state want to put on a fund-raising event tailored for local or state residents, the lack of a home-state board may hurt, some experts say.

Says Douglass Alexander, an Atlanta fund-raising consultant, “Not having the local group there will be very much a detriment.”