In Disaster’s Wake

Charities missed opportunities to win confidence, experts say

After the massive outpouring of $2.3-billion to charities helping to heal the damage of September 11,

many people in and out of philanthropy expected the nonprofit world to be changed forever. No disaster in recent memory has touched off the urge to give among so many Americans — nearly two-thirds say they made a gift — or put charity relief and recovery efforts under such intense scrutiny by the news media, members of Congress, and the public.

Yet a year later, few nonprofit organizations have significantly revamped the way they operate or interact with their supporters, even in the face of a striking erosion of confidence in charities among many Americans, according to a just-released poll conducted for The Chronicle. Nor is there a consensus that the nonprofit world is much better prepared to cope with a disaster of similar magnitude to the terrorist attacks, should one occur.

Among the key questions left unanswered: Are charitable donations best used to provide short-term relief or long-term assistance? How much discretion should charities have in using donations made to help with a specific disaster? How much should charities be counted on to provide disaster relief and rebuild communities — and should they supplement or substitute for government assistance? Did September 11 inspire a new generation of civic commitment or turn off many people from doing community service when their offers to give blood or do other volunteer tasks were rejected?

While such questions were sometimes put on the agenda by charity and foundation leaders, government officials, and the news media, many observers believe that nonprofit groups largely squandered a prime opportunity to educate the American public about their work and how it is supported.

“We need to ask whether 9/11 was a galvanizing event with a permanent impact on the nonprofit world,” says Eugene R. Tempel, executive director of the Center on Philanthropy at Indiana University. Based on evidence so far, including public attitudes as reflected in several recent surveys, he says, “it doesn’t seem to be that.”

‘A Lot of Denial’

Many charities may be hoping that the tarnished image they have suffered won’t be permanent. Forty-two percent of Americans have less confidence in charities after September 11, according to the national survey conducted for The Chronicle by Harris Interactive. Twenty-seven percent of those polled say they are now less likely to give to disaster-relief groups, and 29 percent are less likely to give to any charities.

“There’s a lot of denial that September 11 had any effect at all on charitable organizations or charitable giving,” says Paul C. Light, director of the Center for Public Service at the Brookings Institution. “I think the sector has been damaged by the aftermath of September 11, and it will take more than denial to address the erosion of public support.”

There have been some changes, to be sure. Among the most notable:

• The American Red Cross, which came under heavy criticism for its fund-raising policies after September 11, has new leadership and new policies intended to ensure that its donors’ charitable intentions are honored.
• Some communities have taken steps to improve their emergency preparedness, including fostering closer collaboration between government agencies and nonprofit organizations.
• Several foundations have increased their support for groups studying bioterrorism, for example, or promoting better understanding of Islam, or helping charities make more effective use of the news media.

But some observers fear that charities collectively failed to seize the opportunity to lay the groundwork for a more effective response in future emergencies.

Emmett D. Carson, president of the Minneapolis Foundation, says the legacy of September 11 is mixed.

“We haven’t used September 11 to reaffirm how important the nonprofit sector is in American society,” he says. “People all around the country sent money to all manner of funding vehicles that didn’t exist September 10. Millions upon millions of dollars were collected and are being distributed to all kinds of people who were affected by September 11. We haven’t fully explained to the American people how the response to September 11 is an example of what the nonprofit sector can do at its best, which is to mobilize the community around a tragedy that has affected every American.”

Instead, he says, much news coverage focused on complaints about charities: that donors’ gifts were not being used immediately, or for the purpose they intended; that it was taking too long for beneficiaries to receive aid; or that people were bilking the public by claiming to raise money on behalf of victims. The result: “We’ve allowed the impression to be created that rather small infractions have tainted the overwhelming good that’s been done,” says Mr. Carson.

Consequences of Controversy

That negative publicity can have lingering consequences. Data from Independent Sector and the Brookings Institution show that the share of Americans who express a lot of support for federated fund-raising campaigns like United Way fell from 39 percent in July 2001 to 26 percent in December.

Just as alarming, says Mr. Light, is that only 25 percent of Americans expressed a lot of confidence in charitable organizations in December — virtually unchanged since the previous July.

“Every conceivable civic institution in America got a big post-9/11 surge,” Mr. Light says, including the presidency, Congress, religious institutions, and the news media, in addition to police, firefighters, and other government workers. “Everybody else was going through the roof, while confidence in charitable organizations merely held steady.”

By May 2002, in fact, the number of Americans expressing lots of confidence in charities had fallen to 18 percent. “It’s clear to me that the trend is in the exact wrong direction and that people ought to be worried about it,” Mr. Light says.

Donors Want More Say

One sign of diminished confidence in nonprofit groups is that many donors have become less willing to let charities decide how to spend their gifts.

“The trend of donors wanting more involvement in their giving and more control over where their money is going, which was a big trend already, has gotten even more impetus from this Red Cross fiasco,” says Paul S. Grogan, president of the Boston Foundation, referring to charges that the Red Cross had misled donors about the purpose for which it was collecting money. “We see that at community foundations in the continued proliferation of donor-advised funds,” which give donors more influence over the use of their gifts than if they donate to a general fund.

While many community foundations welcome greater input from their donors, Mr. Grogan says, “if donors’ skepticism is so complete, the resources that allow these institutions to do their jobs effectively are going to be very difficult to obtain.”

Other observers say the public has developed unrealistic expectations about the role of philanthropy in coping with major disasters. “We missed a chance to explain to legislators the limits of the nonprofit sector in handling emergencies,” Mr. Carson says. “We can play a critical role, but there are some things that the government is more suited to do.”

What’s more, organizations that set up several of the most prominent funds after September 11 agreed not to deduct administration costs from money donated by the public, but rather to solicit separate grants to cover their overhead.

“The nonprofit world needs to do a much better job in communicating that there are tangible overhead and administrative costs that have to be acknowledged, and there’s nothing dirty about paying for them,” says Pamela D. Delaney, president of the New York City Police Foundation. She says some groups paid for the administrative costs related to September 11 with money they obtained elsewhere, but that “fed into the public paranoia that administrative costs are illegitimate.”

“We missed a great opportunity to communicate this,” she adds, “but perhaps that’s the next step.”

Mr. Carson agrees. “People had the expectation that disparate numbers of nonprofit organizations overnight could be asked to handle the tragedy as if they were one organization, with one board, one purpose, one mission, and do it for free,” Mr. Carson says, whereas in fact the various groups had differing missions and strategies, staff salaries to pay, and offices to rent. “It was a lost teachable moment.”

Big Challenge

The magnitude of the relief effort and the pressure to act quickly underscored tensions that have long existed in the nonprofit world, says Mr. Tempel. “The nonprofit sector and philanthropy became very visible during this time, as the public saw big nonprofits trying to do things on a scale never seen before, at least in our lifetime,” he says.

“People’s ability to respond in a way they see fit means there can be duplicate efforts,” as well as a certain amount of confusion, Mr. Tempel says. “Sometimes philanthropic money was going where there wasn’t the greatest need, so people continued to give to rescue workers where the most pressing needs might be elsewhere. And people were giving blood when blood wasn’t needed.”

In the Washington area, the Community Foundation for the National Capital Region faced a lot of pressure to distribute immediately the money that poured into its Survivors’ Fund, says the foundation’s director, Terri Lee Freeman. Critics charged that it was holding onto the money so it could earn interest — even though any interest earned was returned to the fund. And many people did not understand why the fund did not just cut checks directly to the victims, when it instead had adopted the case-management approach that had worked so well after the Oklahoma City bombing, which entailed distributing support through other nonprofit groups.

“We think the case-management approach will have significant benefits in the long run,” Ms. Freeman says. “It’s more than simply writing a check to pay for whatever it is; it’s connecting with another human being” — including people who might be too traumatized to be able to go to the bank to cash any check they might receive. The Survivors’ Fund now has 315 cases in 27 states.

In resisting pressure to merely pass along donations directly to the victims, “we always said there were long-term needs for things like rehabilitation, mental-health counseling, education, and respite care for people taking care of family members,” says Ms. Freeman, who notes that the Oklahoma City Community Foundation is still aiding survivors seven years after the bombing. “But there was a lot of misunderstanding about how community foundations operate.”

Of the approximately $20-million raised by the Survivors’ Fund, $4.4-million has been distributed, and Ms. Freeman says she expects the rest to be disbursed over the next three to five years.

New York City groups also faced heavy pressure to give away the donated funds quickly. “One of the things philanthropy does is fill in gaps,” says Ani Hurwitz, a senior consultant with the New York Community Trust, which helped establish the September 11th Fund. “It wasn’t till December that there was even a full list of the people who died,” and it took longer still for the federal government to decide how to distribute the compensation money it had committed. “I hope people will understand that there’s a value to holding back till you can see what the broader picture is.”

Channeling Good Will

Washington and other cities have also taken steps to forge closer ties among government agencies, local businesses, and disaster-related nonprofit groups, so that they can work together more effectively should a similar event occur.

But some observers believe that national leaders could have done much more. Amitai Etzioni, a sociology professor at George Washington University, says the Bush administration missed a golden opportunity to harness public good will for charitable endeavors following the terrorist attacks.

“There was a much larger willingness by people to do good and to become less selfish and materialistic,” says Mr. Etzioni, which was prompted in part by President Bush’s speech calling on every American to spend 4,000 hours over his or her lifetime working as a volunteer. “But, as so often happens,” Mr. Etzioni says, “that impulse was not channeled or institutionalized” in specific projects proposed in communities around the country. The result, he says: “Ninety percent or more of the good feelings that were generated by 9/11 disappeared like water in the sand.”

Nonprofit groups now should focus on figuring out how to respond more effectively to the next big disaster, says Mr. Etzioni. “The problem is, because all that good will has been sadly squandered, it will be more difficult to excite next time,” he predicts.

Mr. Light, too, laments the missed chance for underlining the importance of charitable work. “I haven’t heard any articulate statements from the White House or Capitol Hill about the key role of the nonprofit sector in all this,” he says. In the face of continual negative publicity, “there was no one out defending the sector,” he says. “The nonprofit sector has missed an important opportunity to explain itself as an essential part of democratic life in this country. None of its spokespeople have been out front.”

New Donors

Among the 65 percent of American households that supported the relief and rebuilding efforts last fall were many first-time donors. Now, some charities are considering various ways to prompt repeat gifts from such people, perhaps converting them into regular donors.

“We’re looking at some nontraditional mechanisms to turn one-time 9/11 donors into repeat donors,” says Sarah Bilofsky, communications director at the American Red Cross of Rhode Island. “It’s a donor pool that may not respond to traditional methods” like direct mail and special events, she says, but may be more open to online giving or cause-related marketing efforts, for example.

The Rhode Island chapter, like others around the country, has seen its direct-mail revenue drop steeply in the past year — whether because of the flagging economy or lingering doubts about Red Cross operations. Totals in Rhode Island were down 30 percent over the Christmas holiday, and down 50 percent in March, compared with a year earlier, Ms. Bilofsky says. As a result, the chapter has hired a full-time fund raiser, she says, to do the development work that previously was left to the executive director.

The Greater Cleveland chapter saw its July mailing bring in just half of what came in a year earlier, says Mary-Alice Frank, its chief executive. She says her chapter called all of its major donors to ask if they wanted to come in and talk about any concerns they might have about the Red Cross.

While some contributors may still be upset about the Red Cross’s initial decision to use some donations for future disasters and not spend all the money on September 11 causes, many others are dealing with a more significant anxiety that has been building for some time — but was exacerbated by the attacks, says H. Peter Karoff, chairman of the Philanthropic Initiative, in Boston.

“We are a field that is awash in a paradox of uncertainty and arrogance,” Mr. Karoff says. In the face of complex global problems like terrorism, the growing gap between rich and poor, and the increasing pressures on the environment, he says, “the big question for anyone who thinks about this is, Does philanthropy matter?”

Responses to September 11 among his clients have varied, Mr. Karoff says, but a couple of them have significantly increased their levels of giving, despite setbacks in the stock market. “We’re also seeing considerably greater interest in thinking globally,” he says, as well as renewed interest in conflict resolution, promoting dialogues, and building a stronger sense of community.

He points to the proliferation of “giving circles,” in which donors decide jointly which groups to support, as evidence that many Americans yearn to make a collective difference with their philanthropy, rather than simply write checks individually.

The events of September 11 and their aftermath may have exposed some of the vulnerabilities of the nonprofit world, but they also exemplified many of its strengths, say many observers.

Ms. Hurwitz, of the New York Community Trust, says that “in a year or two, when the dust settles on all of this and we’re able to look back and see what charities accomplished with this incredible outpouring of generosity, Americans will feel really good about it, because a lot of people were helped.”