Modest Gains in Giving

Donations to America’s largest charities grew by 4.3 percent last year, to $67.5-billion, according to The Chronicle’s annual Philanthropy 400 survey.

The increase was much smaller than in the previous two years, when giving rose by double-digit

percentages, thanks to the money that flowed to charities dealing with Hurricane Katrina and the Asian tsunamis. In fact, if $2.1-billion in contributions to the American Red Cross in response to Hurricane Katrina are excluded from the 2006 tally, donations to organizations in the Philanthropy 400 increased by just 0.9 percent.

But veteran fund raisers say even that increase is impressive, because it indicates that charities in the Philanthropy 400 managed to hold onto the big rise in donations even though no major catastrophes occurred last year.

All told, the nation’s most sophisticated fund-raising groups have achieved an 18-percent increase in donations over the past two years.

What’s more, many charities expect to raise more money this year. The 101 charities in the Philanthropy 400 that predicted an increase in donations for 2007 said contributions would rise by a median of 5.6 percent, meaning that half of the groups expect a bigger increase and half expect less.

Demonstrating Results

Charities took many approaches to success. Fund raisers continued to diversify the methods they use to seek donations, and national organizations worked hard to spread those approaches to their local affiliates. Some organizations teamed up with other nonprofit groups to raise money or found compelling new ways to prove their effectiveness to donors. Others became more savvy about reaching out to corporate and other donors, and online giving continued to rise, with many charities reporting double-digit percentage increases in Internet donations.

And though the stock market and the economy have been volatile in recent months, charities continue to benefit from a constant stream of supersize gifts from the wealthy, and they have started a record-breaking number of new multibillion-dollar capital campaigns.

Last month, the University of Pennsylvania, with a goal of raising $3.5-billion by 2012, became one of five universities so far this year to announce campaigns of $1-billion or more.

Philanthropy has reached heights not seen since the days of the Rockefellers, says Ingeborg Reichenbach, vice president for development at Yale University (No. 28), which announced its own five-year, $3-billion campaign in 2006. The campaign propelled a 52-percent jump in gifts last year, to $433.5-million.

“Almost no week goes by that you don’t hear about a $100-million or $200-million gift,” says Ms. Reichenbach.

Some fund raisers speculate that the intergenerational transfer of wealth — predicted to generate $1.7-trillion in charitable bequests as members of the World War II generation make their largest contributions — could be responsible for the spate of mega-gifts. But Ms. Reichenbach disputes that notion. She says her institution and others are receiving such gifts from younger people who earned big fortunes in the past decade or so. “The generation that created the wealth is also disposing of it,” she says. “That is different than predicted.”

A Golden Era

Even as some charity officials hail a golden era of charitable giving, many organizations in the Philanthropy 400 are struggling to increase donations. More than a quarter of the charities on the list reported a decline in giving last year. Of the 110 organizations that experienced a decrease in 2006, the median drop was 14.6 percent.

A key reason was that many charities were not able to sustain the big increase in gifts they received after Hurricane Katrina.

But other influences were also at work: The growing divide between the wealthy and the middle class has meant that causes supported by the less-affluent face an increasingly tough time, fund raisers say.

Social-services groups say they are especially challenged because they rely on gifts from people of moderate means, many of whom are struggling to cope with the rising prices of fuel and other necessities.

Charities that raise money to finance projects overseas say they are struggling to keep up because of the weak U.S. dollar. Already, “the drop in value of U.S. currency vis-à-vis the euro and other currencies has had an impact,” says Richard E. Stearns, president of World Vision (No. 14), which raised $671.7-million last year, an increase of less than 4 percent. “Compared with our fund-raising offices in Europe and other Western nations, we have to raise more U.S. dollars to keep up.”

$4.1-Billion

In this year’s Philanthropy 400, United Way of America was again No. 1, with 1,293 local United Ways reporting a total of $4.1-billion in contributions last year, a 2.7-percent increase over 2005.

The Red Cross moved up two spots to No. 2, raising nearly $3-billion, more than twice what it garnered in 2005. It was the second year in a row that the disaster-relief group, the largest beneficiary of donations to help Hurricane Katrina victims, raised more than double its previous year’s total.

The Salvation Army fell to No. 3, raising $1.6-billion. That was 55-percent less than the previous year, when the group received a large distribution from the estate of Joan B. Kroc, the wife of the McDonald’s founder, as well as substantial Katrina donations. Fidelity Charitable Gift Fund rose to become No.4, with a 29-percent rise in contributions, to $1.2-billion, reflecting the stock market’s strength. The American Cancer Society held onto the No. 5 spot, raising $969.3-million, an increase of 4 percent.

Completing the top 10 were the YMCA (No. 6); Stanford University (No. 7), one of three universities in the midst of capital campaigns to raise $4-billion or more; Gifts in Kind International (No. 8); AmeriCares Foundation (No. 9); and Food for the Poor (No. 10).

Donations to the Philanthropy 400 accounted for nearly $1 out of every $4 donated to charities last year.

Those charities also fared far better in their fund raising than other groups. Last year, Americans donated $295-billion to all the nation’s charities, an increase of 1 percent after inflation, according to Giving USA, the annual measure of philanthropy published by the Giving USA Foundation.

To be included in this year’s Philanthropy 400, charities had to have raised at least $42-million last year, an increase from last year’s minimum, which was $37.7-million.

Donors Under 50

One of the most challenging issues for charities in the Philanthropy 400 is figuring out how to appeal to donors under 50.

Easter Seals (No. 113) says the difficulty in attracting younger donors was one reason its donations dropped by 0.2 percent last year, to $150.7-million. The disability charity is well known to many older Americans as the group that provided physical therapy for polio victims in the 1940s and 50s, and it now is trying to build a similar kind of reputation by focusing on concerns that are important to younger donors.

In Easter Seals’ solicitations and marketing, it promotes its work to help people with autism and soldiers suffering traumatic brain injuries incurred in Iraq. In addition, it promotes its efforts to help young children with disabilities and to treat infirmities that affect the elderly.

“If you’re 70 and over, you have a pretty good understanding of who we are,” says James E. Williams Jr., president of Easter Seals. “But if you’re under 50, you probably don’t. We want to make the Easter Seals name and brand as relevant to people under 50 as it is to people over 70.”

At the American Civil Liberties Union (No. 268), donations rose by 48 percent last year, to $67.6-million, as a result of its efforts to win big gifts from individuals.

But the charity had more trouble getting people to make a membership gift — a donation of at least $20 — than in previous years, and it says such donations are all that many young people and those of modest means can afford.

Donna McKay, the advocacy group’s director of development, says she thinks the organization’s donors are suffering from a malaise because they have not seen much progress on efforts to overturn the Bush administration’s restrictions on civil liberties. “After the last election, when people elected a new Congress, they expected a change. And they got more of the same.”

To re-energize its supporters, the ACLU this year recruited donors to pay for a $60,000 advertising campaign that accused the Democratic leadership of acting like sheep. Although it is too early to tell if the ads have boosted membership levels, they have raised the group’s profile among potential members by drawing a front-page mention in The Washington Post and favorable attention from liberal bloggers, Ms. McKay says.

The Biggest Gainers

Among the Philanthropy 400, arts and culture organizations achieved the biggest fund-raising gains last year. Their donations grew by nearly 51 percent, as they mounted capital campaigns or other special appeals.

The San Francisco Symphony (No. 288), which increased contributions by 80 percent, to $63.5-million last year, attracted big gifts with a $24-million project called Keeping Score, which introduces new audiences to classical music with television, radio, and interactive Internet programs that interpret great works of music.

“Using philanthropy to support something that’s innovative, that could support the art form, has real traction with our donors,” says Robert W. Lasher, the symphony’s director of development.

Hospitals saw giving increase by 18 percent last year, while colleges gained by 13 percent. Two hospitals changed their names to reflect very large gifts: Nationwide Children’s Hospital (No. 175), formerly Columbus Children’s Hospital, received $50-million from the insurance company’s foundation, and Rady Children’s Hospital (No. 306), previously Children’s Hospital San Diego, got $60-million from the financier Ernest Rady and his wife, Evelyn.

Many corporate donor-advised funds and community foundations also recorded double-digit increases, largely because the stock market did well last year. Many people create or supplement their funds with gifts of stock. That is even more appealing to donors when the stock market is doing well, since they can avoid capital-gains taxes by transferring stock to a charitable fund, says James Barnes, director of client relations at the Vanguard Charitable Endowment Program (No. 22), where contributions, mostly stock gifts, increased by 11 percent, to $484.1-million last year. “Contributions go up when people have appreciated assets,” he says.

Responsible Measures

As donors increasingly say they want concrete results, many charities in the Philanthropy 400 have been seeking new ways to demonstrate that they are making a difference and using contributions responsibly.

The Cystic Fibrosis Foundation (No. 124), which last year increased gifts by 3 percent to $133.9-million, tells its donors that drug therapies it has helped develop with their contributions have added years to the survival rate for people with the disease.

“For every investment [in a particular treatment], we’ve added a year more of life,” says C. Richard Mattingly, the charity’s executive vice president. Those measures, combined with the organization’s low overhead costs, have even attracted donors who don’t have family members stricken with the disease, he says.

Among them is Frank Gaughan of Poway, Calif., a retired executive in the semiconductor industry. Although he made a modest initial gift to the charity because a neighbor’s child died of cystic fibrosis, Mr. Gaughan says he became a regular donor who has since given several hundred thousand dollars because he approves of its efficiency.

“When I looked into the foundation itself, their overhead is the lowest of any medical charity out there,” he says. “I have not seen another organization that makes better use of the money.”

At the Academy for Educational Development (No. 355), where gifts rose by 14 percent to $49.6-million, officials used a grant of a few hundred thousand dollars from a British family foundation to create a pilot program that placed 500 AIDS orphans in Kenya with families in their home villages.

After the charity proved that those children stayed in school longer and were healthier than other AIDS orphans not in the program, the family foundation committed $14-million to expand the effort to about 133,000 children.

“More and more donors want to make sure there is a measurement,” says Stephen F. Moseley, the academy’s president.

Helping Affiliates

Some of the largest charities in the Philanthropy 400 worked last year to realign their organizations, in some cases by consolidating or eliminating affiliates to save on overhead and ensure consistent fund-raising efforts. In other cases, charities paid for special projects to help affiliates raise big gifts.

Habitat for Humanity International (No. 17) increased its donations by 42 percent, to $639.3-million, by helping some affiliates with fund raising even as it eliminated others.

It hired fund raisers with expertise in winning six- and seven-figure gifts to work with local affiliates in about half a dozen metropolitan areas.

Habitat also expelled a dozen “smaller and nonfunctional” affiliates last month that were not contributing to the organization’s fund-raising goals or its reputation among donors, says Mark Crozet, vice president of development. Part of the problem was that some of the 12 were not giving the national headquarters a portion of their donations to support Habitat for Humanity projects overseas. Others were completely inactive or had not engaged in enough building projects to meet the charity’s standards, Mr. Crozet says.

Like Habitat, Big Brothers Big Sisters of America (No. 82) is helping its affiliates win donations, a significant reason the charity increased giving by 10 percent last year, to $194.4-million.

It is offering grants to pay a share of new fund raisers’ salaries at some of the largest of its 410 affiliates. The national office pays 75 percent of each new fund raiser’s salary the first year; by the fourth year, its contribution is zero, since the national office assumes that by then the fund raiser will be attracting enough money to exceed salary costs.

Ninety local affiliates now have a chief development officer of their own, says John Malcolm, vice president of philanthropy.

That has helped bring in seven-figure gifts to at least five affiliates for the first time.

Also expanding its fund raising is Susan G. Komen for the Cure (No. 107), which raised 22 percent more, or $156.4-million, last year. But unlike some Philanthropy 400 charities that are closing or merging local affiliates, Komen is adding three or four new chapters every year, according to Cindy Schneible, vice president for resource development. The fast-growing breast-cancer group now has 122 national and three overseas chapters.

Online gifts have grown by 46 percent so far this year, as have donations from its signature fund-raising event, Race for the Cure, Ms. Schneible says. Meanwhile, Komen has already attracted 178 companies that will pay fees to promote the charity’s cause on products ranging from yogurt to clothing, up from 150 such companies last year.

Ms. Schneible says the increases have been stimulated by the widening awareness of breast cancer. And despite the recent declines in the number of women dying from breast cancer annually, support continues to grow.

“We know it’s a health concern that’s top of mind,” she says. “Very few people haven’t been touched in some way.”

Debra E. Blum, Maria Di Mento, Sue Hoye, and Sam Kean contributed to this article.

HOW THE TOTAL AMOUNT OF MONEY RAISED BY THE PHILANTHROPY 400 CHARITIES HAS GROWN (IN BILLIONS) 1997 $36.9 1998 $40.8 1999 $46.3 2000 $50.6 2001 $53.8 2002 $52.5 2003 $51.6 2004 $57.3* 2005 $64.7* 2006 $67.5* NOTE: Figures are in 2006 dollars, adjusted for inflation. * Figures include all United Way affiliates.