Pared to the Bone

Hard-hit by a weak economy and a drop in support, social-services charities are forced to cut programs

When Jay C. Bloom, president of Morrison Child and Family Services, in Portland, Ore., looks at the giving

landscape, he sees more swirling in the air than the usual fund-raising problems faced each year by organizations that provide services to the needy.

With fewer total donations from individuals, corporations, and foundations, less money coming from government grants and contracts as the economy continues to slump, and demand for services high, organizations such as his are caught in a whirlwind of tough choices. “We’re swept up in it from every end,” Mr. Bloom says.

Because of a 20-percent increase in demand for services and a 5-percent decrease in donations and government contracts, his group, which finds foster care for and provides other services to 4,000 needy children and their families each year, has instituted a wage freeze and lowered by two-thirds the retirement benefits it pays to many of its 500 employees. It has also reduced home visits to first-time mothers and counseling for adolescent girls.

“We triage a lot more now than we used to,” he adds. “There are a lot of kids who would have received our attention two years ago who likely won’t now. We just don’t have the revenue.”

Other groups that provide social services, such as serving free meals, providing beds to the homeless, teaching literacy classes, and helping disadvantaged children, also are feeling the pinch. And many have also begun to cut programs and jobs to make up for shortfalls in income.

Organizations are faced with bad news from all directions. Contributions to United Ways nationwide are down 4 to 5 percent so far this fiscal year — which could mean a longtime source of support for many social-service groups won’t be available. (If those numbers hold, this year will mark the first downturn in donations at the charity since 1992.)

The number of homeless people in major American cities increased by 19 percent last year, just as the demand for food relief shot up by 18 percent. State budget deficits that may grow as high as $85-billion in the next fiscal year have many charity members worried that government contracts with service groups will be further cut, forcing them to pare their operations even more.

“There’s major-league cutting back all around,” says Irv Katz, president of the National Assembly of Health and Human Service Organizations, in Washington. The group represents 70 national organizations, including Big Brothers Big Sisters of America, the Child Welfare League, and the Salvation Army. “I fear that that’s going to mean that people may have to opt out of work because many day-care and other programs will shut down, which will just increase their financial strain.”

Donations Down in 2002

The downward trend in giving to social-service groups began last year, according to figures released this week in “Giving USA,” the annual study published by the American Association of Fund-Raising Counsel Trust for Philanthropy, in Indianapolis, a research arm of the association, which represents fund-raising consultants.

Organizations that provide social services saw their donations from all nongovernmental sources drop by 11.4 percent in 2002, to a total of $18.7-billion. In 2001, giving to social-service groups rose 11.9 percent, to $20.7-billion. Last year marked the first decline in donations to social-service groups since 1995. Giving to all types of charities was down by one-half of 1 percent last year, the study found.

Leo P. Arnoult, chairman of the American Association of Fund-Raising Counsel Trust for Philanthropy, says human-service organizations may have received more in donations in 2001 because of an increase in generosity overall following the September 11 terrorist attacks. But those inspired to make donations then may not have continued to make them in 2002, he says.

Mr. Arnoult adds that social-service organizations have typically experienced drops in donation levels during tough economic times. During years of stagnant economies or downturns, such as in 1973-75, 1991, and 1994, giving to social-service groups fell.

“The irony is that during recessionary times, when the demand is greatest, giving to human services goes down,” Mr. Arnoult says. “Perhaps those organizations have more of their gifts coming from more middle- and low-income individuals. During recessionary periods, those are the people whose giving is chilled more than the very wealthy.”

Homeless Services Pinched

Many organizations say that they continue to feel the chill.

Volunteers in Service in Our Neighborhood, an organization that finds homeless people on the street and drives them to shelters in 42 churches, synagogues, and schools in Wilkes-Barre, Pa., borrowed $6,000 against a promised grant from the United Way of Wyoming Valley, also in Wilkes-Barre, this spring to offset a downturn in private donations and a cut in state funds.

Vince Kabacinski, the organization’s executive director, says that with the Pennsylvania state government faced with budget deficits, he wonders if its support for social-service groups will return to the same level as it was before 2002.

As a result of a shortfall that amounts to 10 percent of the charity’s $340,000 annual budget, Mr. Kabacinski has laid off two staff members and, despite a history of poor health in recent years, has increased his own workload to close to 80 hours per week to help deal with an increase in demand for shelter space. The group helped find beds for 671 people in 2002. This year, it is on pace to serve more than 950.

In Minnesota, Catholic Charities of St. Paul & Minneapolis cut 88 of its 600 jobs this year because the group’s budget has fallen by 20 percent since 2001. Gifts of stock and cash, as well as the value of state-government contracts, are all markedly down, says Father Larry Snyder, the charity’s executive director. Beyond the slow economy, Catholic charities face another problem: 22 percent of potential Catholic donors say their giving may also be affected by the church’s sex-abuse scandal, according to a poll released by Catholic Charities USA last month.

“The key challenge for us is to maintain our basic services,” says Father Snyder. “So far, we’ve done that.”

But fewer dollars mean less in services and fewer people with experience to deliver them. With a 15-percent reduction in staff members — and with remaining employees encouraged to work fewer hours to cut costs — the organization has turned to volunteers to staff programs for homeless people and others living in transitional housing.

Meanwhile, need in the Twin Cities has grown. At a social-service center in St. Paul run by Catholic Charities, 68 percent more people have sought beds in a homeless shelter this year compared with 2002, while 15 percent more people are visiting a food pantry where food donations are down 12 percent. At a soup kitchen, full breakfasts have been replaced by pastries and coffee to save money.

Rising Need for Food

Faced with similar problems, soup kitchens, food banks, and pantries across the country have made their services even more basic by cutting the amount of food they deliver to each family. In Baltimore, the Center for Poverty Solutions has cut the size of its baskets by one-third to help it deal with a $600,000 drop last year in donations from its 2001 budget of $3.2-million.

Care & Share Food Bank, in Colorado Springs, which serves 25,000 people per week in 31 counties in southern Colorado, has seen requests for food jump 22 percent in 2002 and 10 percent so far in 2003, largely because of layoffs by technology and telecommunications companies, such as WorldCom. While donations from individuals have increased, gifts of food have not kept pace with the need.

“The food is flying off the shelves,” says Scottie Bibb, the charity’s spokeswoman. “We used to have two food drives per year, one through the post office and another through schools. Now, we have a drive every other month.”

In Tampa, Fla., the Salvation Army of Hillsborough County has seen its donations return to 2002 levels now, after a noticeable downturn earlier in the year. Because of the cost of feeding 10 percent more people this year compared with 2002, the Salvation Army planned to eliminate its soup kitchen, which serves 300 people per day, this spring. After the public learned of the planned closing, however, church groups and civic organizations began to raise money to keep it going.

“We also worked hard to personalize our fund-raising appeals,” says Jaclyn Ward, the charity’s development coordinator. “We wrote many of our letters ourselves to tell people what we do and what kind of need we have. It helped save that program.” Or most of it: What once was a large, nightly dinner has become less expensive soup and sandwiches.

Making Personal Pitches

Many other organizations have decided to use the personal touch to reach new donors or reconnect with old ones. Rise ‘n Shine, a charity in Seattle that provides mentor programs and support groups for 135 children who are infected with HIV or who have AIDS, has encouraged children to make posters and thank-you notes with their pictures to send to donors who support the charity’s summer camps. Reproduced by a color printer donated by Hewlett-Packard, the notes are a low-cost way to remind donors why they have given.

The new approach is necessary to counteract a 20-percent downturn in donations so far this year in its $400,000 annual budget, much of which is due to severe cuts in the amounts of foundation grants the group has received, says Janet L. Trinkaus, the group’s director. So far, the letters and posters from the youngsters have persuaded a number of previous donors to give again.

“One person said they opened their note and had to write a check right away,” says Ms. Trinkaus. “Personalizing your message to donors really works.”

Another group in Seattle, Provail, which provides services to 800 people with disabilities, has increased its donations from corporations, individuals, and foundations by 40 percent this year — a significant amount, but not enough to completely make up for $1-million lost as governments cut the amount of contracts they awarded the group and reduce the fees paid for services Provail provides. James J. Jones, the group’s vice president, says it is focusing largely on corporate donors.

Working Wardrobes for a New Start, a charity in Garden Grove, Calif., that helps adults move from poverty or welfare to jobs by giving them clothing, grooming help, and advice on how to handle job interviews, has also successfully tapped corporate largess. The organization has received $125,000 more in cash in the 2003 fiscal year than it did last year, an increase of about 40 percent. By seeking out new corporate donors, such as Men’s Wearhouse, which has given the group $70,000 in cash and $100,000 in clothing this year, the charity hopes to expand into five new cities, says Jerri L. Rosen, its executive director.

Ms. Rosen adds that the group has also begun to step up its approach to individuals, resulting in a 15-percent increase so far this year. “When people drop off clothing for us, we send them a note back thanking them and telling them that we also need cash to run our job-readiness programs,” says Ms. Rosen. “That’s a new ask for us.”

As groups busy themselves trying to stay afloat, some are engaged in campaigns designed to persuade the public to pressure politicians into restoring money to programs that have been cut. So far, few campaigns have resulted in the reversal of cutbacks, charity leaders say.

One reason might be that charities may not be doing enough to persuade the public of the pervasiveness of social problems in their neighborhoods, according to a national study released last week by the Pew Partnership for Civic Change, a research organization in Charlottesville, Va. The Pew study found that while 90 percent of social-service providers surveyed see social problems as prevalent in the cities and towns where they work, only one in four Americans believes that hunger, homelessness, illiteracy, and other issues represent serious problems.

Mr. Katz, of the National Assembly, says that groups such as his should earmark more for campaigns that alert the public to the need for more government money for social-service programs. “We have no advocacy slush fund right now, but we sure need one,” he says. “Human services aren’t very prominent on people’s radar screens. We need to find ways to communicate that human services are a need, not a luxury.”

Elizabeth Schwinn and Ian Wilhelm contributed to this article.