Tough times for stepping up
Americans struggle to flex their charitable muscle in today's lean economy. But giving still rises, slowly.
If Americans showed some philanthropic muscle after Sept. 11, 2001, then they're showing some fatigue right now. Fourteen months later, amid an economic recovery that can't seem to get going, America's charitable institutions are struggling to meet rising demands for help.
Donations by individuals, businesses, and foundations, appear not to be keeping pace with the need to feed, house, and clothe America's poor.
Also hard hit: many educational, religious, and arts organizations, as well as animal shelters and other small, single-purpose groups. They all saw potential donations siphoned away by the great, immediate human need in the wake of the terrorist attacks.
Yet, across the board, "the needs for help are as high or higher than in recent years," says Leo Arnoult, chairman of the Trust for Philanthropy, an arm of the American Association of Fundraising Counsel (AAFRC).
As a consequence, philanthropic groups are curbing costs by holding the line on staffing, trying more efficient methods of identifying potential donors, and avoiding marginal or unnecessary new program services. They are seeking donations in whatever form they can get them, including land, which has in many cases appreciated in value.
Charitable giving in 2001 reached $212 billion, according to Giving USA, one of the main sources of information on philanthropy in the United States.
That represented only a half a percentage point increase over the prior year, and well below the 6 percent rate of growth in 2000, at the end of the booming-stock euphoria of the 1990s.
Barring a last-minute spurt of giving during the holiday season, donations are not expected to grow substantially for 2002 over last year.
Most charities would be pleased just to hold their own this year, with perhaps a modest increase in funding to offset rising costs, says Mr. Arnoult.
"There is unfortunately a lagging effect under way now," stemming from a drop-off in donations after last fall's surge, says Stacy Palmer, editor of the Chronicle of Philanthropy, a nonprofit trade paper. "In 2001, the numbers were somewhat better because there were a lot of gifts in the [distribution] pipeline. Now, most of those gifts have been paid out, and there are fewer new big donations to replace them."
Charitable giving comes in four key areas, according to Giving USA: gifts from individuals, which represent about 75 percent of all donations; foundation grants, which constitute about 12 percent; bequests, about 8 percent; and corporate giving, about 4-5 percent.
This year, contributions from individuals, bequests, and corporations are believed to be either down or just holding their own. A recent survey by the American Affluence Research Center (AARC), in Pinecrest, Fla., concluded that about 1 in 5 respondents among those individuals with more than $3 million in assets planned to reduce their giving this year. Only about 1 in 10 planned to increase giving.
Traditionally, "high-net-worth individuals tend to make regular charitable donations, in part because of tax advantages," says Howard Waddell, executive director of AARC. For those with a gross adjusted income of between $200,000 and $500,000, the average annual donation is about $8,400, says Mr. Waddell, citing IRS statistics.
Corporations, facing difficult economic circumstances of their own, are struggling to meet prior-year commitments. Finally, giving by foundations is expected to be flat this year, and perhaps even in decline, according to the Chronicle of Philanthropy.
In part, that stems from shrinking assets held by foundations, which in many cases were invested in the stock market.
Charities most hurt by more stringent giving tend to be smaller organizations, many of them lesser known, or more community-based than national charities such as the Salvation Army or CARE.
Arts-based groups have been particularly hard hit, experts say, because of a decline in state tax revenues, which are often funneled to arts groups. Private donations, which appear to be rising, aren't enough to make up the shortfall.
Museums are also struggling to raise revenues. In many cases, attendance is down, as some people remain wary about venturing back into cities, where terrorist incidents might occur.
Still, those engaged in giving remain optimistic about Americans' generosity, while recognizing how financially strapped many are this year.
"More of the joy - and burden - of giving will need to be shared by individuals, perhaps more so than in more 'normal' times," says Arnoult.
"If you are in a position to donate, there is a great opportunity for doing so now," says Daniel Borochoff, president of the American Institute of Philanthropy, in Chicago. And don't forget international charities, Mr. Borochoff says, where need is also great.
Care should be taken over where a donor aims his or her gifts. Early problems with the distribution of Sept. 11 funds, Borochoff says, have made many Americans more skeptical about claims made by philanthropic organizations. Public pressure on charities to open their books has increased, he says.
Also, charities' accounting standards are being looked at far more zealously post-Enron. Questions have been raised, for example, about how United Way organizations count contributions. Some outside analysts believe that some count donations more than once to make their inflows appear more substantial than they actually are, perhaps seeking to encourage others to contribute.
When giving to a charity, you should always start by ensuring it is registered as a nonprofit organization by the appropriate state and federal authorities, according to the Better Business Bureau in Arlington, Va.
To do that, go to the GuideStar website (www.guidestar.org). Its database has information on more than 850,000 nonprofits.
Then, determine the percentage of total receipts used for program purposes compared with money spent toward fundraising or administrative costs. Most national organizations devote 70 to 80 percent or more of revenue for programs.
The BBB also counsels givers to beware of unknown charities that send "runners" to you in person, soliciting money. Most reputable nonprofit groups accept contributions through the mail, knowing that the donation will be just as important a week from today as now.