Charity clash

In the wake of the terrorist attacks on the World Trade Center and the Pentagon, Americans have given an unprecedented sum—currently more than $675 million and rising—to charities. Most of the money has gone to a handful of disaster relief and victim assistance groups such as the Salvation Army and the Red Cross.

But some fear that, despite the historical levels of giving, many of the nation’s 1.7 million charities will be left hard up for money. “Shelters may have to close, food kitchens may have to turn people away, clinics may not be able to provide medicines. … These are worst-case scenarios,” said Sarah Melendez, president and CEO of Independent Sector, a coalition of more than 700 nonprofit groups.

A number of factors caused by the destruction a month ago have combined to make fund-raisers worry. First, many nonprofits have halted their fund-raising efforts because of the attacks. Second, foundations that normally support a wide range of charities have redirected their money to organizations directly involved with assisting the victims of the attacks. Third, the fast-falling stock market has hurt the portfolios of many donors and donor organizations, which rely on their investments to fund their efforts.

The slowing U.S. economy hasn’t helped matters, either. According to the American Association of Fundraising Counsel Trust for Philanthropy, in 2000 charitable giving dropped to its lowest level in five years, and presumably fell even lower in the first half of 2001.

Local fallout
Katy Thoma, director of Chico’s Jesus Center and its free-meals program, reports the charity’s Sept. 21 fund-raiser brought in $20,000 less than last year’s.

“This is important because we are providing a real basic need—we’re providing food,” she said. “But we still have to pay our PG&E bill and our water bill.”

The eternally upbeat Thoma described her operating budget as “as lean as we can get. I went through the budget with a magnifying glass, and there is just not a lot of fat there.”

She said the organizations bill’s are currently up to date and at this point the staff is “praying” to make it through the next few months.

“In the eight years I’ve been here, we’ve always paid our bills on time and met our payroll,” she said.

The combination of people sending money and aid to New York as well as an uncertain economy accounts for the local downturn in contributions, she said.

“People are just holding onto their money,” she said. “But, for Christians, giving is not a multiple choice. In this country there are a lot of fat cats. We grumble when we have to turn the air-conditioner up to 80. We don’t know what suffering really is.”

Suspended Fund Raising
“We have determined it is highly inappropriate for us to be in the mail soliciting at this point in time,” Amnesty International USA’s director of development, Catherine Carpentieri, told The Chronicle of Philanthropy. The group has cancelled several direct-mail campaigns and postponed two fund-raising events so far.

And it’s not alone. Across the country, groups ranging from the National Rifle Association to the Robinson Township Library Association in Robinson, Penn., have cancelled mailings, fund-raisers and more.

How this will affect charities in the long run is unclear. “Our response rates to direct mail have been depressed,” said Jordan Peavey of the Nature Conservancy. But others are more optimistic. “People who give have always been folks who support an average of six or seven causes,” said Sheri O’Dell of Craver Mathews Smith and Company, a fund-raising firm that handles direct mail campaigns for clients such as the ACLU and Habitat for Humanity. “They’re giving to relief organizations as well as their usual causes.”

Independent Sector’s Melendez sounded a note of caution. “We don’t know whether this is going to be a huge problem or not. If the crisis has caused people to give the amount they have to give this year, we may have problems.”

Reallocated Funds
Some of the millions of dollars given by foundations to groups assisting in the recovery from the terrorist attacks was “new” money—funds that foundations had not been planning to give away this year. But some of the millions were not. They came from “discretionary funds,” pots of money that foundations annually set aside to give, but wait until the end of the year to award.

The Annie E. Casey Foundation’s $3 million grant to disaster relief charities came from such discretionary funds; likewise, the Ford Foundation’s $10 million grant and the Robert Wood Johnson Foundation’s $5 million.

While larger nonprofits often raise enough money by mid-year to keep their doors open through December, “a lot of smaller charities depend on discretionary funds to make ends meet,” said Juliet Page, development director for the Parks Council, a local New York City charity that supports public parks and recreation. The Parks Council, she said, often hopes for end-of-year money from foundation discretionary funds to help cover operating costs.

With much of those funds now redirected to disaster relief, some smaller charities are wondering if they will have enough money at the end of the year.

Depressed Stock Market
“The stock market has lost around 14 percent in the last two weeks,” said Patrick Rooney, director of research at the Center on Philanthropy at Indiana University. “It’s somewhat inevitable that you will see a decline in foundation giving this year or the next, if the market doesn’t recover.”

Most foundations keep a large portion of their money in stocks and related investments. For the past five years, this has been good policy. But in the last two weeks they have watched their portfolios weaken—and their ability to give, as well.

Moreover, Rooney pointed out that a slumping economy could hurt giving from all sources, as corporations and individuals will have less money to give away.

“It doesn’t mean overall giving will decline,” Rooney said. “But the rate of growth may slow.”

Tom Gascoyne contributed to this story.