• December 19, 2014

Many Big Charities Struggle to Raise Money in the Bad Economy

Bad Economy Hobbles Biggest Charities 2

Courtesy of ASPCA

American Society for the Prevention of Cruelty to Animals—which sent workers to help rescue pets after the tornado this year in Joplin, Mo.—says stepping up disaster-related work has sparked new interest from donors.

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close Bad Economy Hobbles Biggest Charities 2

Courtesy of ASPCA

American Society for the Prevention of Cruelty to Animals—which sent workers to help rescue pets after the tornado this year in Joplin, Mo.—says stepping up disaster-related work has sparked new interest from donors.

The nation’s most successful fund-raising groups appear to be pulling out of the recession: They expect contributions to grow by a median of 4.7 percent this year, after a median 3.5-percent gain last year.

But only some types of big nonprofits are prospering, and the struggles faced by the rest paint a far more worrisome picture of the state of fund raising than the overall projection suggests.

In The Chronicle’s annual ranking of the 400 groups that raise the most from private sources, organizations collected a total of $70.3-billion last year.

Most of the gains were made by groups that receive the bulk of their contributions in the form of donated products, such as international charities or antihunger organizations.

Other winners were groups that raise most of their money in stock gifts, which revived with the market recovery last year. Those include Fidelity Charitable Gift Fund (No. 3.), which raised $1.3-billion, more than any other time since it was created two decades ago.

Happy to Hold Steady

But for nonprofits that depend primarily on cash gifts, the situation was not nearly as healthy. Looking at those groups alone, giving was virtually flat, increasing by 0.2 percent.

What’s more, the modest increases for the Philanthropy 400 don’t come close to erasing an unprecedented 11-percent decline in the total raised by charities on the survey in 2009.

Few fund raisers expect a turnaround anytime soon.

“You try to keep a happy face, but it is really tough after years of going through this,” says Alisa Borland, director of fund raising at the Conservation Fund (No. 310), where contributions dropped by more than 25 percent last year, mostly because of the declining value of land donated to the charity. But cash contributions also fell from $42.6-million in 2009 to $41.1-million.

Many fund raisers now take the view that just holding steady, or managing to raise slightly less than in the past, should be considered a success.

At Catholic Charities (No. 10), where contributions dropped 2.2 percent last year, to $793.8-million, those results are “pretty good,” says Kathleen King, the organization’s chief fund raiser. “Inthese serious times, sustaining is not bad.”

Adds David Yarnold, president of the National Audubon Society (No. 319): “Our major-gift fund raising was flat, and that is good news because a lot of organizations weren’t able to stay flat.”

Despite its modest 2.4-percent increase in total donations last year, to $55.8-million, Audubon is “very wary about the economy,” Mr. Yarnold says. “We all wake up at night worrying about it.”

Sharp Declines

Nonprofits on the Philanthropy 400 are an important bellwether because they raise nearly $1 of every $4 donated to American charities. But it is clear that smaller charities are suffering more.

In a study of 800 nonprofit organizations released last month by the Nonprofit Research Collaborative, 30 percent reported a drop in giving during the first half of this year, and another 25 percent said donations were flat. Groups with budgets of $3-million or less were more likely to report stagnant or declining returns. (See article on Page 23.)

Not only are charities of all sizes encountering struggles to raise money but just about every type of giving has been hurt. Whether fund raisers are pursuing individual gifts or corporate and foundation grants, “it’s harder in all of them,” says Jack Murray, director of development at the Natural Resources Defense Council (No. 218), where contributions declined by more than 4 percent last year, to $88.5-million.

Since 2010, when his organization wrapped up a five-year campaign that raised $531-million, Mr. Murray says he has noticed yet another bad sign: Many wealthy donors who made big pledges in 2005 and 2006 paid them off, but they have now sharply cut their giving.

“The usual line of thinking is that a lot of people will stay up at the campaign level or at least above where they were before,” he says. “We’re seeing more people going back to the precampaign level. The recession has intensified this.”

Indeed, the number of gifts and amount contributed by wealthy donors has dropped sharply since the recession started, according to The Chronicle’s annual tally of gifts of $1-million or more. Last year, gifts of that size totaled $4.1-billion, only a third of what such donations were worth just two years before. Some 574 such gifts were made in 2008, compared with 361 last year.

'A Tough Slog’

Donors of more modest means aren’t any easier to find.

Catholic Relief Services (No. 51) spent $1-million more last year on mailings to recruit donors, an expenditure it playfully dubbed the “million-dollar baby.” But even with the extra money, the charity attracted only about as many new donors as it did in past years, because it’s more difficult to persuade people to give, especially to causes they have not previously supported.

“It’s a tough slog out there,” says Michael Wiest, executive vice president for charitable giving and awareness.

Other Philanthropy 400 charities say that corporate and foundation gifts have withered—and they doubt they will be the beneficiaries of many such gifts again.

Arts organizations have been hit especially hard.

“Corporate giving has been permanently changed,” says Amy Purvis, development director at the Museum of Fine Arts, Houston (No. 277), which raised $64.6-million last year.

“We have seen a lot of corporate support evaporate,” she says. “There are far fewer corporate foundations these days, and any gifts are coming more from marketing. Six-figure sponsorships of exhibitions have dried up.”

While the museum continues to get some corporate support, she adds, the last time the museum received a seven-figure corporate sponsorship was in 2007, when JPMorgan Chase gave $1-million to sponsor an exhibit of Impressionist paintings.

But a few museums on the Philanthropy 400 have been able to find new corporate sponsors.

While the Art Institute of Chicago (No. 300) suffered a decline in overall giving last year, it is about to receive two sponsorships from companies that will underwrite exhibits for two to three months.

In exchange, the companies will be able to offer their clients special perks, such as breakfast and a private tour with an Art Institute curator or a cocktail reception that shows how the museum’s conservation department works.

One company is giving more than $1-million, while the other is giving more than $100,000 so the Art Institute can create “experiences that only we can provide,” says Elizabeth Hurley, vice president for development.

A Fund Raiser’s Dream

While many charities in the Philanthropy 400 limped along last year, some managed to increase contributions by 10 percent or more.

An arts organization in one of the most depressed cities in America made one of the biggest gains.

The new Smith Center for the Performing Arts (No. 258), in Las Vegas, vaulted into the Philanthropy 400 for the first time by raising $71.7-million last year.

The center, which will open in March, is seeking a total of $470-million in its capital drive.

One of the first gifts was $50-million from the Donald W. Reynolds Foundation, which went on to increase its support to about $200-million. The foundation’s donations have been instrumental in attracting support from the city’s government, which placed a 2-percent tax on car rentals to help pay construction costs. The organization has also attracted 54 gifts of $1-million or more.

“This is what a development person dreams of,” says Terry Jones, Smith’s chief fund raiser.

Facebook Fans

Another charity that has achieved steady increases is the American Society for the Prevention of Cruelty to Animals (No. 172), which raised $111.3-million last year, an increase of 10.2 percent. The organization expects another 10-percent gain this year, and “that’s a conservative estimate,” says Todd Hendricks, senior vice president for development.

In recent years, the society has spent significant sums to recruit monthly donors with television and other advertising. Since 2005, when it worked to help animals displaced by Hurricane Katrina, the charity has also built up its ability to help pets in disaster zones, a move that has improved its visibility and drawn more donors to its work.

And Mr. Hendricks says that his organization’s aggressive use of social-media tools such as Facebook, where it has a million supporters, is another big reason contributions have continued to grow.

“We had to go into social media,” Mr. Hendricks says. “Right now it is hard to tie fund raising directly to social media, but some of our content is reaching 2 or 3 million fans of our fans, and we know they come to our Web site, and it is raising money, though we cannot track it.”

In a financial downturn as severe as this one has been, Mr. Hendricks adds, “we realized we needed to be communicating more effectively in all channels. This was not a time to turn down the message. It was time to turn it up.”

Peter Bolton, Marisa López-Rivera, and Caroline Preston contributed to this article.

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