Giving Bounces Back

By Holly Hall, Leah Kerkman, and Cassie J. Moore

Donations to America's biggest charities grew by 11.6 percent last year, according to The Chronicle's 15th annual survey of the 400 charities that raise the most money in the United States.

And 2005 has already

ALSO SEE: DATABASE: The Philanthropy 400 Special Report: The Philanthropy 400 How The Chronicle Compiled Its Annual Philanthropy 400 Rankings Causes and The Support They Garnered Groups Whose Noncash Gifts Accounted For More Than Half Of Donations Groups That Raised More Than $1-Million in 2004 For Tsunami Relief How the Total Dollars Raised by the Philanthropy 400 Charities Has Fluctuated

been a strong fund-raising year for many groups. At the 79 charities that provided fund-raising totals for the 2005 fiscal year, contributions grew by a median 7.3 percent, meaning that half achieved bigger fund-raising gains and half did worse.

Although many people in philanthropy have been worrying about the effects of the spate of natural disasters around the world -- the December tsunamis, Hurricanes Katrina and Rita, and this month's earthquake in India and Pakistan -- few large charities say they have seen a big slowdown in contributions because donors are giving to relief efforts.

Indeed, many of the nation's most-successful charities say they are now raising as much or more than they did in the late 1990s, when charities in the Philanthropy 400 reported double-digit percentage increases in giving due largely to the booming economy. As the stock market fares relatively well and real estate keeps rising in value, many affluent donors feel comfortable expanding their charitable gifts.

What's more, many fund raisers are expecting a spurt in super-size donations over the next few months, as donors take advantage of a new law, enacted after Hurricane Katrina, that allows taxpayers to write off up to 100 percent of their income for charitable gifts made before January 1.

Even as giving recovers from several lackluster years, however, nonprofit officials say they still face daunting challenges. The rising cost of fuel and postage is increasing charities' operating costs and squeezing the wallets of many people with low or moderate incomes -- individuals whose small gifts add up to a lot of money for many charities.

In addition, charities face growing competition as more and more groups mount ambitious fund-raising campaigns, particularly as governments cut back financing for charities and a wide range of groups seek to help hurricane survivors get adjusted in new areas and rebuild their lives.

United Way Tops the List

In the Philanthropy 400 rankings, United Way of America was No. 1. The nation's 1,350 United Ways raised $3.9-billion, an increase of 0.4 percent from 2003. United Way was followed by the Salvation Army, which was No. 1 in last year's survey and raised $1.5-billion (9 percent more than in 2003). Feed the Children rose to No. 3, up from No. 9 on last year's list.

Feed the Children, an Oklahoma City group, raised $888.1-million, an increase of 57 percent from 2003. The charity received 90 percent of its donations in the form of food, medicine, clothing, and other items it gives to the needy.

The American Cancer Society, raising $868.1-million (a 9-percent increase), was ranked No. 4, and the AmeriCares Foundation, which provides food, medicine, and other donated items to survivors of natural disasters around the world, raised $800.5-million (a 15-percent increase), taking the No. 5 spot.

Rounding out the list of the top 10 charities: the YMCA (No. 6), Gifts In Kind International (No. 7), Lutheran Services of America (No. 8), the Fidelity Charitable Gift Fund (No. 9), and Catholic Charities USA (No. 10).

For the first time in the history of the survey, the American Red Cross did not make the top 10. The organization raised $557.1-million last year, a 5-percent decline, and fell to No. 11 from No. 8 last year. The Red Cross is likely to be back in the top 10 list next year, when it will report some $532-million raised after the Asian tsunamis. The donations the Red Cross raised after Hurricane Katrina, which now total $1.2-billion, will be included in the organization's 2006 fiscal year.

Many charities on the Philanthropy 400 list are in a similar position. The majority of tsunami donations were made after December 31 and will not show up in donation tallies until 2005. The 31 charities that did report tsunami donations in 2004 received $41.4-million.

Ten groups raised more than $1-million for tsunami relief, but only one, the Mennonite Central Committee (No. 344), reports that tsunami contributions accounted for more than 10 percent of its private support. The committee, which provided figures for the fiscal year ending in March 2005, had three more months to collect donations than charities whose fiscal year ended December 31. Those donations, $6.8-million, made up nearly 15 percent of the charity's contributions last year.

Donations to the charities on the 400 list totaled $53.9-billion last year, or more than $1 out of every $4 given to nonprofit groups last year. Charities raised $248.5-billion in 2004, according to Giving USA, an annual yearbook on philanthropy published by the American Association of Fundraising Counsel, in Glenview, Ill.

Changes in Approach

This year's Philanthropy 400 rankings were influenced by a major change in The Chronicle's approach to gathering data.

To better compare organizations that raise money across the United States, The Chronicle stepped up its efforts to persuade groups to consolidate the fund-raising results of their local affiliates.

While many, such as the Red Cross and the YMCA, have long done that, some big organizations have not. Local United Ways made the change, catapulting the United Way of America into the No. 1 spot. In last year's survey, only 25 individual United Ways raised enough to make the list on their own. To be included on this year's list, charities had to raise at least $34.1-million.

Some especially large organizations declined to consolidate their figures, including United Jewish Communities, whose 155 local Jewish federations raised more than $2-billion last year, more than any group except United Way. Even so, United Jewish Communities and 12 Jewish federations raised enough on their own to be included in the rankings.

Ambitious Goals

For many charities, 2004 was the beginning of a significant upswing in capital campaigns and other fund-raising projects with record-breaking goals, and many groups expect ambitious campaigns -- financed by donors who make multimillion-dollar gifts -- to be the norm as long as the economy does not falter.

"We seem to be back where we were in the 1990s," says Peter Hansen, director of external affairs at the Nelson-Atkins Museum of Art, in Kansas City, Mo. (No. 223). "This is the decade of bricks and mortar and growing endowment. It's so much better than four years ago."

Mr. Hansen and his colleagues are in the homestretch of back-to-back capital and endowment campaigns to raise $125-million and $100-million, respectively. Last year alone, contributions rose by more than 130 percent to $66.6-million.

Twenty-nine of the 126 colleges and universities in the Philanthropy 400 were engaged in campaigns to raise $1-billion or more last year. Six of those drives have been successfully concluded with the help of wealthy donors. Among them: a billion-dollar campaign at the University of Arkansas at Fayetteville (No. 190), which prompted a $300-million gift, the largest ever made to a public university, from the family of Sam Walton, who founded Wal-Mart.

The Art Institute of Chicago (No. 294) is now in a drive to raise $450-million. By last month, it had raised more than $200-million, $160-million of it from 50 board members, with 20 donors each giving $5-million or more.

"The mega-gifts have come back," says Bruce Flessner, a Minneapolis fund-raising consultant who advises higher-education and arts institutions.

Indeed, several institutions received landmark donations last year, many in the form of bequests.

National Public Radio shot up to No. 32 on the Philanthropy 400 list -- it was No. 219 in last year's survey -- with a $229-million bequest from Joan B. Kroc, the widow of the founder of McDonald's restaurants. The Museum of Fine Arts, Houston (No. 45) received a $450-million bequest from Caroline Wiess Law, a Texas oil heiress.

Matching Gifts

Some organizations are doing well in their capital campaigns by finding ways to motivate donors to make huge donations in relatively short periods.

The Museum of Fine Arts, Boston (No. 195) is in a seven-year drive to raise $500-million by 2008. The campaign got a big boost from several anonymous donors, who offered a dollar-for-dollar match of up to $35-million for new pledges of $1-million or more, but only if they are paid off within five years.

Patricia Jacoby, director of the museum's capital campaign, says that the match was offered nine months before the campaign was scheduled to go public, because museum officials wanted to be sure to have 60 percent of the goal in hand when the campaign was announced.

To qualify for the match, donors who made previous seven-figure gifts had to make new contributions bringing their total giving up to $2.5-million, $5-million, or $10-million. The $35-million was matched in just six months, and donations grew by more than 100 percent to $78.3-million last year.

As fund-raising goals grow, many organizations are stepping up their efforts to win planned gifts -- bequests, charitable trusts, and other donations that offer big tax breaks and other financial benefits.

Fund raisers say that wealthy donors have become increasingly savvy about such gifts and are making them earlier in their lives than in the past.

"People are becoming interested at younger ages," says Donella M. Rapier, vice president of alumni affairs and development at Harvard University (No. 12).

Instead of waiting until their 60s or 70s, Ms. Rapier says, people in their 50s are increasingly setting up charitable trusts. Donors make a gift to the university, which manages the money and provides them with payments from the investment earnings.

Donor-Advised Funds

Other types of gifts, particularly contributions to donor-advised funds and gifts of real estate, increased sharply last year.

After a nearly 16-percent decline in 2003, contributions to the Fidelity Charitable Gift Fund (No. 9), in Boston, grew by more than 10 percent to $683.1-million last year. Since then, Fidelity's donations have improved even more: Contributions grew 35 percent to $923-million in the fiscal period ending in June.

The key reason for those increases has been a strengthening stock market, says David L. Giunta, president of Fidelity's gift fund, which was the first charity created by a major financial institution to accept donor-advised funds. Through such funds, donors earmark their money for specific causes.

At the Vanguard Charitable Endowment Program (No. 28), in Southeastern, Pa., gifts of stock accounted for 62 percent of all contributions to donor-advised funds this year, up from 45 percent of the $309.6-million received last year.

The three other donor-advised funds in the Philanthropy 400 run by financial institutions -- Ayco, Schwab, and the U.S. Charitable Gift Trust -- posted double-digit percentage increases in donations last year.

Community foundations saw similar increases in donor-directed funds. The Columbus Foundation (No. 220), in Ohio, raised $66.9-million last year, nearly half of which was contributed to new and existing funds, says Philip T. Schavone, vice president of development. He says that is the most the foundation has ever raised for donor-advised funds, plus it established 111 new funds last year, a record number.

At the Community Foundation Silicon Valley (No. 67), in San Jose, Calif., where 95 percent of assets are in donor-directed funds, officials have already received 32 gifts of $1-million or more this year, up from 12 last year, when the fund raised $182.3-million.

Hoping to compete for such gifts, and following the example of other big charities, Rotary International (No. 140), in Evanston, Ill., decided to set up its own donor-advised fund two years ago.

Donors who set up a fund at Rotary must agree to donate $250 to the charity in addition to a percentage of their annual balance each year. Besides encouraging additional Rotary grants from the account, the charity also requires that at least 50 percent of each account's market value be transferred to Rotary at the donor's death.

"We noticed that more and more of our donors were making annual gifts off a donor-advised fund they established," says John Osterlund, Rotary's general manager. So far, 61 donors have given $2.9-million to the new fund.

Real Estate's Role

The red-hot real-estate market is helping many charities raise large sums. Last year Community Foundation Silicon Valley created a separate nonprofit entity to accept and market donations of property and has since received two: a vacation home the foundation sold for more than $1-million and an $18-million office complex donated by John A. Sobrato, a real-estate developer, and his son.

Kim Wright-Violich, president of the Schwab Fund for Charitable Giving (No. 86), in San Francisco, says donors are interested in real-estate gifts now because of speculation that property values may soon start to drop. Donating property to a charity when it is at the top of the market -- and can be sold for the highest price -- maximizes both the size of the gift and the donor's tax write-off.

What's more, with some properties, donors avoid capital-gains tax by donating the property, rather than selling it and making a cash gift with the proceeds.

"With all this talk about the real-estate bubble," Ms. Wright-Violich says, "people are assuming we're at the top of the market, and that would be the best time to get the most from a gift of real estate."

Trips and Seminars

As charities on the Philanthropy 400 increasingly raise a big percentage of their funds from affluent people, many groups are starting new efforts to bring wealthy donors into closer contact with their institutions, through elaborate trips, carefully executed educational seminars, and other forms of face-to-face involvement.

After its $75-million capital campaign ended last year, KQED (No. 290), a San Francisco public-broadcasting station, started offering new perks to donors who give at least $10,000 annually. The 65 donors who have so far made such gifts, totaling $1.5-million this fiscal year, are invited to intimate gatherings where they rub shoulders with public-broadcasting celebrities like the author and former news anchor Robert MacNeil.

Paying more attention to wealthy donors helped the John F. Kennedy Center for the Performing Arts (No. 358), in Washington, raise $39.8-million last year.

In 2004, the Kennedy Center started a new group for donors interested in supporting international art exchanges and arranged for the 31 new members, who donate at least $50,000 annually, to travel to St. Petersburg, Russia, for the White Nights Festival, several days of art performances, dinners, and balls during the summer solstice. Donors pay for the costs of the trip.

"We bring them experiences they wouldn't have on their own," says Marie Mattson, the center's development director.

Carol O'Brien, a Durham, N.C., fund-raising consultant who has worked with several Philanthropy 400 charities, says more and more charities should start similar efforts.

"People want an experience," she says, not a transaction involving a thank-you note and a receipt when they make substantial gifts. "The high-end experiential relationship is what people crave."

Charities are also trying other ways to connect with donors.

In Missouri, the Greater Kansas City Community Foundation (No. 139), which raised $106.4-million last year, a 38-percent increase, now offers donors access to detailed information on 650 local charities before they decide where to give. The foundation spent two years compiling information on local groups for a computerized database and began using it with donors in 2003.

Now, instead of relying on limited knowledge and word of mouth when donors ask about charities that meet their interests, "I look in the database and it pulls out 20 organizations with 20 profiles," says Laura McKnight, senior vice president for development. "I sit down and look at the profiles with the donor. It is less about me picking a favorite cause and more about us learning together."

Other charities are also trying to do more to appeal to donors' interests. At the American Committee for the Weizmann Institute of Science (No. 263), rather than asking donors to give a specific dollar amount based on what they gave in the past, fund raisers now tailor their solicitations to donors' interest in scientific research. That's one reason the group raised $56.4-million in 2004, an increase of 18 percent, and is reporting another 17-percent increase in the fiscal year ending in June.

Stepping Up Fund Raising

Noting the success of organizations that reach out to wealthy donors, many charities that previously did not actively seek gifts from individuals are beginning to do so.

Gifts to Shriners Hospitals for Children (No. 55) dropped by 13 percent, to $213.0-million, last year. Edgar McGonigal, director of development, says that Shriners has taken a passive approach to fund raising, relying on bequests for 80 percent of its contributions. But, since the end of last year, it has hired seven fund raisers and started sending out direct-mail appeals. Donations are now up by 7.5 percent compared with a year ago, Mr. McGonigal says.

At Boys & Girls Clubs of America (No. 16), donations were flat last year, despite an increase in the amount of money raised from corporations and other sources that gave to the charity's national headquarters.

For the charity's 3,700 local clubs, "these are difficult times," says Kurt Aschermann, senior vice president for marketing. "We only get about 19 percent of our money from individuals."

He says that the charity has started training local leaders in how to win donations from people. From January to the end of August this year, the clubs reported raising 50 percent more than during the same period in 2004.

Grant-Maker Support

Charities that rely on foundations and corporations had mixed results last year.

At Girls Incorporated (No. 306), in New York, donations declined by 16 percent to $47.5-million. While charitable giving is up overall, some youth-service organizations are not seeing an increase, according to Girls Incorporated's chief development officer, Jan Roberta. In addition, she says, the charity sees signs that foundation support may decline.

But other charities, noting stock-market improvements that helped revive foundation assets, saw grants rise. The National Trust for Historic Preservation (No. 375), in Washington, received 15 percent more in foundation grants last year. The $3.8-million in grants helped the organization raise $37.7-million.

Corporate support was more difficult to come by in 2004 for many charities in the survey. Some arts groups, for example, say corporate donors that sponsor exhibits, tours, and other events have become more reluctant to do so unless the event gets television coverage. "Unless there is a big media component to help them get visibility, it's a much harder sale," says Julie Diaz, vice president of development at the Philadelphia Orchestra Association (No. 182), which raised $85.1-million last year and saw some companies decrease their giving.

Meanwhile, companies like Cigna, formerly a big sponsor of overseas tours by the orchestra's musicians, Ms. Diaz says, "don't want to do it anymore."

Companies that have become global in their operations, she says, no longer find sponsoring tours to be a useful way to make contacts with high-level officials in other countries since they already have such contacts.

Christopher E. Jones, vice president of external relations at the Hispanic Scholarship Fund (No. 339), in San Francisco, says he worries that many companies are more interested in using philanthropic dollars to get in front of potential customers than they are in helping people.

"We see a slow but steady migration from scholarship funding to other things that get them more brand recognition in the Hispanic community," Mr. Jones says.

For $100,000, a corporation can provide scholarships to 40 young people, he says, but a company is more likely to want to spend the same amount to sponsor seminars on topics such as how to plan for college and reach 50,000 families. "It's disturbing," says Mr. Jones. "The No. 1 reason kids don't graduate from college is a lack of financial resources. Scholarships are not that sexy, but they're the most needed."

Debra Blum, Suzanne Perry, and Elizabeth Schwinn contributed to this article.