The disappearing donor
- May 28, 2009
Marc Broderick has trouble sleeping some nights because he’s concerned about paying college tuition. He’s not worrying about his own children but the students at George Mason University (GMU) who depend on scholarships to pay for college. As GMU’s vice president for development and alumni affairs, it’s Broderick’s job to raise money for the school’s endowment, which supports student scholarships. But lately, the students aren’t the only ones who are cash-strapped. So are Broderick’s donors.
“I’ve been in this business for 16 years, and in my professional career, I have never seen economic conditions affect giving the way it has,” says Broderick. “Talking with people about giving money when they have lost jobs, when people’s life savings have been reduced by 60 percent, is challenging.”
Just like Main Street and Wall Street, nonprofit organizations also are suffering because of the ailing economy. With more companies and individuals struggling to balance their budgets and investment portfolios recording double-digit losses, many nonprofits in Virginia and across the nation are now seeing a decline in charitable giving.
According to the Association of Fundraising Professionals, only 46 percent of charities raised more money in 2008 than in 2007, a new low in the survey’s eight-year history. Usually that number is around 60 percent. Forty percent of organizations surveyed reported raising less money in 2008 than the previous year. The remaining 14 percent of respondents raised the same amount as in 2007. “Fundraising decreases were seen across the board, regardless of issue, size or geography,” the association reports.
“Nonprofits have been hit on all sides: private funding, corporate funding, government funding, you name it,” says Michael Nilsen, the association’s director of public affairs. “Certainly there are organizations that are doing OK, and certainly we are seeing some organizations raise more money, but in general, all the signs are way, way down.”
This decline in giving comes at a time when the need for services is rising. Organizations that specialize in providing the basics, like housing, food, health care and job training, are reporting increasing demand for their services. For example, in the Roanoke Valley, 37 percent of calls to the state’s 211 information hotline last year requested money to meet basic needs, almost double what it was the previous year.
Organizations such as The Community Foundation in Richmond are trying to help with increased demands for service. The foundation set up a safety net fund last November, seeded with $1.8 million, to provide grants to nonprofits for immediate needs. As an example, Commonwealth Catholic Charities was awarded $75,000 for its food pantry and Goodwill Industries of Central Virginia received $97,000 to staff job centers. “The [safety net fund] committee meets on a monthly basis, so we can respond quickly,” says Susan Hallett, program officer for The Community Foundation.
The foundation’s community grant program also is seeing a spike in demand. “We’ve seen the effects of the economy in the number of requests we get both in dollar amounts and number,” Hallett says.
During the fall grant cycle, the foundation received 160 requests for assistance, totaling $8 million. A more typical cycle draws 100 requests of around $6 million. “We expect to see a continued increase,” says Hallett. “Nobody really knows how things are going to turn out through the end of this year.”
Generally, all forms of charitable giving to nonprofits are down, but corporate contributions and new donors have become especially scarce. “Corporate funders are either nonexistent or have significantly reduced contributions,” says Hallett.
The effects of that trend are being felt at the Colonial Williamsburg Foundation. It reported 20,000 new donors in 2008, contributing $900,000. “We are making every effort to attract new donors,” says Colin Campbell, the foundation’s president and CEO. But he acknowledges, “It’s a time where people are less inclined to branch out in their philanthropy.”
The foundation is conducting an ambitious direct-mail campaign, trying to find new donors, but that could be scaled back depending on response, says Campbell.
Rising unemployment is being blamed for falling contributions in some areas. The United Way of Roanoke Valley, for example, raised 4 percent less in its 2008 fundraising campaign than in 2007. At the same time the region’s jobless rate was climbing from 3.6 to 6.5 percent. “When you see a loss of jobs, invariably it will have an impact on the fundraising results,” says Frank Rogan, the United Way’s president and CEO. “People who had money and had a job gave money and those that were uncertain or out of a job weren’t able to give.”
The $300,000 drop in revenue meant the United Way had to make some tough choices. “We had to cut our budget, staff didn’t get raises and we dipped into our reserve fund [to fund programs],” says Rogan. “It’s going to be a tough year ahead. A lot of folks are going through some tough times they’ve never gone through before.”
Giving trends are similar at GMU, the University of Virginia and the Chrysler Museum of Art in Norfolk.
“We have seen things slow down since December,” says GMU’s Broderick. “We are seeing the same level of enthusiasm for GMU. However, many of the people we are speaking with ask us to come back and have the same conversation once the economy turns around, so they are not saying ‘no,’ they are just saying, ‘not now.’ ”
At U.Va., the fundraising team is putting more attention on repeat donors. They’ve boosted their face-to-face visits with alumni and parents by 26 percent.
“We really redoubled our efforts,” says Charles Fitzgerald, the university’s senior associate vice president of development and public affairs. U.Va. has seen cuts in state funding, and its endowment lost $1.3 billion between July and February because of declines in the value of investments.
“It’s making our goal for raising private funding even more important,” says Fitzgerald.
The university launched an ambitious campaign in 2004, with the goal of raising $3 billion by 2011. At of the end of February, $1.8 billion had been raised — about 2 percent less than projected donation levels.
Meanwhile, giving at the Chrysler Museum is down around 20 percent so far this year. “The response has been different in different parts of our donor base,” says William Hennessey, the museum’s director. “Some members are renewing at lower levels, and some aren’t renewing. Our most generous supporters have stuck with us.”
Chrysler’s fundraising team is working hard to raise money to fully fund the museum’s $7 million budget. “We think we are going to make it, but it’s going to be close,” says Hennessey.
Hennessey and others are not as optimistic about 2010, though. “We’re still waiting for a lot of the impact of the recession to strike people,” he says. “Everyone is still very uncertain about what all this means and how long it’s going to go on. We’re going to be here. There’s no question about that, but what may happen is that the quantity of our special exhibitions may come down.”
GMU’s Broderick is also concerned about what next year will bring. “It’s unclear; it’s unknown. I stay awake at night worried about what’s going to happen in FY10.”