Gifts to Charity in 2002 Stayed Unexpectedly High

Posted June 24, 2003

An Article to Ponder by Those Who Support Their churches

Gifts to Charity in 2002 Stayed Unexpectedly High

By Stephanie Strom
Taken from the New York Times

Charitable giving held up last year, in spite of an uncertain economy, international turmoil, increased unemployment and other factors that might have put a damper on it.

Americans gave an estimated $240.92 billion in 2002, a 0.5 percent decrease on an inflation-adjusted basis from the previous year, according to Giving U.S.A., an annual tally of charitable contributions published by the A.A.F.R.C. Trust for Philanthropy, a unit of the American Association of Fundraising Counsel, and compiled by the Center on Philanthropy at Indiana University.

Estimated giving amounted to 2.3 percent of the nation's gross domestic product, extending a trend that began in 1999, the first time since 1971 that charitable contributions exceeded 2 percent of the total output of goods and services.

Also, based on new data from the Internal Revenue Service, the trust has revised its estimate of giving in 2001 to $238.46 billion, an increase of more than $26 billion over its original estimate.

"Giving did hold its own in spite of reports of great difficulty in fund-raising," said Leo P. Arnoult, chairman of the trust, referring to the data for 2002. "Giving is still pervasive and broad, perhaps because our culture treats all philanthropic activity, even the widow's mite, respectfully."

In general, the report mirrored earlier gauges of giving, both statistical and anecdotal. But it differed significantly in one area: Giving U.S.A. put charitable contributions by corporations and corporate foundations at $12.19 billion for last year, an 8.8 percent increase over the previous year when adjusted for inflation.

That runs counter to anecdotal reports from charities and other fund-raising entities that say corporate gifts have fallen more significantly than others. Mr. Arnoult said he believed corporations have gotten better about accounting for their gifts, particularly those of materials and products, and he noted that corporate profits fell only 2 percent in 2002, compared with 17 percent in 2001.

While giving may have remained stable last year, many nonprofit organizations say they have struggled to raise money to support their activities. Many report lower corporate giving. Foundation endowments have declined, mirroring the stock market, and fund-raisers say that individuals are reassessing the way they give, for example, making larger donations to two or three organizations instead of five or six.

"This is cheering data, but it's macro data," said Jon Small, executive director of the Nonprofit Coordinating Committee of New York, a trade group representing more than 1,100 organizations. "I believe it masks a wide range of fund-raising successes and failures on an organization by organization basis."

Take E.M.Q. Children and Family Services, an organization based in Campbell, Calif., that provides mental health services in Silicon Valley for emotionally disturbed children and their families. Charitable contributions to the organization fell by almost $500,000 in the fiscal year that ends June 30, a decline of roughly 25 percent.

Scott Staub, vice president of fund development at E.M.Q., would not release figures because he has not yet given them to the organization's board, but he said that a direct-mail campaign had had disappointing results and that donors who might have given $10,000 in the past had given $2,500 or $5,000 this year instead.

While those gifts account for a tiny part of E.M.Q.'s budget of roughly $50 million, their worth has increased because E.M.Q. knows it will receive far less from federal, state and county governments, which supply the bulk of its revenues.

"We have increased our fund-raising goal by about 15 percent in spite of our experience," Mr. Staub said. "I think we'll be successful because we are going to try to communicate more effectively with our donors. We have to."

Giving U.S.A. reported that organizations providing human services suffered the steepest decline in charitable contributions, which fell 11.4 percent on an inflation-adjusted basis, to $18.65 billion. These groups have seen increased demand as unemployment worsened and costs of living rose.

“Human services is traditionally the third sort of charity that people will give to," said Julia Erickson, executive director of City Harvest, which supplies food to soup kitchens and food banks in New York City. "They normally give first to some educational institution, their alma mater, maybe, or their children's schools, and then to health-related things because almost everyone has someone in their family who's had a serious health problem. Human services is the third cause, and if they're tightening their belts, it'll be the first to go because people who are donors don't think of themselves as needing those services."

City Harvest faced a $2.4 million budget shortfall and laid off 22 of its 108 employees in March, blaming a sharp fall in direct-mail receipts and disappointing product from those campaigns.

Ms. Erickson said she was surprised giving had held up in 2002 when many had thought it would fall because so much philanthropy had been directed to charity related to the terrorist attacks of Sept. 11, 2001. Instead, donations began plummeting this year, she said.

City Harvest, which ends its fiscal year on June 30, was one group that was able to regain its footing, however, thanks to the widespread publicity that its woes generated, Ms. Erickson said late last week. Its spring direct-mail campaign, which began the week that City Harvest announced layoffs, brought in $200,000 — $60,000 more than anticipated — and several foundations increased support for the organization.

"We'll end the year just under what we did last year, but next year is a different story," Ms. Erickson said.

Like City Harvest, many organizations have posted steady or even slightly increased fund-raising results because of unexpected gifts. "We anticipated that we would raise only $10,000 or $12,000 on our last fund raising event, and we raised $28,000," said Robert A. Shamy, director of fiscal and human resources at the El Paso Child Guidance Center in Texas. "We were able to keep our costs real low, but I really can't explain it."

Dartmouth College's class of 1978 raised a record-setting $14.4 million in its 25th reunion year, a gift that the college president, James Wright, called "astonishing." The report showed an inflation-adjusted 2.6 percent drop in giving to educational institutions last year.

Carrie Pelzel, Dartmouth's vice president for development, predicted that giving would remain constant this year. "Donors are continuing to make large commitments to institutions and causes that are making an impact somehow," she said. "They are being careful about the timetable for their giving, slowing down their payments, and making contributions to the annual campaign rather than to the capital campaign, but they're continuing to give."

The Pan-Massachusetts Challenge, a bicycling event that raises money for the Jimmy Fund, which supports research at the Dana-Farber Cancer Institute in Boston, raised $15 million last year, $1 million more than it did in 2001. More riders participated in the race, but each rider on average also raised more money, said David R. Hellman, director of operations.

Many nonprofit executives are hoping that Congress will pass legislation that will stimulate charitable giving through tax breaks. The Senate has passed a bill that is intended to encourage billions of dollars in additional giving by allowing older individuals to take a deduction for charitable contributions from retirement accounts and other incentives, but the House version has bogged down over a provision that would force foundations to spend more of their assets.

Five major associations representing fund-raisers have come out in support of the legislation.

"That legislation would be a powerful inducement for individual donors to give more," Mr. Arnoult said, "and if it doesn't pass for some reason, it will certainly be very hurtful to philanthropy in 2003."