Are leaner times ahead for charities?

Cancelled events, reduced donations may cut into overall support, but some say donations to post-Sept. 11 relief efforts may mean more money for all.

By Victoria Stagg Elliott, amednews staff. Nov. 12, 2001.

The annual event had been planned for months. Participants had collected pledges, endured training rides and tuned their bikes -- all to raise money for the New York City chapter of the National Multiple Sclerosis Society, a group that funds medical research into the disease and helps pay for services for those who suffer from it.

The $1.5 million usually raised by the yearly bike tour was supposed to be a significant chunk of the chapter's $8 million annual budget. But the event, planned for Sept. 23 and ending at the World Trade Center, obviously had to be rescheduled.

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"We took a big hit," said Kathleen Walsh, spokeswoman for the chapter.

Now, the organization is one of many medical-related charities looking to recover from the financial losses incurred because fundraising events had to be rescheduled or cancelled completely.

At the same time, these causes face the impact of the shift in attention to charities providing relief to victims of the Sept. 11 disasters.

Finally, they are also suffering the effects -- either by reduced donations or less valuable investment portfolios -- of an economy that was feeling a pinch even before the national tragedies occurred.

To date, some 180 charities have collected more than $1 billion to fund disaster relief efforts over the short and long term. It is unclear how much of that is money that would have gone to other charities.

Most charities not associated with the relief effort say it is too early to tell what the impact of the charitable money flow in one direction will be on their donations, although some have observed a 20% decrease since Sept. 11.

Feeling the pinch

"With the focus being on the direct victims of the attack, it does begin to present serious issues for all health charities," said Karen Sendelback, executive director of the American Kidney Fund. "You've also got all these indirect victims of the attack as well which is going to put an enormous demand on the social service delivery system for not-for-profits."

AKF, a small charity with an annual income of $23 million, provides money for kidney disease research and directly to patients to pay for care and any related expenses, including transportation. The actual dollars lost so far amount to about $75,000.

"It isn't a large percent of the overall budget," said Sendelback. "But it is a huge percent of that income stream.

"When you couple it with the downturn in the economy, which means that our investments have declined, it puts all of us in uncharted territory. We've never experienced an intersection of events like this before."

Many charities are hopeful that they will make up their recent shortfalls over the coming fiscal year, but they are all extremely concerned that the checks written at Christmas, when giving is at its height, will go to disaster relief rather than other causes.

Some also fear that direct mail, a large source of revenue for many charities, may be directly affected by the recent anthrax scares.

The American Heart Assn., for example, sent out their latest direct mail campaign at the beginning of September. Response has been slow and is a half-million dollars below the $7.5 million expected, something the association partially accounts for by the urgent needs of the victims of Sept. 11, but also by the new fears people have.

"People are afraid to open their mail because of anthrax," said Gordon McCullough, executive vice-president of operations at the Heart Assn., which usually has an annual income of a half-billion dollars.

There is also concern that government funds, which are a significant source of money for many charities, may be redirected to the war on terrorism.

The Lesbian Community Cancer Project, a small charity in Chicago with an annual budget of a half-million dollars, provides Pap smears, mammograms and smoking cessation programs funded by donations but also by grants from local, state and federal public health agencies.

"I'm afraid about state and federal money," said Jessica Halem, LCCP executive director.

"When you hear about $60 billion for a war, how is that going to affect health issues which are always at the bottom of the list? And now anthrax. What if the little bit of money I have now has to go to anthrax?" she asks.

A silver lining?

Like many charities, LCCP has not seen a decline in individual giving, and some speculate that the outpouring of giving to disaster relief may have a silver lining for all charities.

A survey by Independent Sector, a national coalition of nonprofit organizations, found that although 26% said they would be giving less or nothing at all to other charities, 59% said their giving habits would be unchanged, and 14% said they would give more to other charities.

A historical study by the American Assn. of Fundraising Counsel and the Center on Philanthropy at Indiana University in Indianapolis also found that giving to all causes traditionally went up in the year after a terrorist attack such as the 1993 World Trade Center bombing and 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City.

Experts say this is because some of that $1 billion raised may be from people who have never given to charity before, and they may become regular givers to other charities as the current frame of events fades into memory. And there is some anecdotal evidence to support this.

City of Hope, a cancer research and treatment center in Duarte, Calif., held a series of breast cancer walks around the country in October. The organization reported record participation, although exact figures on the amount of money raised are not yet available.

"It's amazing how many people have turned out for these walks, which makes me believe that charity is not dead," said Steve Solton, president and CEO of the City of Hope development group.

"Older people have always given to charity, but I think the younger people have become aware of charity and might continue giving," Solton said.

ADDITIONAL INFORMATION:

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A telephone survey of 1,009 American adults based on a representative national sampling conducted between Oct. 5 and Oct. 8 concluded the following:

73% of Americans contributed blood, money or time to the relief effort
59% of those who donated to the relief effort plan to continue giving to their usual charities
14% of those who contributed plan to give more to charities not related to the disaster
26% will give less or nothing at all to their usual charities
48% said they will give less to all charities over the next six months if the economic slowdown worsens
50% said economic conditions will have no impact on their giving

Source: Independent Sector report, "Charitable giving: September 11 and beyond"