Growth in Giving
Just as the economy appeared poised to improve the charitable giving climate, the outlook turned again. The debt ceiling quagmire and the instability of markets around the world has put economic recovery on shaky ground.
Diminished state revenue has forced more not-for-profit organizations to accept funding cuts and look to new sources. The stalled economy has affected not only government funding, but corporate and individual donations as well. Central Ohio nonprofits have been doing their best to hold their ground until the economic outlook improves.
Terry Schavone, senior vice president for donor services and development for the Columbus Foundation, says profitable companies will continue to make the donations, and foundation giving remains steady, but there are still major issues affecting charitable giving in Central Ohio. "There has to be a tightening at each level. At the local level, things are very tight. With the loss of jobs goes the loss of many smaller contributors. That is still a problem," Schavone says.
For the Columbus Foundation, 2010 was a good year, with several one-time gifts improving the results. This year started out strong until the second quarter, when the stock market lost steam. Without help from the market, donors could grow conservative again, Schavone says.
A Nonprofit Research Collaborative survey released in September found charitable donations in the first half of 2011 weren't significantly different from a year before. Among 813 nonprofits, 44 percent had year-over-year increases in contributions, 25 percent remained level and 30 percent saw a decline. The trend was brighter among larger organizations, 57 percent of which raised more funds in the first half of 2011 than the same period in 2010.
In Central Ohio, charitable giving has improved since the recession, but remains sluggish. "There are some corporations in the Columbus area that had to be a little more conservative about their giving but are now seeing signs of growth. We heard from individual contributors to Children's Hunger Alliance who we hadn't heard from in a couple of years," says Mary Lou Langenhop, CHA's president and CEO.
Tom Barry, executive director of the Capital Area Humane Society (CAHS), says the mission of a nonprofit doesn't change with the economy, and that makes vigilance important. "You never know what might be ahead. The best things we can do are stay ahead and keep everyone informed about what we are doing. Our bottom line is the animals need help," he says.
Most nonprofit organizations receive at least some funding from local, county, state and/or federal sources. CAHS gets $60,000 from Franklin County for animal control services; the rest of its $250,000 investigation budget comes from donors. Of the organization's $2.4 million overall budget, 95 percent comes from private donors. Individual donations make up the majority.
In 2010, CAHS handled 6,700 calls, 3,000 investigations and had 1,200 animals under its control. During the recession, it has dealt with an increase in abandonment or people giving up pets for other reasons. Cruelty investigations also have been on the rise, Barry says.
Catholic Social Services gets about 15 percent of its funding from private donors--a proportion that has grown in the past decade as resources dwindle. "As the funding environment for social issues gets tighter and tighter with government funding, [organizations] need to rely more on private dollars. It encourages people to be invested in their community," says Don Wisler, president and CEO of Catholic Social Services of the Diocese of Columbus.
United Way of Central Ohio has seen its fortunes improve. After two rough years, the 2010 campaign grew 9.8 percent on a goal of 5 percent, raising $48 million. For 2011, the goal is 4 percent growth or an aggregate of $40 million. "I am seeing some early positive signs of encouragement, but it's going to be a long road for all of us," says Deanna Stewart, senior vice president for institutional advancement at the United Way of Central Ohio.
National Giving Up, Local Giving Steady
A 2011 study from the Giving USA Foundation, in conjunction with the Center on Philanthropy at Indiana University, noted a nationwide increase in giving of 3.8 percent (2.1 percent when accounting for inflation) between 2009 and 2010. An estimated $290.89 billion in gifts were made last year. That's an improvement from 2008-09, when giving dropped by an inflation-adjusted 6.2 percent.
Also in 2010, corporate giving rose by 10.6 percent (8.8 percent with inflation) and individual giving increased by 2.7 percent (1.1 percent with inflation). Individual giving often lags corporate giving when the economy emerges from a recession. The 2008 downturn led more people to concentrate on boosting their savings, which could have slowed the gains in individual giving, the study noted.
Three sectors gained the most: public-society benefit organizations gained 6.2 percent (4.5 percent adjusted for inflation); education grew by 5.2 percent (3.5 percent adjusted); and the arts, cultures and humanities grew by 5.7 percent (4.1 percent with inflation adjustment). Due to several natural disasters, international giving beat all other sectors, increasing by 15.3 percent in 2010.
In Central Ohio, organizations have held their own. "There might have been some increases, but they were nominal. But the good news is they weren't significantly down," says Lisa Courtice, senior vice president of community research and grant management for the Columbus Foundation.
Organizations that improved their fundraising during the recession have acted strategically, reduced administrative expenses and targeted donors in new ways. For Children's Hunger Alliance, goals include a renewed focus on boosting individual donors. The organization already conducts three direct-mail pieces a year and receives United Way support in five programs. "We think there is an individual contributor base that has an interest in the issues we serve, and we want to be in a relationship with those folks," Langenhop says.
Barry, who has a background in fundraising, and CAHS CEO Rachel Finney include time for donor relations in their regular work. "What I've done is make sure I can carve out sufficient time to work on donor relationships and donor cultivation," he says.
The United Way has also increased its efforts to connect with new donors outside the workplace. Office campaigns effectively bring in donations, but not every office holds one. "Our research has been consistent for years. The No. 1 reason people don't give to United Way is they are not asked," Stewart says.
While not all local nonprofits have seen an uptick yet, many have invested in new strategies to preserve individual and corporation donations. "Overall, we hear the nonprofits that are doing the best have the most diversified portfolios of revenue. Organizations are being more strategic and are working to be as lean as they can," Courtice say.
Nonprofits that find different ways to stay connected to donors see the same individuals return to donate in subsequent years. "There are some fundamentals to relationship building with your donors. We are enhancing those steps to where we contact our donors about five times a year," Barry says. CAHS conducts outreach with annual personal phone calls to donors from board members and numerous thank-you events and open houses. The phone calls are strictly for appreciation, not solicitation for further donations, Barry says. "Each member is engaged in donor relationships. We believe it means a lot when donors hear from actual board members," he says.
Children's Hunger Alliance is looking to leverage its statewide reach. While it operates across the Buckeye State, most donated funds have come from Central Ohio. It recently undertook efforts to expand the donor base. "That has been helpful for us as well. I feel good about where things are at. It's still a constant effort that nonprofits need to make," Langenhop says.
Some donors give more in fruitful years to offer protection against leaner times. That holds true not just for individual donors, many of whom front-load their contributions, Schavone says: "Some companies do the same strategy in terms of front-loading multiple years' worth of funding to offset when they don't have profitable years."
Technology has added numerous ways for nonprofits to reach potential donors. Children's Hunger Alliance, for example, sought to increase its online profile to capture younger individuals. The Internet also brought new ways for donors to research nonprofits. Financial data and information about organizational efficiency and success is available with the click of a mouse. "Whether it's younger givers or experienced ones, people are relying more on the Internet to find information about organizations. When they like an organization and there's an easy way to give, then they're more likely to use that pathway," Langenhop says.
In addition to aligning donors with organizations they want to support, the Columbus Foundation also alerts donors to areas of critical community need. The foundation's shared investment concept also has proven successful. "We can use our expertise and resources to make a bigger impact than us acting alone or our donors acting alone. It's been a winning combination," Schavone says.
One challenge has been a trend for donors to restrict dollars to specific programs. Donors who develop relationships with organizations are more likely to allow leeway in how their contributions are allocated, Catholic Social Services' Wisler says. "People are restricting it to program use. There's a huge need for unrestricted contributions. It makes it important for donors to know the organizations they are contributing to so they can determine it's an agency that fits their interests and so they have enough information to trust an agency," he says.
Volunteers and Renewed Focuses
As in the corporate sector, nonprofits have cut staff and administrative expenses to combat the recession and maintain direct services to members. That has increased the value of volunteer time.
"When people volunteer, they give up their time. There is a direct link to donations. People who volunteer give three times as much on average, so it makes sense to have a strong volunteer community," Stewart says.
CHA has increasingly used volunteer time to aid with some administrative functions. A crew of Mettler Toledo employees helped CHA move onsite materials to offsite storage, an undertaking it would have had trouble doing without additional help, Langenhop says. "When you are lean, it's hard to find staff time to do that. That saves us a tremendous amount of effort," she says.
The humane society augments its 40-member staff with myriad volunteers, 1,600 of whom contribute 43,000 hours annually. To support CAHS's three staff veterinarians, seniors at the Ohio State University College of Veterinary Medicine must complete a two-week rotation at the humane society. Donors recently funded a new roof for the Hilliard-area facility.
In-kind donations also play a critical role. Catholic Social Services used reserve funds to create a program to move women from domestic violence shelters into more permanent housing. The organization also is helping those women outfit their new homes. "We're trying to garner a lot of donated goods, furniture and household items," Wisler says.
Foundations and nonprofits continue to work through a difficult environment for donors--especially individuals. "The average person who gives out of income will be more cautious when things look a little precarious. As goes the stock market, so goes charitable giving," Schavone says.
At the United Way, creating dedicated teams to work with different giving groups (individuals, small business, large corporations) has become a renewed focus. While the nonprofit courted all of these donor bases in the past, the new model allows United Way to customize the approach for each segment, Stewart says. "That is a shift for us," she says. "Many individuals and organizations are still struggling. We go at it one corporate partner and one individual at a time."
On the whole, Central Ohio is a generous community--no matter the economic conditions. When a specific need arises, donors have been willing to support that cause, Courtice says. When the closure of the South Side Settlement House was announced, a fund was established to ensure some critical services continued. "If you make them aware of the need, they respond generously," Courtice says.
Bill Melville is a freelance writer.
Reprinted from the December 2011 issue of Columbus C.E.O. Copyright © Columbus C.E.O.