A Thought for Your Pennies

While the Colorado AIDS Project faces a unique struggle because of the complex changes in the AIDS epidemic, it's not alone in its financial predicament.

All charitable organizations in Colorado are now hurting as a result of the faltering economy. The National Bureau of Economic Research confirmed on November 26 what people have been thinking for quite some time -- that the country is, indeed, in a recession. And the September 11 terrorist attacks only made things worse.

Seeds of Hope Charitable Trust, an organization that raises money to help Catholic schools provide scholarships for low-income families, is an example of a Denver nonprofit that has been especially hard hit by shaky economic times.

"This was our slowest summer ever," says CEO Terry Polakovic. The trust's total revenues are down more than $118,000 from last year. "A lot of our donors are in the thirty-to-fifty age range, and a lot of them are professionals working in high-tech jobs, so a lot of them were directly affected by the stock market dive." An October fundraising dinner featuring comedian Bob Newhart had a good turnout and raised more than $225,000, but it fell $100,000 short of what the dinner raised last year, when former education secretary William Bennett was the guest speaker. "This year, some people would buy a $5,000 table instead of a $10,000 table," Polakovic explains. "Some corporations didn't come at all."

As a result of these difficult past few months, she says, the organization may only be able to give away about $1 million this year, instead of the usual $1.4 million.

Polakovic is also concerned about the effect that negative publicity surrounding the way the American Red Cross handled disaster relief funds will have on other causes. "People might not trust to give to other organizations," she says.

Following September 11, the Red Cross set up the Liberty Fund to benefit victims' families. After people started questioning where their donations were going, the Red Cross acknowledged that a portion of the money would not go directly to victims, but to other needs that arose after the attacks, including a blood reserve program, a national outreach effort and armed forces communications. Red Cross president Bernadine Healy resigned amid the criticisms in October, and the Red Cross has since pledged to use the $543 million Liberty Fund solely for relief efforts (Denver and Boulder area residents alone raised $5 million for the fund).

While the terrorist attacks have captured everyone's attention, Barbara Shaw, executive director of the Colorado Association of Nonprofit Organizations, is working on a public-information campaign to remind people that local charities need help, too. "September 11 was a tragedy of mass scale that we can't fathom, but people here have tragedies every day that they need help with," she says. "While we support the East Coast charities, we can't forget our local people."

That goes for local children, too. The United States Marines' annual Toys for Tots program is suffering from dwindling donations. Since 1947, Marines across the country have been collecting new, unwrapped toys for low-income children. The Colorado Marine Corps had collected 190,000 toys by this time last year, but as of December 5, only 22,000 toys had been donated.

Fundraising is weighing so heavily on the minds of nonprofit directors that Blacktie-Denver.com, an online company that advertises fundraising events and offers other Internet services for charitable organizations, held a November 27 panel discussion in which experts talked about economic conditions since the attacks and offered some common-sense fundraising advice.

In an informal, non-scientific poll of local philanthropists, Blacktie-Denver.com found that 30 percent of Denver donors are planning to reduce their charitable giving by 10 to 50 percent next year; 25 percent will reduce the number of organizations they support; 36 percent will hold back on funding capital campaigns; 18 percent will cut back on funding the arts; and 18 percent will cut back on funding medical and disease-related causes.

Tucker Hart Adams, chief economist for US Bank's Rocky Mountain region, was one of the panelists who offered her predictions at the discussion. "Prior to September 11, I thought we were looking at a normal post-World War II recession, lasting nine to twelve months, and that by the second quarter of next year, things would look up. I gave a 5 percent probability of a long, deep recession," she told the more than 400 people gathered in the downtown Westin hotel. "After September 11, we added uncertainty to the U.S. economy, which is something we're not used to dealing with. Until we become comfortable with this uncertainty, the economy will continue to suffer."

Now she's saying there is a 35 percent chance that the recession won't end in the second quarter of 2002.

However, a recent opinion piece in the Nonprofit Quarterly reports that there is hope. "In most major political crises, such as the Cuban Missile Crisis, the assassination of President Kennedy, the resignation of President Nixon, the Oklahoma City bombing and the 1993 World Trade Center bombing, charitable giving was not deterred," states the author, Rick Cohen, president of the National Committee for Responsive Philanthropy. "According to the American Association of Fundraising Counsel, the total giving of Americans generally increased. In some circumstances, the rate of growth of giving, not the actual amount of giving, lagged in the year of the crisis, as in the year of the Cuban Missile Crisis, or lagged in the year after the crisis."

And if local nonprofits are worried that donations to the September 11 relief efforts will detract from contributions to their own causes, they should worry no more. A poll titled A Survey of Charitable Giving After September 11th, 2001, which was commissioned in October by the Independent Sector, a national coalition of nonprofits and philanthropists, found that 73 percent of those who gave to relief funds continue to give to other charities; of those, most indicated that they'll give as much as they usually do, and 14 percent said they'll give even more than usual.

It's the economy, not September 11, that nonprofits should be worried about; 28 percent of those polled said that an economic slowdown would greatly reduce their giving.

The experts at the Blacktie-Denver.com discussion gave the 250 nonprofits in attendance some sound, if not obvious, tips on how to emerge from the hard times. Walter Imhoff, managing director of the investment-banking firm Stifel Nicolaus Hanifen Imhoff, said nonprofits can recover by acting more like corporations and tightening their belts; fundraising events with big-name entertainers often cost more than they're worth, he added.

Mike Shaw, owner of several local car dealerships, emphasized the importance of thanking donors -- something that the Colorado AIDS Project admits it hasn't done enough of. "Find ten or fifteen rainmakers -- the people who have always given money over the years. Bring them into your office, sit down with them, thank them, ask for their advice, and tell them you need them now more than ever before," Shaw said. "Get passionate about asking for money. Don't feel sorry for yourself; just get out and do the work."

And Sally Rippey, executive director of the Adolph Coors Foundation, told the nonprofits to take advantage of the circumstances. "Look at this as an opportunity to evaluate what your organization does and how you spend your money. Finding your flaws can be a very interesting exercise to do with your board," she said. "The longer you're in business, the easier it is to stray from your mission. It could be interesting to go back and revisit it.

"If we could find a way to equate volunteerism and charitable giving with patriotism," Rippey concluded, "we'd all have it made"


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