Robust economy proves to be a boon for most, but rise in demand squeezes human-services groups
The Salvation Army last year raised more than $1-billion -- far outpacing any other charity in America, according to the Philanthropy 400, The Chronicle’s annual ranking of organizations that receive the most each year in private donations.
Fund raising by the social-services organization, which has ranked No. 1 for five years in a row,outstripped the efforts of the American Red Cross, which placed No. 2 by raising $479.9-million. They were followed by the American Cancer Society, which raised $426.7-million
.While those organizations have long been the leaders in raising money, another institution jumped 50 notches to gain a place among the top 10 for the first time. Emory University in Atlanta vaulted to No. 4, raising $415.4-million last year. A gift of $295-million in Coca-Cola stock accounted for its fast rise. It was only the second time in the seven years of the Philanthropy 400 that Harvard University was not the leader in university fund raising. Harvard was surpassed this year not only by Emory but also by Stanford (No. 10), which raised $312.9-million. Harvard was No. 11, with $309.4-million.
Rounding out the top 10 were Catholic Charities USA (No. 5, with $386.5-million), Second Harvest, which provides food and other supplies to the nation’s food banks (No. 6, with $351.4-million); YMCA of the USA (No. 7, $340.3-million); Habitat for Humanity International (No. 8, $334.7-million); and Boys & Girls Clubs of America (No. 9, $321.8-million).
The Philanthropy 400 ranks non-profit groups according to the amount of support they receive from private sources -- individuals, foundations, and corporations. To be included on the list this year, charities had to have raised at least $17.2-million.The Philanthropy 400 demonstrates how large a share of Americans’ donations go to the biggest charities. In 1996, a total of $25.9-billion was donated to the non-profit organizations on the list -- about one in every six dollars given last year to the nation’s more than 650,000 charities and thousands of religious institutions, according to Giving USA, an annual compilation of contributions figures.
For many of the charities on the Philanthropy 400, 1996 was a bountiful year. And many groups said giving in 1997 will continue to be strong. Cultural groups, colleges and universities, and community foundations, in particular, reported big increases in giving in 1996, due to a flood of multimillion-dollar donations from wealthy people who reaped big rewards in the booming economy and in the stock market.
Among the gains:
* The San Francisco Foundation (No. 55) saw donations triple last year to $115.7-million. More than half of that was in gifts of stock.
* Donations to St. Olaf College (No. 363), new to the list, more than doubled last year, to $20-million. Two anonymous donors gave a total of $10-million.
* The Jewish Theological Seminary of America (No. 220) saw a 32-per-cent increase. It raised $32.6-million last year, including a $7-million gift from a retired rabbi.
But not all of the 400 charities were beneficiaries of the thriving economy. Human-services organizations said they had an especially tough time raising money. Many said that that difficulty makes it hard for them to keep up with increasing demands for assistance caused by a new federal welfare law and other changes.
Catholic Charities USA, Covenant House (No. 108), the Christian Appalachian Project (No. 197), and Volunteers of America (No. 235), for example, failed to raise enough to outpace the 2.7-per-cent rise in inflation last year. Leaders of such organizations said they had failed when they tried to attract large numbers of wealthy donors.
Other social-services leaders said they feared that good economic times had made donors at all income levels lose sight of the persistent needs of the poor.
''As the economy seems to heat up and get more prosperous, it’s almost more difficult to get people to focus on giving,’' said Ann Hewitt, director of resource development at the Arc of the United States (No. 107), which works with retarded children and their families. ''There isn’t the urgency when the basic temperature of the nation is good. Consequently, people don’t rush out to give.’'
The Arc reported a 14-per-cent increase in donations, to $68.2-million. But Ms. Hewitt said she does not think contributions really increased. She said the rise came about because the charity had improved its ability to monitor giving to each of its 1,100 chapters.
At many of the nation’s charities, keeping track of year-to-year rises and falls has become more complicated because of new accounting rules.
The Financial Accounting Standards Board, which sets the policies followed by most charities, has urged non-profit groups to make major changes in how they account for pledges, volunteer time, and other sources of support. Large charities, like those on the Philanthropy 400, were expected to alter their bookkeeping to reflect the new policies for fiscal years that began after December 15, 1994. But some organizations only recently began to make the changes, which has skewed some year-to-year comparisons in the Philanthropy 400.
The Salvation Army’s figures show how much of a difference the accounting policies can make. The organization said its donations actually grew by 3 or 4 per cent from 1995, when it raised $741.7-million. But on paper the charity appears to have received 36.5 per cent more, largely because of the new accounting policies. The major reason: The Salvation Army now must count pledges and deferred gifts, which it had not done in the past because it only wanted to count money it had in hand.
The paper increase masks the difficulties the Salvation Army is having as it tries to keep up with requests for food, shelter, and other aid.
''While we’re seeing slight increases in fund raising, we’re seeing gigantic increases in expenditures and in the number of people coming to the Army for help,’' said Major Tom Jones, national community-relations and development secretary. ''In many communities, the Army’s finances are stretched to the limit.’'
Not all charities feel so squeezed. Community foundations, more than any other type of organization on the Philanthropy 400, saw a flood of big gifts in 1996. Altogether, such organizations, which raise and distribute money in a specific geographic area, raised $940.7-million.
In northern California, where Silicon Valley has transformed many high-technology workers into millionaires, four community foundations raised enough to make it onto the Philanthropy 400. Three of them -- the San Francisco Community Foundation (No. 55), the Peninsula Community Foundation (No. 164), and the Marin Community Foundation (No. 381) -- each saw donations rise by more than 150 per cent last year.
''There’s a lot of wealth being created here,’' said Susan Luenberger, director of development and marketing at the Community Foundation of Santa Clara County (No. 319), which received $23.2-million -- a 25-per-cent increase. ''The good news is that the wealthy are starting to give it away.’'
Young entrepreneurs, said Ms. Luenberger and her colleagues, respond well to pitches by community foundations that they offer an easy way for donors to learn which are the most effective charities in their region and direct their money to a range of causes. Entrepreneurs are ''too busy working’’ to do research themselves, said Ms. Luenberger. Also, she said, they like the fact that they can take one tax write-off for a gift that may support many charities.
Another advantage: Community foundations are considered by the Internal Revenue Service to be charities, not foundations. That means that they offer distinct tax benefits to donors compared with forming one’s own foundation.
Many community foundation officials said they had attracted donations by reminding donors that they can give highly appreciated stock and deduct its full market value. Donors to their own private foundations can claim that same break, but at times during the past three years, they have been barred from doing so. What’s more, those who choose to donate stock to private foundations only have a short time left to take advantage of the tax break. Congress voted to allow the full deduction only through June 30, 1998. After that, donors will be able to deduct only the purchase price, unless Congress once again extends the provision.
Stock gifts made a big difference to the Omaha Community Foundation in Nebraska (No. 100), which saw its donations jump by 893 per cent, to $72.7-million.
Walter Scott, an Omaha billionaire, donated $48-million worth of WorldCom stock to four funds that he set up for his four children to control.
The foundation also benefited from another gift: a deed to an Iowa casino and dog-racing track, worth $16-million. The Iowa West Racing Association, which previously owned the gambling business, transferred its ownership to the community foundation. The foundation will now act as landlord and collect about $700,000 per year in rent from the casino and race-track operators. All of the money will go toward supporting charities in nine southwest Iowa counties.
Many other organizations besides community foundations saw multimillion-dollar gifts that were much bigger than any they had received in the past.
The University of Richmond (No. 127) saw its contributions triple last year mostly because of one donation: a $35-million bequest from E. Claiborne Robins, an alumnus who founded a company that manufactures birth-control devices. All told, the institution raised $58.7-million last year.
Several organizations reported a big increase in the number of $1-million donations.
Campus Crusade for Christ (No. 19) received 17 cash gifts of $1-million or more, up from 11 in 1995 and from only one in 1990, officials said.Elvin Ridder, ministry development coordinator, said that as the charity has grown larger, it has been easier for it to attract big gifts. ''Wealthy donors have told us they feel more like they can give us large amounts now, because we’re large and they’re not the only one keeping the organization afloat,’' he said.
Other institutions say that capital campaigns were a primary reason for several record-breaking gifts.
Amherst College (No. 273), new to the Philanthropy 400, began a six-year campaign to raise $200-million last year.
The college received four gifts over $1-million -- in addition to a $4.6-million bequest from the estate of Winifred Arms, the wife of a 1927 alumnus. The year before, Amherst’s biggest gift was $800,000.
In Chicago, both the opera (No. 327) and the symphony (No. 283) had campaigns with the same goal: $100-million. Last year, leaders from each institution asked a group of about 50 local businesses to pledge a total of $50-million to each organization. In return, the two arts groups promised to match the money with donations from other sources. Businesses agreed to make the gifts in part to insure the city continued to have a sophisticated arts scene -- a feature that helps them attract top-notch employees.
Many organizations that have typically relied on small gifts achieved big increases by experimenting with new approaches to fund raising.
At the American Diabetes Association (No. 88), much of the 17.8-per-cent increase in donations last year was the result of a simple change in direct mail. The charity began to ask recipients of its mass mailings to specify whether they or a family member had diabetes. People who responded Yes received follow-up appeals that took note of their personal reason for caring about the disease -- and offered them services to help.
More than 88 per cent of the people who received the appeals that emphasized the personal connection made a gift, compared with only 28 per cent of those who got the solicitation letters that were less specific. And their average gift was larger: $17.27 compared with $15.30.
Many charities saw lucrative results when they tried to persuade people who typically gave $10 or $20 to start contributing at least $1,000.
Taking a cue from arts groups and many other charities, the National Easter Seal Society (No. 56) started a donors’ club to acknowledge people who give $1,000 or more annually. It tries to persuade people who don’t give that much to increase donations to be part of the ''club.’' More than 2,300 donors joined last year.
Traditionally, the charity -- which saw donations rise by 9.3 per cent last year to $111.9-million -- has depended on gifts under $20 that came in response to direct-mail appeals.
Boys & Girls Clubs of America (No. 9), which raised $321.8-million, or 9 per cent more than in 1995, created a new executive position last year, senior vice-president for major gifts, to concentrate on raising gifts of $100,000 or more from among the four million adults who belonged to Boys & Girls clubs as youths.
''We’re doing more good ol’ face-to-face fund raising,’' said Kurt Aschermann, senior vice-president for marketing.
Several charities experienced a growth in donations after starting new programs and asking donors to support them.
Coral Ridge Ministries (No. 305) saw gifts rise by 14.7 per cent last year, largely because donors were responding to the national charity’s one-year plea for dollars to pay for a new grassroots effort called the Center for Reclaiming America. The program will link donors across the country through direct mail, facsimile, and electronic mail so they can share ideas about how to accomplish the charity’s goals, such as trying to get Bibles used in school curricula.
Junior Achievement (No. 93) saw its donations rise 28 per cent -- the biggest increase of any youth group -- to $78.2-million.
Companies and business leaders have been enthusiastic about supporting the charity’s efforts to expand services beyond students in 7th through 12th grade to those in kindergarten through 6th grade. Junior Achievement now helps 2.7-million children each year, up from one million four years ago, when the expansion effort was started.
''The growth is more than what we thought it would be,’' said Timothy Armijo, vice-president for finance. ''It’s been easier to sell than we had anticipated.’'
The new programs do what Junior Achievement has always done: introduce capitalism and rudimentary economic lessons to young people.
''Obviously, we keep it very simple for the very young,’' said Mr. Armijo, who volunteers as a tutor for fourth graders. His students are learning now how their Nike sneakers made it from a factory to their feet.
The Humane Society of the United States (No. 216) saw a 36-per-cent increase in donations after it made a deliberate effort to sign up new members. The animal-welfare group, which had fewer than two million members in 1995 when it began the drive, reached its goal of five million this year. In 1996, about one million people joined, donating at least $10 each and pushing the organization’s private support to $34.5-million.
The organization said it wanted to expand not so much for financial reasons but because it wanted to have more clout when it lobbied Congress. ''When you say we’re five million animal lovers strong, that carries a lot of weight in that forum,’' one official said.
But some charities that tried new programs last year failed to accomplish their objectives and watched donations slip.
The Heritage Foundation (No. 342), a conservative think tank, saw contributions drop 14 per cent.
One direct-mail campaign by the foundation to raise money for new research that would help conservatives weigh in during the budget debate last year brought in only 20 per cent of what officials had projected. The reason: Congress passed a budget bill after the mailing went out, so people who received it saw little need to respond.
What’s more, many of Heritage’s donors were disillusioned because they believed that conservative lawmakers had not followed through during budget negotiations on their promises to slash federal spending. Some stopped giving altogether in frustration that they could not do more to influence Congressional decision making, Heritage officials say.
''Donors were very upset,’' said John Von Kannon, the foundation’s treasurer. ''Immediately, contributions dropped off. Charities operate in the real world, and real-world events affect giving.’'
