Pubdate: Thu, 03 Feb 2005 Source: Chronicle of Philanthropy (US) Copyright: 2005 The Chronicle of Philanthropy Contact: http://philanthropy.com/ Details: http://www.mapinc.org/media/3680 Author: Holly Hall Note: Nicole Lewis and Suzanne Perry contributed to this article. Cited: Drug Policy Alliance http://www.drugpolicy.org Bookmark: http://www.mapinc.org/find?214 (Drug Policy Alliance) Challenging Times Ahead FUND RAISERS STRAIN TO CAPTURE ATTENTION OF DONORS In Grand Rapids, Mich., where the average high temperature at this time of year hovers just above freezing, the local Salvation Army is relying on donors to give generously so it can help needy people pay heat and utility bills. But DeWayne Duskin, the group's director of development, worries that he could have trouble raising enough money to meet the demand for help, especially because so many donors have been opening their wallets for efforts to help the tsunami victims in South Asia. "I hope we don't run into a dry spell like we did with 9/11," he says. "Fund raising took a dip for three or four months and went real flat. We cannot afford that at the front of the calendar year." Across the country, many other fund raisers are struggling to find creative ways to capture the attention of donors and experimenting with new approaches to soliciting gifts. As charities map out their fund-raising approaches for 2005, many are redoubling efforts to solicit gifts from affluent people rather than putting more energy into mass solicitations, such as mailings and telemarketing, and are looking for new ways to attract money from corporations. Fund raisers at domestic charities say it is not just the spotlight on the tsunamis that's making it harder to win contributions. With Americans focused on topics like the war in Iraq, the debate over Social Security, and the ups and downs of the stock market, donors seem to be paying less attention to causes like the environment. Garnering attention from donors is likely to become ever more challenging in the months ahead, as more and more nonprofit groups step up solicitations to individuals, foundations, and corporations -- often in an attempt to make up for cuts in government aid. Cautious Approach The bleak outlook for 2005 comes after a year in which many charities struggled to raise enough money to keep pace with inflation, which was 3.3 percent in 2004. Even though other organizations saw strong increases in donations last year, many say they are not overly optimistic about the fund-raising climate. "The market is still volatile, and we are being careful rather than optimistic," says Jon Gossett, senior vice president for development at Minnesota Public Radio, in St. Paul, where a new effort to win big contributions from affluent donors helped push donations to $31.6-million last year, up from $27.7-million in 2003. While many of the fund raisers at more than 50 organizations interviewed by The Chronicle in the past month said they expected 2005 to be a year of continued struggles, a new survey has found that fund raisers are more optimistic about giving than they were a year ago. In a semiannual survey of more than 200 fund raisers nationwide released by the Association of Fundraising Professionals in December, 88 percent of respondents said they were optimistic about their ability to raise money in the current economy, up from 75 percent one year earlier. It was the highest level of confidence reported since 2001. Election Aftermath For many nonprofit groups, the reverberations of the 2004 elections continue to affect their finances. Some groups hope that in 2005 they can make up money they believe they lost because donors were giving to political causes rather than to charitable ones. At Covenant House, which operates shelters for runaways in Los Angeles, New York, and other cities, officials say the election was at least partly responsible for a 12-percent decline in direct-mail returns, which make up about 70 percent of the charity's $120-million budget. "The election sucked out some contributions," says James Harnett, the group's chief operating officer. Other charities may still be experiencing cash-flow problems because of sluggish direct-mail returns. Political candidates and advocacy groups sent out so many mailings last year that the postal system couldn't keep up, says Ray Grace, chairman of Creative Direct Response, a Crofton, Md., company that handles direct mail for nearly 20 large charities. "We saw pieces that normally turn around in 7 to 10 days take a month or five weeks," he says. But for many advocacy groups, the election year was a fund-raising bonanza. Groups that are concerned with some of the most divisive and prominent social issues, such as gay marriage and abortion, say they raised a lot of money from donors who wanted to influence the election or its aftermath. Focus on the Family, a Christian advocacy group in Colorado Springs that promotes traditional family values, raised $146-million, a 13-percent increase over 2003. Mark Buzzetta, the group's chief financial officer, said 7 percent of the rise came from contributions to the organization's new lobbying arm, which promotes President Bush's call for a constitutional amendment to restrict marriage to heterosexual couples. But this year, Mr. Buzzetta says he doubts that donations will increase by as much as they did in 2004, especially now that the election is over. "We're not anticipating another 13-percent growth year," says Mr. Buzzetta. "This was unique." At Planned Parenthood affiliates, fund raisers say that donations flowed in fast after the election. Many donors, they say, are concerned that the Bush administration will push for new limits on abortion, birth control, and sex education, and they don't expect contributions to taper off, because donors support the charity's efforts to oppose such restrictions. "We saw a definite postelection bounce among our supporters," says Bryan Howard, president of Planned Parenthood of Central and Northern Arizona, in Phoenix, which raises about $1.3-million from donors each year. Mr. Howard says that total contributions for December, immediately following the election, were 20 percent higher than projected, with direct-mail returns alone generating 30 percent more than expected. "Our supporters are very familiar with the policies of the first Bush term," Mr. Howard says. "The re-election caused supporters to sit up and take note that challenges we faced over the past four years will become that much stronger." Out of the Spotlight Donors have not rushed to give to all types of advocacy groups, however, and charities working on issues that are not hot topics of debate among politicians and pundits are seeking new and better ways to raise money. At the Drug Policy Alliance, in New York, Clovis Thorn, director of development, says many of his donors do not see his organization's issues as a high priority these days. The alliance wants to promote needle-exchange programs to help drug users avoid disease, legalize marijuana use for medical purposes, and seek ways to help drug addicts get treatment. "So many donors are turning their attention elsewhere," Mr. Thorn says. "A lot of our major donors are staying committed to political issues, and we're being moved down to tier two." His charity raised $7-million last year, about the same as in 2003. To increase donations in 2005, Mr. Thorn says, the alliance "is going to have to work harder to convince donors and the public that drug reforms are needed." He says that the group hopes to persuade the public and policy makers that taking a different approach to drug offenses could save considerable amounts of money at a time when the growing federal budget deficit is prompting many lawmakers to look for ways to slash spending. "Offering treatment for drug offenders rather than incarceration could save hundreds of millions of dollars," he says. "Our challenge is to demonstrate that." Environmental groups say they also are straining to get donor attention. "There has been a reordering of priorities, and the environment is not as pressing an issue as it used to be," says Kalman Stein, chief executive officer of Earth Share, which last year raised a total of $13.4-million for 500 environmental groups through on-the-job drives. In the organization's most recently completed campaign, Mr. Stein estimates that Earth Share will raise enough to keep up with inflation. Appeals From Volunteers With fund raising growing more competitive, charities of all kinds are lavishing attention on individuals who have the potential to make significant gifts -- especially after such efforts paid off handsomely last year. Big Brothers Big Sisters Southeastern Pennsylvania, in Philadelphia, raised $1.1-million in donations and pledges at a spring breakfast gathering. That event, plus a similar one in December that raised $312,000, helped the charity raise 40 percent more last year than it did in 2003. The spring breakfast featured a youth choir and testimonials from both a Big Sister volunteer and the 16-year-old she helps. The event worked because board members invited friends and colleagues to the breakfast who were greatly impressed with the program, says Linda Jacobsen, the group's fund raiser. "We let the people whose lives have been changed by this work do the talking." Sixty percent of the nearly 250 people who attended, she notes, made a gift to the charity, many for the first time. Other charities are getting more aggressive in asking wealthy people to donate land or stock in privately held businesses. World Vision, the international relief organization, received $12.2-million in such gifts last year, triple the amount it received in 2003. Although that is a small part of the organization's donations -- it estimated that it raised $800-million last year -- the organization believes such donations can become a strong part of its fund-raising effort in the future. Real-estate gifts are attractive to many people. Property values have soared in recent years, and donating land to charity allows contributors to escape capital-gains taxes they would have to pay if they sold it. World Vision only recently started going after stock in certain types of privately held companies, after Congress passed a law in 1998 that made it easier for stockholders in many private companies to donate their shares. Before that, stock in S corporations, a tax status used by many family-held businesses, could not be donated to charity. "A lot of these family-owned businesses have been doing very, very well, in contradiction to the stock market," says Dan Rice, World Vision's national director of planned giving. "Ninety percent of all businesses are privately held; half of those are S corporations. We're getting these gifts because we're asking for them, and you get what you ask for. If you went all the way through 2004 and did not get real estate or closely held stock, you left something on the table." Corporate Support Many charities are turning to companies for help in reaching both new clients and new donors. In Nebraska, Father Flanagan's Girls and Boys Town has formed an agreement with Godfather's Pizza, the national chain that has its headquarters in Omaha. The deal is the first corporate-charity agreement for both organizations. Godfather's is printing the Boys Town logo and hotline number for children on more than 18 million of the boxes it uses to deliver pizzas and is mentioning the charity in its national advertising. In addition, the company says it will devise ways for its 600 local stores to raise money for the charity. William Swindell, national director of development for Boys Town, estimates that the charity will realize $1.5-million per year from the Godfather's deal. "We'll be able to serve more kids as a result," he says. Cardboard Fund Raisers The Salvation Army, which received a major setback last year when Target stores said the charity could no longer hold its traditional red-kettle holiday drive on its premises, has also been developing new ways to work with companies. While the charity figured it might be wise to solicit customers at small stores, it didn't have enough people to stand alongside the kettles. During the 2004 holiday season, the charity's fund raisers decided that one way around the problem was to use life-size cardboard figures as stand-ins for the charity's workers. Two versions of the cardboard figures -- a man and a woman, both wearing Salvation Army uniforms and broad smiles -- were placed beside kettles in 200 bookstores and sporting-goods stores. Each figure was rigged with a motion detector so that when a customer walked by, the cardboard figure's arm would wave up and down to the sound of a ringing bell, and a voice recording would ask for a gift. The cardboard displays raised $135,000 this year, and the charity says that it wants to place them in 1,000 retail locations next holiday season. The charity's efforts to diversify the locations where it solicits kettle gifts -- plus the publicity the Salvation Army received when Target ousted the charity's workers -- helped the organization raise more this year than it had in the past. While the charity is still calculating how much the kettles brought in nationwide last year, officials say that at least $94-million was collected -- $1-million more than in 2003. Government Cuts For many charities, the loss of government funds is creating new pressure to raise money from private sources. In Colorado, for example, 76 percent of charities that receive state money to provide job training, family planning, mental-health treatment, and other services saw cuts in government aid last year, according to a study by the Colorado Association of Nonprofit Organizations. Meanwhile, more than half reported increased demand for their services. YouthZone, a Glenwood Springs group that helps troubled children, has already lost a third of its budget because of state and federal cuts. The charity has reduced the number of youngsters it serves from 1,500 to 900 annually, even though it says demand for its services is rising. The charity has tried to make up for a loss of $92,000 in government funds last year by charging fees to its clients, but it does not want to go too far in that direction because many people cannot afford to pay. YouthZone also stepped up its efforts to raise money from private sources, but the depressed local economy and competition from other charities made that difficult. The organization brought in $403,000 in 2004, $110,000 less than it raised in 2003. The budget woes forced Debra Wilde, YouthZone's executive director, to place a freeze on hiring, and she is now doing three jobs -- her own, as well as that of the former program director and the financial officer. "We are feeling the strain," says Ms. Wilde, "but we had to get leaner." Other charities are also taking a cautious approach to spending on employees and other administration expenses -- even those organizations that achieved fund-raising increases in 2004. "I will aim high and budget flat," says Peter Thomas, senior vice president of United Ways of New England, which raised $22.4-million last year, about $100,000 more than in 2003. "It is just prudent business until we see a real economic turnaround." - --- MAP posted-by: Richard Lake