Charities feeling the effects of economic slowdown
NEW YORK - For Marcia Stein, the collapse of Bear Stearns Co. is not about subprime mortgage loans or complex securities.
It's simple math.
Last year, Bear Stearns employees donated $500,000 during the main fund-raising drive for Stein's organization, Citymeals-On-Wheels, which last year delivered 3 million meals in the city.
This year, she will have a hard time raising even $100,000 from Bear Stearns or anyone else, and, as a result, 64,000 fewer meals will be going out to elderly New Yorkers.
"There's nowhere to turn except to cut the budget," said Stein, executive director of Citymeals-On-Wheels. "When you are in the feeding business, that's tough."
The philanthropy of high-earning New Yorkers constructs hospital wings and underwrites university research, funds scholarships, enables museums to acquire new work, and stocks soup pantries. For many companies, philanthropy is no longer just charity, but a strategic investment in the company's image. At some investment banks, giving is mandatory.
Nonprofits target their fund-raising around Wall Street windfalls. The United Jewish Appeal Federation of New York, which last year raised $290 million for programs in the United States and Israel, has in other years held its biggest fund-raiser on the day Bear Stearns told employees the size of their bonuses.
But with turmoil on Wall Street and a worsening national economy, New York charities are beginning to feel the pinch. Officials at nonprofit organizations increasingly are worried about their financial future.
In 2006, the last year for which a comprehensive survey exists, Americans donated a record $295 billion to charity, according to Giving USA, an Illinois-based foundation that publishes data and trends about philanthropy.
Charitable giving follows national economic trends with a lag time between six and 18 months. So far it is unclear exactly how much Wall Street's difficulties and the wider financial problems will hurt nonprofits.
One group, the Association of Fund-Raising Professionals, has noted that the growth of giving has stalled since late 2007. "There's definitely a sense, particularly in the first quarter of this year, that [fund-raising] is going to be challenging," said Michael Nilsen, a spokesman for the organization. But Nilsen added that it is too early to tell if this signals the beginning of a serious decline or simply a return to previous levels after several years of record donations.
Corporations reported a 7 percent increase in grant-making in 2007, but nearly one-third of corporate foundations are expected to reduce their giving in 2008, according to a report published last week by The Foundation Center in New York.
Already corporations have cut back on discretionary spending and budgets have been reined in, said Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a Washington, D.C.-based watchdog organization. "We are seeing nervousness among nonprofits of all sizes, nervousness about what the downturn in the economy is going to mean in terms of being able to attract donations," he said.
