- The Washington Times - Sunday, July 7, 2002

The Salvation Army and the American Heart Association, two of the nation's largest charities, both concede they had some nervous moments in the aftermath of September 11 and the recession as a result of decreased donations in some parts of the country.But the fears did not materialize on a national basis. The Salvation Army and the heart association which rank first and 15th, respectively, in the nation in total donations, according to the Chronicle of Philanthropy both ended up taking in more contributions either in the calendar year 2001 or fiscal 2002 than they did the previous year. However, in neither case was the level of increase what the charities had been used to in the past.
It's a situation many charities have experienced, and most blame the economy, not the September 11 terrorist attacks, for their less robust fiscal situations. Food banks and soup kitchens say they have seen sharply increased demand in some regions that lost badly needed tourism dollars after the September 11 attacks.
And St. Jude Children's Research Hospital in Memphis, Tenn., which ranks 30th in total contributions, says its budget is down between $12 million and $15 million, a drop of 5 percent from a year ago. One factor in the decline, says Richard Shadyac, chief executive officer and national executive director of the American Lebanese Syrian Associated Charities (ALSAC)/St. Jude Children's Research Hospital, was the donations that schoolchildren and others made to victims of September 11, rather than to St. Jude.
In particular, St. Jude's was hurt by the negative media publicity surrounding the use of September 11 funds by charities such as the American Red Cross and the United Way.
"The main issue we were confronting was the lack of accountability by some charities the lack of accountability to donors for the use of their money by the Red Cross and the United Way has greatly affected all charities," said Mr. Shadyac, who says he's confirmed that fact with executives of other charitable groups.
Lt. Col. Tom Jones, national community relations and development secretary for the Salvation Army, didn't identify any charities he believes were at fault. "But I do believe some Americans became skeptical when they read stories about charities not handling money appropriately," he said.

Charities under fire
The American Red Cross was sharply criticized when it indicated it would hold back some money contributed for victims of September 11 and apply it elsewhere. Last month, the national Red Cross fired the entire board of its San Diego chapter because of concerns about its decreased fund raising and public credibility. Questions were asked about how the chapter spent money raised for victims of a wildfire that occurred in January 2001 and its unwillingness to turn over documents sought by a panel assigned to investigate the chapter.
Sen. Charles E. Grassley of Iowa, ranking Republican on the Senate Finance Committee, has leveled many complaints at the chapter and has wondered why a former chapter CEO earned an annual salary of more than $300,000. National Red Cross leaders wanted the CEO, Dodie Rotherham, fired, but the chapter board resisted.
In recent months, the United Way of the National Capital Area has raised eyebrows and generated news reports about its accounting practices and the way it treats contributions. According to reports in The Washington Post, the chapter acknowledged it reported about $2.6 million in donations last year that it never received or distributed; it released figures showing it deducts as much as 45 percent of contributions from donors who do not specify a charity in order to pay overhead costs.
Also, it was disclosed that the local United Way chapter had withheld more than $1 million collected in recent years on behalf of charities and had placed that money into its reserves, The Post said.
Suzie Upton, executive vice president of development for the American Heart Association, said her organization has not encountered donors who have become cynical about charities because of the behavior of some. "Our normal growth has been 10 percent-plus [in donations] for the past four years," she said in an interview. The organization's last fiscal year ended June 30, and Miss Upton said AHA was expected to come out "5 to 7 percent ahead."
Overall, giving to health-based charities dropped 4.8 percent in 2001, a larger decline than the average 2.2 percent decrease seen in recession years, according to "Giving USA," a report released June 20 by the American Association of Fund-Raising Counsel (AAFRC) Trust for Philanthropy.
Col. Jones said the total amount the Salvation Army collected in last year's Christmas kettle campaign was "up 4.7 percent overall from a year ago." That was the case, he said, even though "Christmas giving declined in some areas."
The nearly 5 percent increase was only half the sum realized in the previous Christmas campaign, Col. Jones said. Still, he said, "I was pleasantly surprised."

Charitable giving rose
Walter Sczudlo, vice president and general counsel of the Association of Fundraising Professionals (AFP), says he was not surprised by the results of a recent national report that showed charitable giving in the United States rose slightly in 2001, despite the dual setbacks of a recession and the September 11 attacks.
"American support for charities is remarkably resilient," said Mr. Sczudlo, whose 26,000-member group, based in Alexandria, is the world's largest organization of philanthropic fund-raisers.
The "Giving USA" report found that Americans gave an estimated $212 billion to charity last year, an increase of 1 percent over the nearly $210.9 billion they donated in 2000.
The findings were in line with AFP's projections. Mr. Sczudlo said a survey of charities his group conducted in December found that 60 percent had received either as much or more in charitable contributions in 2001 as they had received the year before.
"That was a little counterintuitive, since our anecdotal evidence [at the time of the survey] indicated the trend was that charitable giving was either flat or down," he said.
Asked to explain the relative good news, Mr. Sczudlo cited several factors. "Given the tremendous outpouring for disaster relief [after September 11], most charities redoubled their efforts" to raise money, he said.
What's more, Mr. Sczudlo said, the tragedies caused by the terrorist attacks "may have exposed an entirely new group of givers to the importance of charity." As a result, he said, they "firmed up charitable giving" in 2001, "despite the recession."
Leo P. Arnoult, chairman of the AAFRC Trust for Philanthropy, put it this way: "A variety of factors influenced giving in 2001. Many donors gave less or stopped giving because of the worsening economy. New donors, increases in giving from other donors, and changes in the mix of causes that donors support occur each year. These factors, along with recent growth in the number of foundations and giving for September 11, all affected giving in 2001."
While much attention has been focused on the fact that Americans donated nearly $2 billion for post-September 11 disaster relief, those donations represented less than 1 percent of the total U.S. charitable contributions last year.
There has been only one year since 1939 when the numerical amount of charitable contributions actually dipped from the previous year. "1987 was the only year it didn't increase. The stock market crashed that year. Even so, charitable giving only went down 1 percent," Mr. Sczudlo said.
Those who monitor charitable donations readily acknowledge last year was a tough one for charities. When adjusted for inflation, last year's total contributions represented a decline of 2.3 percent from the previous year.
"2000 was actually the year the economy turned sour, but charitable contributions that year totaled $203 billion. And that amount represented an overall increase of 6 percent from 1999," Mr. Sczudlo said.
But Mr. Arnoult countered that the "economy entered a recession in March 2001," and he defended last year's small rise in charitable donations, given the adverse circumstances. He said the 6 percent jump seen in 2000 "was a more typical rate of growth after four years of extraordinarily high growth, above 10 percent."
"The 0.5 percent increase in giving in 2001 is attributable to economic conditions more than to crisis. Research shows that giving is closely tied to the economy. Not surprisingly, giving in 2001 fits the pattern that we have seen during previous recessions. In six of the eight recession years since 1971, giving dropped by 1 to 5 percent when adjusted for inflation," said Mr. Arnoult, adding:
"Despite fears last fall that giving might decline precipitously, in fact, the change in giving in 2001 falls within the normal range for a recession year."
Even so, he acknowledged there is "no doubt that some agencies saw charitable revenue fall in 2001."
John Keightley, vice president of development and communications for Catholic Charities USA, said the donation situation of the more than 150 Catholic Charities agencies nationwide "has been, pretty much, a mixed bag" since September 11.
"A number of our agencies said they were fine. Others said they were down. For instance, Minneapolis-St. Paul said they were down by 15 percent, so far. They attributed that mostly to the economy and layoffs in the area. Local factors are more likely to determine fund-raising" outcomes, Mr. Keightley said. Catholic Charities ranks ninth in total donations, according to the Chronicle of Philanthropy.
Mr. Keightley added he would be "surprised" if there were a significant dip in total allocations to Catholic Charities campaigns this year.
Asked if the priest sex-abuse scandal in the Roman Catholic Church has adversely affected any campaigns, Catholic Charities USA spokeswoman Shelley Borysiewicz said: "We've seen no negative impact outside of Boston. I've read and heard they are hurting in Boston." The Archdiocese of Boston has been at the center of the sex-abuse scandal.

Individual giving
As has been the case since 1959, living individuals gave more than three-quarters of the total charitable contributions in 2001. Individual giving, which does not include bequest gifts, is estimated at $169.7 billion last year, according to AAFRC Trust for Philanthropy.
The "Giving USA" report said individual giving dropped 1.7 percent last year, when adjusted for inflation. That figure is very near the average drop of 1.4 percent during recession years from 1971 to 2000. In non-recession years since 1971 individual giving has increased by an average of nearly 4 percent.
The report found that corporate giving showed the biggest drop in 2001, falling by 14.5 percent. Also, it said, this reduction was much larger than the average decline of less than 1 percent seen in other recession years between 1971 and 2000. The sharp decline in corporate giving was a reflection of reduced corporate profits in 2000. When adjusted for inflation, corporate profits fell nearly 20 percent in 2001.
As for individual giving in the wake of September 11, the "Giving USA" report said most such gifts were less than $100.
Col. Jones said the Salvation Army received donations totaling $84 million for September 11 relief. Every nickle of that amount, he said, will be used for needs resulting from the disasters that occurred that day.
He said the mammoth religious charity used money it collected for the September 11 tragedy to pay the rent, utilities and prescription drug costs of those affected; to feed those searching for survivors and remains; to provide food and counseling at the New York Medical Examiner's Office; and to provide temporary housing for those left stranded when the Federal Aviation Administration halted all flights following the deadly hijackings.
Col. Jones was one of the beneficiaries of the Salvation Army's largesse. He had to go to Los Angeles on September 11. "And I was supposed to be on that flight out of Dulles that flew into the Pentagon," he said.
He was saved by the fact that he found the cost of the airfare too expensive, and he elected to take a cheaper flight that left Baltimore-Washington International Airport at 8 a.m. "Halfway across the country, we learned that all flights were canceled, so I came down in Kansas City, where 3,000 people were stranded at the airport," he said.
Col. Jones said he spent several days at the home of the Salvation Army's divisional commander in Kansas. He noted that about 200 people at the airport who were unable to find a place to stay were transported to a Salvation Army camp in Wichita.
Col. Jones says he has "no idea" how this year's Christmas campaign will fare. He acknowledges the "economy is looking better" than it did a year ago.

Rising demand for charities
America's Second Harvest, a Chicago-based umbrella group for more than 200 food banks and soup kitchens, said that beginning after the holiday season, it saw increased demand, ranging from 10 percent to 50 percent, at 80 percent of its offices.
"We started to see the biggest demand as a result of economic disruption [that followed September 11] in places where tourism dried up, such as Albuquerque, N.M. this [trend] was well beyond New York, New Jersey and D.C.," Susan Hofer, spokeswoman for America's Second Harvest, said in a telephone interview.
Ms. Hofer said contributions were "comparable" to those the feeding centers received the year before. "But there was no means of meeting demand," she said.
America's Second Harvest has taken some new steps designed to increase awareness of the need for foodstuffs for the needy and to thank those who have helped in the past. Strategies included running full-page ads in newspapers with large circulations and sponsoring the first-ever National Hunger Day on June 5.
At least one major charity Easter Seals, which raises money for people with muscular dystrophy and other disabilities says its fund raising since September 11 is running 10 percent ahead of where it was last year.
"We're probably right where we want to be, given that our costs for postage have gone up overall, we feel we're doing quite well," said Chris Cleghorn, spokesman for Easter Seals' national office in Chicago.
Asked to explain this nonprofit's good fortune, Mr. Cleghorn said: "We're staying with the same strategies that worked in the past, but we're working them harder."
As always, he said, Easter Seals is "doing a lot of direct-mail fund raising." But also this year, he said, "We're putting a lot of focus on person-to-person fund raising."
Mr. Cleghorn said particular emphasis is being put on a program called the $1,000 Giving Group, which is geared toward wealthy donors, who can contribute $1,000 or more.
William H. Gray III, president of the Fairfax-based United Negro College Fund, says his nonprofit group, which he described as the "primary educational charity for minority Americans," raised $165 million in the fiscal year that ended March 31. "We raised $170 million the prior fiscal year, so we were down a little but we reached our goal this year. And there was no impact from 9/11, and no impact from the slowdown of the economy," Mr. Gray said.
He said the main reason for this year's decline was a drop in contributions for a "technology enhancement capital campaign," which kicked off last year with much fanfare. He said it's well recognized that donations for technology campaigns tend to fall off after their debut.
Mr. Gray, who held Democratic leadership posts in the House of Representatives before joining the United Negro College Fund, is proud to point out that the organization's contributions have grown from $55 million to more than $160 million in the past decade.
He says he believes that both need and accountability have been factors in the impressive growth of contributions to the organization. "Contributors know our administrative and fund-raising costs are very low 88 percent of the money we raise goes for scholarships for kids."

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