Charities Struggle With Faltering Economy and Uncertainty After September 11

The faltering U.S. economy and the effects of the September 11 terrorist attacks are causing a shift in the charity landscape as many new nonprofits struggle to survive, while others adjust fundraising approaches and refocus on their missions, the New York Times reports.

Donations to charities from foundations, corporations, and individuals with extensive stock holdings rose sharply in the late 1990s as the stock market soared. However, the beneficiaries of the stock market boom are also its losers: Foundations give less when their stock holdings decline in value, corporations cut back when profits are down, and large gifts of stock are not nearly as valuable. As a result of the recent economic downturn, many nonprofits have seen their funding slide and many will not be able to survive the crunch.

Some social service organizations and many arts groups, especially in New York, are having a difficult time hitting their pre-September 11 fundraising goals this fall. According to Patrick M. Rooney, the director of research at the Center on Philanthropy at Indiana University, arts organizations "basically do well when there's a lot of extra income or wealth around." In New York, nonprofit arts organizations also have faced a loss of income from ordinary operations as fewer residents and tourists have attended museums and performances after the attacks. The American Heart Association's fall fundraising walks exemplify the state of fundraising after the terrorist attacks, said Liz Andrews, a spokeswoman for the organization's midwestern branch. She explained that the closer the walks were to New York or the sooner after September 11, the worse they did.

Despite the lackluster climate, charities' fundraising efforts do not appear to be severely impacted by the generous outpouring of donations to the funds and organizations dealing with the aftermath of the September 11 attacks, as many had feared. According to philanthropy executives and researchers and consultants in the field, those gifts from individuals are being made in addition to their usual giving. And the total $1.3 billion in donations for the relief and recovery efforts amounts to far less than one percent of the $203 billion that Americans gave to charity in 2000. Still, the uncertainty created by the attacks and the end of the stock market boom are causing nonprofits to go back to the basics and focus on their missions.

"It's a return to mission-focused fundraising: talking directly about what you do and the value of your programs to the community," said H. King McGlaughon, director of the Center for Philanthropy and Nonprofit Management at Merrill Lynch. "In the 90's there was a fairly significant trend toward donor gratification."

John O'Neil. "Charities Get a Big Helping of Uncertainty" New York Times 11/12/2001.