Charities Cinch Belts in Uncertain Economy

When economic pressures grip corporate America, charities feel the squeeze.

Even in recession-buffered Northwest Arkansas, where new construction and white- and gold-collar jobs continue to flourish, the nation’s languid economy has made both corporate and private philanthropists cautious. Local nonprofit organizations are adjusting on-the-fly, adding innovative fund raising strategies to their 2001 campaigns.

The biggest change may be in the way charities ask for money. Dan Vancil, regional director of the Arkansas Chapter of the Arthritis Foundation in Springdale, said nonprofits must view fund raising as a take-and-give proposition.

“All charitable organizations are going to have to recognize that when you stick your hand out, you have to have something in it for them,” Vancil said. “You can’t just stick your hand out to receive. You’re going to have to figure out how you’re giving back to the company or person.”

Statistics recently published by Giving USA, an annual measure of the nation’s philanthropic health, said charitable giving slowed in 2000 to its lowest growth rate in five years. Last year, it was up only 3.2 percent to an estimated $203.5 billion including adjustments for inflation. In 1998, the growth rate was 27.5 percent.

The same study said corporate gifts rose 8.4 percent, or a third less than 1999’s growth rate. And in a recent survey published by the Chronicle of Philanthropy, a trade journal, 72 of 142 national foundations surveyed said they expected their giving to remain flat or drop this year.

No comprehensive data could be found on charitable giving for Benton and Washington counties. But several philanthropic foundations said their giving this year would be about the same as in 2000, indicating a thin surplus. More than one nonprofit organization executive said locally officed retail and poultry vendors have reduced charitable giving lately.

The problem, said an executive who asked not to be identified, is many nonprofits just now discovered this previously untapped donor market and vendors are being solicited nonstop. Ed Nicholson, a spokesman for Tyson Foods Inc. of Springdale, said from a corporation’s standpoint it’s frustrating not to be able to help everyone.

“No business can be all things to all people though,” Nicholson said. “There are so many good causes, but at some point you can only do what you can do. When you’re not making money, it’s hard to give it away.”

Three local United Way offices, which support more than 150 agencies in the two-county area, said the affects of a pressured economy have been painfully obvious to them.

Dealing with Shortfalls

The United Way — through its Washington County, Rogers-Lowell and greater Benton County offices — raises more money for more local agencies in Northwest Arkansas than any other nonprofit. The three units combine annually for more than $3.5 million in totally local charitable work.

Holly Hill, executive director of the United Way of Rogers-Lowell, said her organization felt the sting last November when St. Louis-based Emerson Electric closed its 36-year-old Rogers manufacturing plant and cut 260 jobs. Previously, Emerson had been a large fund raiser amassing as much as $23,000 for the Rogers-Lowell United Way in 1999. Much of that total came from employee contributions.

“When you lose $20,000 in one driver, it has a big impact,” Hill said. “We wound up still being over our goal of $1 million, but with only about 9 percent administrative costs, that was more than $20,000 that would have gone back into the community.

“It means, that much in services wasn’t put back.”

Last year, United Way of Washington County wasn’t as lucky. The entity missed its fund-raising goal of $1.74 million by $200,000 or about 15 percent. Linda Brown, president of United Way of Washington county since Jan. 2, said a number of factors contributed to the shortfall including the economy, taxpayer uncertainty in an election year and an unusually high number of local capital fund drives.

The ramifications were 7 percent across-the-board funding cuts for the 35 agencies supported by the United Way of Washington County. The nonprofit made up the other 8 percent of its shortfall by using $110,000 or half of the reserves it’s accumulated over many years

“The agencies all had to adjust their budgets and services downward,” Brown said.

As a result, United Way of Washington County will raise money first this year and then do its allocation process afterward. That’s standard practice nationwide, but local agencies will have to weather 2001 even less sure about the status of their funding. Brown’s office has been hosting CEO luncheons, and the Rogers-Lowell office is marketing itself toward higher-end giving.

New Approach

Vancil, the regional Arthritis Foundation director, said charities can stay viable even in 2001 if they communicate and market the benefits of their work to donors. Especially when dealing with corporations, he said, offering something larger is a must.

In 2000, the Arthritis Foundation slightly missed its $150,000 goal locally and was $80,000 short of its statewide goal of $1 million. The statewide goal by 2005 will be $1.2 million.

“There’s always an appeal for companies to be affiliated with a national charitable organization or foundation that represents an illness affecting 43 million Americans, like ours,” Vancil said. “But that only carries so much weight. Our goal is to come up with ways to combat both the affects of arthritis and to directly benefit our donor corporations.”

According to studies by the Center for Disease Control and Prevention in Atlanta, arthritis is the No. 1 cause of disability in America and the No. 2 cause of missed work hours. So the Arthritis Foundation is doing workplace prevention training.

“In industries like poultry production or trucking, arthritis is a risk because there’s a lot of repetitive manual work,” said Vancil, who is also a retired physical therapist.

“Workers could be hampered by arthritis in later years, but that could be prevented with the proper precautions and training. We can help cut companies’ workman’s compensation rates and reduce downtime if they’ll let us work with them. That’s our message.”

Connie Hendrix-Kral, director of donor relations for the Northwest Arkansas Community Foundation in Springdale, said another way local charities can boost their financial positions is to establish an endowed fund with a foundation like hers. NWACF is a public-supported grant making charity. That affords smaller nonprofits tax breaks and financial management they might not otherwise receive.

“Some organizations are going back to the old event fund-raisers,” Hendrix-Kral said. “The only problem is those will only work for a year or two if the organization doesn’t do the appropriate tweaking. They’ll hit a plateau, and unless you have a good coordinator and executive director, they just won’t make it anymore. You’ve got to think long term.”