Where has all the money gone?

It's not just the terrorists, it's the economy

WHAT'S SCARIER—a planeload of terrorists or a stagnant economy?

Many area charities and nonprofits would choose the latter. Although a massive $1 billion national fund-raising campaign in response to the Sept. 11 attacks had smaller charities feeling neglected, our cooling local economy could be a bigger threat to their survival.

"The greater worry is what the state of the economy is right now—that's a bigger factor than how much people gave in response to the crisis," says Eleanor Brown, a Pomona College economics professor and an expert on charitable giving. "It's not just how much money people have, but whether they're worried for the future."

With layoffs at Boeing and in the tech sector, "we're going to get squeezed on both ends," says Shelley Rotondo, executive director of Northwest Harvest, which operates the city's largest food bank. "Those that used to be donors will no longer be financial donors, and they'll become clients."

Stock market woes figure into the region's malaise. Typically, charitable giving rises along with upturns in the stock market, both because individuals get more disposable income and because foundations get a better return on invested endowment money. Many social-service charities are also partially funded through government contracts and grants, which are prime targets for budget cutters in tough economic times.

Alice Woldt, acting director of the Church Council of Greater Seattle, says she has told the council's 10 direct-service programs to identify possible budget cuts totaling 10 percent of their 2001 funding. The Church Council funds programs addressing hunger and homelessness and aiding at-risk youth, the elderly, and the mentally ill. "As you can imagine, those needs are not decreasing," she says.

The Boeing layoffs have hit hard in South King County, says Josephine Tomayo Murray, executive director of Catholic Community Services. She says her organization has seen increased requests for its rent assistance, utility assistance, and Adopt-A-Christmas programs. "It's grim," she says. "I think you are getting people asking for help who have never asked for help before."

Undeniably, the Sept. 11 events had a huge impact on U.S. charitable giving—both positive and negative. The Seattle-King County Chapter of the American Red Cross handled about $12.5 million of the $561 million bound for the dedicated Liberty Fund, devoted to aiding victims of the terrorist attacks. The local Salvation Army set up its trademark red kettles for one week and collected some $300,000 of that group's $57 million national disaster aid fund.

But there was a flip side to this largesse. Mike Frederickson, executive director of Seattle's Lambert House, says his group saw a 95 percent drop in average donations the month after Sept. 11. "It was such a shock to us to come to the end of the month and not even have our rent taken care of," he says.

Fall fund-raising events were especially hard hit. In Washington, D.C., the annual AIDS Walk fell from 25,000 participants to just 5,000 and failed to raise even half of its $1 million goal. Fortunately, Seattle's AIDS Walk had been rescheduled to Sept. 9 (it was originally set for a week later). "We dodged a bullet," says Chuck Kuehn, executive director of the sponsoring group, Lifelong AIDS Alliance.

Both Frederickson and Kuehn say their groups have resumed their usual fund-raising activities and are seeing better results. "We think people are getting the message that [they] need to continue supporting their local charities, even as they support the national cause," says Kuehn.

But this holiday season will be the real test. Charitable giving is always focused around the end of the year—for reasons ranging from big givers seeking tax deductions, to foundations doling out grants on an annual cycle, to ordinary folks writing a few more checks than usual.

Other charities are heavily dependent on holiday impulse giving, such as the Salvation Army and their annual kettle campaign. "Christmas is our bread and butter," says Mike Seely, community relations director for the Salvation Army's Northwest regional office. "We have a lot at stake this holiday season."

Feeding charities, such as Northwest Harvest, also draw the lion's share of their cash gifts around Thanksgiving and Christmas, says Rotondo. "Historically, November and December are predictably the months out of the year when we have more money coming in than money going out," she says. "We do look to financial support in those two months to support us year-round."

A good Christmas probably won't be enough. Catherine Stringer, director of communications for the California Community Foundation, says foundations usually fund specific programs but may be forced to make grants for operating expenses based on the current economic troubles. "There are so many groups that already walk a fine line in terms of their operating budgets," she says.

Others are looking hopefully at the new group of Sept. 11 donors as potential continuing givers. "A lot of those people that gave to that effort back East, it's the first time they've given to charity," says Seely. "If somehow we can capture those donors and somehow sustain their giving, the result would be a net positive."

It's not that long a shot: Americans are a generous bunch, notes Brown, who points out that the huge outpouring of funds to disaster relief still represents only about 0.5 percent of annual U.S. charitable giving (about 75 percent of Americans give to charity each year, and total charitable giving in the U.S. has risen 39 of the last 40 years). According to a national survey commissioned by the nonprofit coalition Independent Sector, about 70 percent of Americans responded to the Sept. 11 attacks with financial donations or volunteer work—and three-quarters of those people said they planned to maintain, or even increase, their usual charitable giving. However, this same survey found that about half of participants feared that a continued economic slowdown could reduce their giving.

Even officials at the American Red Cross, which was front and center during disaster relief efforts, aren't sure they'll benefit significantly in the long term. "We don't really have much of a sense locally as to whether it's going to be a boost for us," says spokesperson Michael Patton. "We haven't had a chance to really see what's come in the last month, we've been so busy counting the money that's going back to national.

"We know it can be challenging to convert disaster donors" to regular supporters, he says.

So the charity world waits and watches to see how the last two months of 2001 turn out. "We're a little bit nervous about this year," admits Seely. "Everyone's nervous."


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