Churches and charities slow to feel effects of economic recovery, analysts point out_41904
Posted: 4/16/04
Churches and charities slow to feel
effects of economic recovery, analysts point out
By Mark O'Keefe
Religion New Service
WASHINGTON (RNS)–A rising stock market and recovering economy have many of the nation's 1.2 million nonprofits feeling optimistic again, but it could take months–even years–before they see big financial benefits.
“Nobody is singing 'Happy Days are Here Again' yet, but they've stopped singing the Chicken Little tune that the sky is falling,” said Diana Aviv, president of Independent Sector, a national coalition of nonprofits and philanthropy-minded corporations, based in Washington, D.C. “There is still a cautious attitude of 'let's wait and see.'”
One reason for less-than-unbridled enthusiasm is the seriousness of state budget crises, which can mean less government money for nonprofits. Still, there's plenty of reason to smile as individual donors, corporations and foundations appear ready to write large checks for good causes again.
“The phones are ringing off the hook,” said Stephen Adler, chief executive of JAMI Charity Brands Marketing, which connects companies and causes from its New York City base. “A lot of folks that told us to take a walk last year are starting to call us. We're starting to look at a sunny outlook after a pretty chilly year.”
A financially healthy nonprofit sector is good news for the general public. Historically, nonprofits have addressed societal needs in ways business and government do not, whether with free medical clinics mending bodies, colleges challenging minds, arts organizations stimulating imaginations or religious groups stirring souls. The nonprofit sector also is an important cog in the overall economy, employing nearly 10 percent of the nation's workers.
For many nonprofits, the late 1990s were the happiest of days, thanks to a roaring economy, solid government support and increasingly generous donors. But the Sept. 11 terrorist attacks, a bearish stock market, the war in Iraq and state government shortfalls changed the mood from buoyant to downright gloomy.
From the summer of 2000 to December of 2001, the twice-a-year Philanthropic Giving Index, similar to a consumer confidence index for charitable giving, showed three straight declines for the first time since the Great Depression. After a slight spike in the summer of 2002, the index sank again until December 2003.
“Uncertainty is the enemy of investment, and it's also the enemy of philanthropy,” said Patrick Rooney, an economist who is the director of research at the Center on Philanthropy at Indiana University, which produces the index. “Part of your economic security is whether you'll be alive tomorrow. When you have heightened fear of war or terrorism, that can have a negative impact on some donors.”
A mood swing appears to have begun last fall. The giving index released last December showed a 15 percent increase from the summer of 2003, bringing it up to a level last seen immediately after Sept. 11, 2001.
The index measures perceptions of senior fund-raisers, not actual giving to charities. That data won't be available for a year or more.
History gives further reason for confidence. Rooney said the best predictor of increased giving is a rising stock market, particularly the Standard & Poors 500 Index, which spiked 26 percent in 2003.
Dorothy Ridings, president and chief executive of the Washington-based Council on Foundations, made the same point. “The fact that the stock market was up about 25 percent at the end of the year means, I would say, that you'll see about an equivalent increase in foundation grant-making,” she said.
The increase won't be immediate, however. In planning how much to give to charities, many foundations use a portion–typically 5 percent–of a rolling three-year average of their stock market portfolios.
But even if they could move quickly, it's unlikely foundations could plug the holes left by state budget woes. According to the New Nonprofit Almanac, governments provide 31 percent of revenues for nonprofits, while foundations provide 2 percent.
“Government spending is not going to zoom back up at the state and federal level,” said Alan Abramson, director of the Nonprofit Sector Research Fund at the Aspen Institute in Washington. “I think nonprofits are in for a few more years of crunch.”
In states where budget crises have been severe, nonprofits are scrambling to make up the difference.
In Mobile, Ala., state funding to the Mobile Child Advocacy Center was reduced from $167,000 to $147,000. To provide the same level of care to children victimized by sexual abuse, the center will have to dip into its reserves. If more money doesn't come in by June, services may have to be cut.
“Last year was very tough,” said Patrick Guyton, the center's director. “We're hoping this year will be better. We're hoping the economy of Alabama will improve, increasing (our) funds, … but we're just not sure yet.”




