GuideStar Survey Reveals Drop in Philanthropy

Release date: December 2, 2002
A new survey by GuideStar, the premier source of information on U.S. charitable organizations, indicates that contributions to most nonprofits decreased or remained flat in January-October 2002 compared to donations during the same period in 2001.

"Most nonprofits responding to our survey reported decreased or stagnant donation levels for the first ten months of 2002. This year's traditional giving season, where nonprofits often receive a majority of their donations, will be more important than ever," said Robert G. Ottenhoff, GuideStar's president and CEO.

"There was an 8 percent response rate to the survey invitation, with 2,725 individuals from public charities and private foundations participating. Every segment of the nonprofit sector—all budget levels, all subject areas—was represented, as were all 50 states and the District of Columbia. This broad participation makes the survey's results compelling."

Of the survey respondents whose organizations accept contributions, almost half (48 percent) reported that donations in January-October 2002 had decreased compared to those received during the first 10 months of 2001. Another 22 percent said that contribution levels had stayed about the same. "It's taking significantly more effort to achieve lower donation revenue," commented Daryl Orts, vice president of the Board of Directors of the Washington Academy of Performing Arts in Redmond, Washington.

Factors in the Downturn

The participants identified a number of causes for the decreased or stagnant contribution levels. Many cited reduced support from grantmakers. "Grants from private foundations that usually fund our programs have decreased 10-15%," explained Bill Thomas, facilities/resources developer for the Women's Community Revitalization Project in Philadelphia, Pennsylvania. "We are also less likely to receive grants from foundations approached for the first time."

Loss of corporate gifts was another factor. Eric Salisbury, executive director of the Madison Boychoir in Wisconsin, noted: "We have seen an exit from an annual corporate sponsor. We lost funding from a foundation that has contributed annually since 1991, stating, 'requests far exceeded the Trust's resources and it was necessary to deny many grants that have ordinarily been approved.'" The Columbus Indiana Philharmonic has had a similar experience, said executive director Alice Curry: "Corporate sponsorships and donations are down; the decision makers are saying, 'We hope this decision is temporary and we will be able to return to our normal giving pattern in a year or two.'"

Government cuts have also hurt nonprofits. "The economy has not affected our programs—Head Start and Early Head Start," stated Elsa Little, chief financial officer of the Rosemount Center in Washington, D.C. "The District of Columbia's use of federal funds," however, "has had a somewhat adverse effect, since funds earmarked for day care were switched to elementary education due to DC's difficulties with money."

The bear market has affected individual donations as well. According to M. Kemp, finance manager of First United Methodist Church in Albuquerque, New Mexico, "Older contributors on fixed incomes or with incomes tied to the stock market are not increasing contributions, but decreasing, ending or keeping their contributions the same. Some pledges are far from being fulfilled, while other contributors are stepping up to help more."

Western States Hit Slightly Harder

The majority of Rocky Mountains (53 percent), Southwest (53 percent), and Far West (51 percent) nonprofits reported reduced contributions, compared to 43 percent-47 percent for the rest of the nation.

Mission Affecting Impact

Subject area had more impact on how organizations fared, ranging from a low of 40 percent of medical-research organizations reporting a decrease to a high of 60 percent of animal-related nonprofits stating contributions had dropped. "The non-human focused charities in particular will probably suffer more than most, as we may not be perceived to be providing essential services," stated Yvonne Wallace Blane, director of rehabilitation for Fellow Mortals, Inc., a wildlife facility in Lake Geneva, Wisconsin. Diane Bradford, director of Nepal Scholarships in Aspen, Colorado, believes her organization's international focus has contributed to lower contribution totals: "I attribute around 2/3 of our decrease in donations to the poor economy. The other 1/3, I think, is because we serve non-US students and the focus is on U.S. giving now."

Guarded Optimism for 2002 Giving Season

Traditionally, contributions to charitable organizations increase at the end of the year. Survey participants were guardedly optimistic about how their organizations would fare during the last two months of 2002. The majority (55 percent) predicted total contributions would stay the same or increase compared to donations in November and December 2001. Nonprofits in the Rocky Mountains and Far West were least hopeful, with 40 percent of the former and 43 percent of the latter predicting an overall decrease.

Grantmakers Also Feeling the Pinch

Grantmakers are also feeling the pinch. Four out of 10 grantmakers responding to the survey said that the amounts their organizations awarded in January-October 2002 had decreased compared to totals granted for the same period in 2001. Some 17 percent stated that moneys granted had "decreased greatly," and 23 percent said funds awarded had "decreased modestly." Only 18 percent reported an increase.

"We have suspended our open application period as we will already be using a significant portion of our assets in order to continue funding those organizations that we have previously funded," Chery McRoberts, administrator of the C. Louis Meyer Family Foundation in Westchester, Illinois, stated. "We will grant fewer dollars than last year and may reduce 2003 even further," explained Marlene Fluharty, executive director of the Americana Foundation in Novi, Michigan." Elizabeth Miller, director of Washington Grantmakers in Washington, D.C., noted, "Grants amounts are less than last year. Grant requests have been moved to future grant cycles."

About the Survey

GuideStar e-mailed 32,960 messages inviting individuals at public charities and private foundations to participate in the survey; the response rate was 8 percent, with 2,725 people taking the survey on-line between November 7 and 21, 2002. The final survey report will be posted on the GuideStar Web site, www.guidestar.org, on December 4. To obtain an advance copy of the report, a copy of participants' comments, or request survey results for a particular location, contact GuideStar's director of communications, Suzanne Coffman, at 757-229-4631.

About GuideStar

GuideStar is the operating name and registered trademark of Philanthropic Research, Inc., a 501(c)(3) public charity located in Williamsburg, Virginia. GuideStar's mission is to revolutionize philanthropy and nonprofit practice with information. To that end, GuideStar has created and is constantly updating a database of information on all IRS-recognized 501(c) nonprofit organizations eligible to receive tax-deductible contributions. The GuideStar database currently comprises information on 1.7 million nonprofit organizations. Basic program and financial data about these organizations are available for free on the GuideStar Web site, www.guidestar.org.

News Contact

Suzanne E. Coffman
Director of Communications
757-229-4631, ext. 27