Recession Puts Charities in Twin Bind of Need, Funds : Donations: Groups are faced with more to help and fewer resources. Some laid-off workers turn volunteer.
For the first time in decades, charities here and nationwide are facing the double-edged sword of rising demand and falling contributions, foreshadowing a tough year ahead for the needy.
“Our business is booming,” said Bob Kardon, executive director of the California Assn. of Nonprofits, an advocacy group for charities. “The only problem is we don’t have the money to serve the constituency.”
But at the same time, the stubborn recession has reaped a strange harvest for charities--people who have lost their jobs and turned to volunteer work to replace their careers, at least temporarily.
The number of people volunteering at area charities has increased 20% in the last year--a record, said Janet Harrison, resource development director for the Volunteer Center of Los Angeles.
Most often, new volunteers are laid-off workers who want something to do, Harrison said. “It helps them to explore new areas they may be thinking of getting involved in.”
One of the volunteers is Gail Farnsworth, 49, who reports to work daily as an unpaid disaster team captain with the local chapter of the American Red Cross. In November, she lost her $2,000-a-month job as an administrative secretary for an insurance company, where she worked for 5 1/2 years. She now fills her time with expanded volunteer duties.
Farnsworth, a widow, said she has 30 years of work experience and “25-plus years” of charitable volunteer service, mostly at administrative levels. She said she was replaced at her old job by two part-timers who are being paid half her salary and receive no medical benefits. She’s afraid she may have to take a lower paying job, despite her “extremely good job skills.”
People like Farnsworth are virtually the only bright spot in a bleak landscape of layoffs and bankruptcies that have cost charities dearly.
The Greater Los Angeles chapter of United Way, which fell $12 million short of its fund-raising goal last year, has pared its expectations even further in its current drive. The American National Red Cross chapter in Los Angeles is running 10% behind its expectations and considering cuts in services and staff soon after the first of the year.
“The economy has gotten significantly worse,” said Lon Burns, president of the Southern California Assn. for Philanthropy. “We are in a recession that seems to never want to go away.”
More and more, charities are being forced to rely on the skills of volunteers rather than an outpouring of donations from a once-booming economy.
Jack Kyser, chief economist for the Economic Development Council of Los Angeles County, warns that charities will have to become more creative in their approach to fund raising.
“Service agencies this year are going through a very agonizing appraisal of what they can do,” Kyser said. “They are caught in a real bind because the amount of money available to them is limited, yet we have a huge increase in the demand for services.”
Nationwide, Americans contributed $122 billion to charity last year--5.8% more than in 1989, according to the American Assn. of Fund-Raising Counsel Inc. Trust for Philanthropy. Yet the increase was only slightly above the rate of inflation--4.8%--and far behind the annual 10% increases of previous years.
Observers predict donations may be less generous this year, especially from individuals--who account for 83% of all contributions--and from corporations facing reduced profits, mergers and other effects of the economy.
“Constituencies are becoming more discerning, limiting the number of causes they are supporting,” said Robert Zuer, chairman and president of Development Management Associates of Long Beach, a fund-raising consulting firm. “We are seeing donors focus more on a select number of organizations,” a trend he said began a year ago.
Corporate foundation managers, particularly, are taking a harder look at their charitable spending, which totaled almost $6 billion nationally last year--4.8% of the total.
ARCO, which recently reorganized to reduce spending, sticks to “narrowly defined targets” in its grants program, said Eugene Wilson, ARCO Foundation president.
“We tend to not look at contributions as charity,” he said, “but to take a more strategic and focused approach so that we don’t try to react to every compelling need that comes along.”
The company this year spent $19.5 million on such community programs as early childhood development, prenatal care for expectant mothers, job training, low-income housing and the arts in Southern California and Alaska, Wilson said. But its grants budget next year will be trimmed to about $18 million because of reduced profits, he said.
Financial woes at Carter Hawley Hale Stores Inc., parent of The Broadway, forced it to cease all monetary contributions when it went into receivership last February. The company instead has focused “on practical ways that we can help communities where we do business,” said Jan McElwee, director of external affairs.
For instance, The Broadway is co-sponsor of a drive to generate Christmas gifts for 10,000 needy youngsters in Southern California.
Pacific Enterprises, the financially troubled parent of Southern California Gas Co. and Thrifty Corp., will cut its charitable spending by 14% next year, from $4.9 million to $4.2 million, said spokesman Tom Sanger.
Such reductions were partly responsible for a $4.7-million drop in United Way’s revenues last year, the first decrease in its fund raising since it was incorporated in 1963, said John Moawad, chapter senior vice president of resource development.
The agency has relied heavily on contributions from 75 of the largest private employers in Los Angeles, Moawad said. But those same employers laid off 55,000 workers last year and have dismissed another 17,000 employees since the current United Way campaign began in September, he said.
Contributions fell from $93.1 million in 1989 to $88.4 million in 1990--a 5% decline. The goal this year is set even lower, at $88 million, because companies that accounted for $1.7 million in contributions last year have closed, Moawad said.
The agency--the main fund-raising arm for many Los Angeles charities--refocused its recruitment program two years ago to mid-sized companies with 75 to 300 employees. So far, about 3,500 new businesses have been recruited and another 1,500 are targeted, Moawad said. But replacing the number of donors lost through massive layoffs takes time.
“They don’t make big companies anymore and the big ones out there are getting smaller,” Moawad said.
United Way’s decreased revenues have had a domino effect in Los Angeles on other agencies, such as the Red Cross, said Bowen H. McCoy, chapter president. He said the Red Cross has launched its own campaign, hoping to raise at least $4.5 million. If the campaign fails, McCoy said the chapter, which has 200 employees and 10,000 volunteers, will have to consider cutting services early next year. He declined comment on which programs could be curtailed.
The Salvation Army is conducting a Christmas appeal campaign to raise $3 million, almost 14% more than last year, said Russell Prince, executive director of development for the Southern California division. He said contributions so far are running about 10% higher than last year, but that the demand for services has increased 20%.