Economic Effects on Philanthropy

Advisers to the Wealthy Predict Rise in Giving to Offset Tax Increases
By Grant Williams
The Chronicle of Philanthropy— July 21, 2010

Eighty-seven percent of financial advisers expect income taxes to increase for most of their clients in the next 12 to 18 months, with 26 percent predicting their clients will increase charitable giving to offset the tax hikes, according to the 2010 Fidelity Charitable Gift Fund Advice & Giving survey of 500 financial advisers.

Forty-eight percent of advisers "expect their clients to maintain their level of giving, despite continuing market uncertainty and an overall decline in U.S. charitable giving in 2009," according to the Fidelity report.

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Nonprofit Job Market Appears to Stabilize, Study Finds
By Heather Joslyn
The Chronicle of Philanthropy— May 11, 2010

A modest sign that the nonprofit job market's decline may have slowed: Far fewer organizations in a new survey said they intend to eliminate positions this year, compared with a similar poll taken last year.

Ten percent of nonprofit groups surveyed said they intend to cut jobs in 2010, compared with more than half of respondents to last year's survey by Nonprofit HR Solutions, a human-resources consultant in Washington, and the Caster Family Center for Nonprofit and Philanthropic Research, at the University of San Diego.

Another sign of recovery: Thirty-six percent of respondents said they planned to hire at their organizations; of those, 43 percent said those jobs would be new, full-time positions.

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Pay for Fund Raisers Grew Last Year, the First Time Since the Recession Started
By Holly Hall
The Chronicle of Philanthropy— May 11, 2010

Fund raisers across the country earned a median of $66,000 last year, a 4-percent increase from last year and the first rise in pay since 2007, according to a survey released on Wednesday by the Association of Fundraising Professionals. (Editor's note: An earlier version off this article noted that average pay rose more than 7 percent; this article has been adjusted to give the median figure, which statistical experts say is the most reliable way to measure change. The median figure means that half of fund raisers received bigger increases and half received smaller increases or no raises at all.)

While the 3.9-percent overall salary increase among fund raisers appears to reflect signs of recovery in the economy, pay is still not rising as fast as it was before the recession officially started in December 2007. Median salaries for fund raisers rose by 5 percent in 2007 in the months before the economic downturn and jumped by as much as 15 percent in 2004.

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States Move to Revoke Charities' Tax Exemptions
By Jeff Swensen
The New York Times — February 27, 2010

Faced with steep declines in tax revenue, an increasing number of states and localities are considering eliminating various tax exemptions for nonprofit groups. Mayor Luke Ravenstahl of Pittsburgh considered a tax on college tuition. Calvin K. Y. Say, the speaker of the Hawaii House, supports eliminating exemptions for nonprofit groups. A bill before the Hawaii Legislature, for instance, would require charities to pay a 1 percent tax, and Kansas is considering making them subject to sales taxes. Revoking the nonprofit organizations' exemptions from property taxes is also under scrutiny in several counties in Kansas, as well as inPennsylvania.
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Majority of Nonprofit Groups Laid Off Employees and Shifted Investments in 2009
The Chronicle of Philanthropy — February 26, 2010

Eighty-seven percent of nonprofit groups that responded to a recent accounting survey said they cut costs last year, with 57 percent resorting to layoffs.
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Private School Demand Dips as New Yorkers Skip $30,000 Tuitions
By Janet Frankston Lorin

Bloomberg.com — February 26, 2010
Anxiety over the recession is trumping the angst of New York City parents to get their children into elite private schools.

Fewer children took entrance exams for private elementary schools, continuing a decline that began last year, as the economy hurt parents' ability to pay annual tuition of more than $30,000. The number of tests completed by kids applying to prekindergarten to fifth grade declined 4.4 percent, to 4,259, said Antoinette DeLuca, an executive director of the Educational Records Bureau, which administers the exams.
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Fund Raisers See Glimmers of Hope, But Tough Challenges in 2010
The Chronicle of Philanthropy — February 7, 2010
By Holly Hall

Peter Hansen, of the New Jersey Performing Arts Center, predicts his group will see a jump of 5 percent in revenue this year over last, but says that "it's going to be a long haul to get through this recession."

The New Jersey Performing Arts Center expects to raise $10.7-million this year, 5-percent more than in 2009.

Peter Hansen, the center's vice president of development, says he is grateful to be projecting an increase of any size. This is the harshest fund-raising climate in his nearly 30 years in the profession, he says.

Donors are more willing to talk about making large gifts now than they were right after the stock-market plunge in the fall of 2008, he says.
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Good Intentions
The credit crisis has compelled companies to take a more holistic view of social responsibility
The Wall Street Journal &mdash February 3, 2010
By Julian Evans

When the going gets tough, costly good intentions can go out the window. Company spending has been squeezed by the global recession and budgets for corporate social responsibility have suffered disproportionately.

A survey of U.K. businesses by KPMG and Business In The Community found a third of companies cut their corporate social responsibility budgets in 2009. Corporate philanthropy has also been hit, with a study by the Giving USA Foundation revealing that charitable donations byU.S. companies fell by 8% in inflation-adjusted terms in 2008.
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Slowdown in Charitable Giving Kicks In
The Wall Street Journal &mdash November 19, 2009
By PUI-WING TAM

Thanksgiving is around the corner, but Silicon Valley's charitable giving is on the back burner.

Evidence of that comes from the Mountain View offices of the Silicon Valley Community Foundation, which manages the philanthropy efforts of many techie multimillionaires and wealthy locals. The foundation offers an investment vehicle called a donor-advised fund, in which individuals and families can put in some of their wealth and then use those assets for charitable purposes. Those who have donor-advised funds with the foundation include former Yahoo Inc. Chief Executive Tim Koogle, E*Trade Financial Corp. co-founder Bernie Newcomb and Prosper Inc. CEO Chris Larsen.
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Foundation Giving Faces Steeper Decline Than Expected
The Chronicle of Philanthropy &mdash November 04, 2009
By Ian Wilhelm

A new report suggests that grant makers will cut back their giving this year more than previously expected.

In January the Foundation Center estimated that foundations would reduce their grant making 8 to 13 percent, but a new survey from the New York research group indicates that "the decline will be on the steeper end of that range."

While the stock market has trended upward in recent months, foundation investment gains will not make up for the financial loss in 2008, when philanthropic assets fell an estimated 22 percent, says the center.

In 2010 the giving picture doesn't look any rosier. Based on a September survey of 583 grant makers, 50 percent said they plan to keep their giving steady at 2009's reduced levels, 26 percent expect to decrease it, and 17 percent will increase it. Seven percent said they did not know how their grant-making budgets will fare.
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Princeton Endowment Fell 23%
The Wall Street Journal &mdash Sept. 29, 2009
by John Hechinger

Princeton University, joining a host of wealthy colleges with poor investment results, said the value of its endowment declined 23% in the year ended June 30.

The Ivy League school had previously said its endowment could fall as much as 30%. But in a letter released Tuesday, Princeton President Shirley M. Tilghman said the school had, unlike most years, declined to withdraw cash from the endowment for operating expenses.

Instead, the school last spring decided to fund its budget from other sources, including a bond offering. Princeton said that step, along with budget cuts, helped preserve more of the endowment's value.
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Economic Woes Force Arts Groups To Scale Back
September 17, 2009
by Neda Ulaby

The beginning of fall usually marks an exciting time for art lovers, as mailboxes fill up with enticing brochures advertising new seasons of music, dance and theater. But this year, many of those patrons have canceled their subscriptions — forcing arts organizations to trim their offerings.

New York state's Rochester Philharmonic Orchestra is among the entities affected by the downturn. Since last year, the orchestra has lost 900 donors and hundreds of thousands of dollars in grant money and endowment funds.
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Columbia Endowment Falls 21%
September 11, 2009
By John Hechinger
Columbia University, reporting smaller investment losses than some of its Ivy League peers, said its endowment over the last year declined in value by 21%, to $5.7 billion.

.For the year ended June 30, the New York City school reported the endowment had an investment loss of 16%--less than the 18% drop reported by the average big endowment, according to Wilshire Associates, the investment management consultant. The decline also marked an improvement over the negative-22%Columbia had previously reported for the first nine months of its fiscal year.

The overall size of the endowment, which fell by $1.5 billion during the year--reflects both spending and donations, as well as investment return. As of June 2008, when Columbia endowment was valued at $7.2 billion endowment, it was the nation's ninth largest.

The disclosure comes a day after Harvard and Yale each said their endowments, higher education's largest, had declined in value by 30%. Harvard reported an investment loss of 27% Yale didn't disclose its investment return.

Columbia declined to release details of its investment strategy. But the school has, in the past, had a smaller percentage of its funds devoted to alternative investments such as private equity funds than has Harvard and Yale. Those alternative investments, which had led to strong past investment performance, declined sharply in value over the last year.

Columbia said its five-year annualized return was 8%. The median endowment's annualized return over that period was 2.5%, according to Wilshire, and Harvard's was 6.2%.

"Columbia's investment team has successfully positioned the portfolio to take advantage during the bull market and cushion it as markets significantly weakened this year," said Robert Kasdin, a Columbia senior executive vice president.
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Income Gap Shrinks in Slump at the Expense of the Wealthy
September 10, 2009
By Bob Davis and Robert Frank
The deepest downturn in the U.S. economy since the Great Depression may finally shrink the gap between the very best-off Americans and everyone else. If so, it won't be by lifting up the bottom. It will be by pulling down the top. Over the past 30 years, chief executives, Wall Street bankers and traders, law-firm partners and such amassed ever-greater incomes, while the incomes of factory workers, teachers, office managers and others in the middle grew much more slowly. In 2007, the top 1% of U.S. families accounted for 23.5% of all personal income in the U.S., according to economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics. That was a level not seen since the Roaring Twenties.

The top 1%'s share appears to be falling fast. Mr. Saez and other economists expect income going to the top 1% of taxpayers -- currently, those with about $400,000 a year -- will drop to somewhere between 15% and 19% of all income by 2010. That still would leave income distribution more top-heavy in theU.S. than in many other countries.
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Bank of America promises to keep giving Foundation's new leader expects to donate $200m
September 9, 2009
By Todd Wallack
The Boston-based foundation said it will have donated $200 million nationwide by the end of this year, including $13 million in Massachusetts - about the same as last year, said Kerry H. Sullivan, promoted to foundation president effective today.
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Endowment Losses From Harvard to Yale Leave Universities Poorer
July 22, 2009
By Gillian Wee
While the Standard & Poor's 500 Index has increased 41 percent from its low in March, endowments have been weighed down by holdings of private equity, real estate and commodities, which haven't recovered as fast. These assets are also harder to sell, making it more difficult for schools to raise cash.
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From The Chronicle: Fund Raisers Predict Turnaround
College fund raisers predict about a 4-percent decline in donations for the fiscal year that ended in June, according to a survey by the Council for Advancement and Support of Education. But they also expect that trend to start turning around sometime in the next year.
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Fund-Raising Offices Make People a Priority as Budgets Are Cut
By Kathryn Masterson

In the face of declining revenue and institutional budget cuts, college advancement chiefs are working to protect their most-valuable assets: frontline fund raisers. To do so, they are reshuffling resources, streamlining operations, and learning to do without — something many have not had to do for a while.
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Colleges Will See a Decline in Megagifts, Experts Predict
The golden age for philanthropy—and the United States—may be over.

That was the sobering message delivered late last week at the annual conference for the Council for Advancement and Support of Education. Speakers at the fund-raising conference, including Robert B. Reich, a former U.S. secretary of labor, predicted that the economic recovery, when it happens, is likely to be weak, and that the number of megagifts to higher education will probably fall and the pace of such giving slow.
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One College Sidesteps the Crisis
Cooper Union, a private college in Manhattan that charges no tuition, has skirted the financial crisis in higher education due to its decision years ago to cut the risk in its endowment.
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Ivy League Endowments Finally 'Dumb'
The largest college endowments, long the envy of their smaller rivals, were left behind over the past year by the performance of schools with simpler approaches.
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Stimulus Plan Includes Money for Arts
Congressional Compromise on Stimulus Plan Includes Money for Arts, Social Services, and Volunteerism

The compromise economic-stimulus package passed today by the House of Representatives would provide $50-million for a new program to strengthen nonprofit groups so they can help people suffering from the economic downturn.
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Harvard Endowment to Cut 25% of Staff
The company that manages the endowment for Harvard will cut about 25 percent of its staff, or 50 positions, over the next several months, the school said on Friday.
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Jeff Schoenherr on "staying the course"
Jeff Schoenherr, director of the regional and international major-gifts program at the Johns Hopkins Institutions, shares his thoughts on "staying the course."
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Bad Economy Prompts Change in Gift Annuities
Responding to the changing situation caused by the economy, a key nonprofit umbrella group today recommended that charities lower the amount of money that donors receive in exchange for creating charitable gift annuities.
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MN Foundations Stepping Up
Some [Minnesota foundation executives] are flexing grant-making guidelines and otherwise scrambling to make good on 2009 commitments to hard-hit charities that are experiencing unprecedented demand amid a recession that reaches from the heart of city to the shores of Lake Minnetonka.
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Despite Economic Downturn, Private School Enrollments Hold Strong
Although officials at costly private schools in the Washington, D.C., area anticipate tough times ahead, enrollments in these elite institutions continue to increase, according to a October 29 article in The Maryland Gazette.

It's still too early to know what effect the economic downturn will have on these schools, representatives of these schools say. Budgets, endowment numbers and financial aid may soon feel the pinch, but Ron Goldblatt, executive director of the Association of Independent Maryland Schools. said parents remain committed to private education.

"I think if you asked every independent school about their endowments, they would be lying if they said it hasn't gone down," Susan Jones, Holton-Arms head, told the Gazette. "But we've lost much less than the market. We've weathered difficult times before, world wars, the Great Depression, and we will do it again."
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Philanthropic Giving May Decline, But Not as Sharply as Some Fear
If philanthropic giving drops off in coming months, any decline is unlikely to be as severe as the broader economic downturn might suggest, The New York Times reported on November 11.

Robert F. Sharpe, Jr., president of the Sharpe Group, a Memphis, Tenn.-based fundraising firm, cited historical data showing that charitable giving remains remarkably steady even during hard times. "Just about any way you look at it, the Depression was one of the best periods for charitable fund-raising," Sharpe told the Times.

Even so, experts consider it unlikely that the $300 billion contributed last year in the United States will be matched. Surveys by the Center on Philanthropy indicate, for example, that households with an annual income of less than $50,000 may stop giving completely.

Jennifer L. Howse, president and CEO of the March of Dimes, said the impact of the financial downturn "is probably going to be more serious next year than it is this year."
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Operas and Orchestras Batten Down Hatches
Bracing for Bad Days, Operas and Orchestras Batten Down Hatches
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Predictions for Holiday Giving
THE CHRONICLE OF PHILANTHROPY: 70% OF AMERICANS PLAN TO GIVE DURING THE HOLIDAYS, SURVEY FINDS
A study of online giving finds people are planning on donating this November and December at levels similar to this
time last year.
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Tips for Weathering the Economic Storm
Given recent economic developments, we want to share with you Marts & Lundy's collective thinking on common sense recommendations for moving philanthropic initiatives forward during difficult times.
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M&L Minute #3 – Economic Climate and Giving
The following report provides details on responses to our survey related to the impact of the current economic climate on philanthropic support, as well as additional analysis of fundraising results during historic economic downturns. To date, data suggests that the economic climate is affecting gifts toward the lower end of the gift pyramid and that some donors are looking for alternative gift methods to support institutions.
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Nelson C. Lees: Philanthropy through Downturns
A recent analysis by Marts & Lundy Senior Consultant Nelson C. Lees found that philanthropic giving has shown "remarkable resiliency" over the past four decades despite periodic dips in the stock market. Lees draws from a variety of sources in this informative study of economic slowdowns linked to stock market declines from 1969 to 2006.

Philanthropic Trends: Change is in the Air
A glimpse at current trends and expectation for philanthropy
By Bruce R. McClintock, Senior Consultant & Chair 2008