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Finding a Way to Keep It All Going by Stephanie Strom El Paso—One sunny day in late October, Las Americas, a nonprofit organization that represents detained children and others in trouble with immigration authorities here, had $958.78 in its checking account, about enough to pay one month's salaries and taxes.
True, it had another $8,752.88 in its "investment" account, but that wasn't enough to cover the annual costs of its auditor and bookkeeper, let alone its $306,065 annual budget. Fourteen foundations and religious organizations have turned down Las America's grant requests this year, some of whom were steady supporters in the past, and others gave only half of what they gave last year. "It's tough," said Sister Liliane Alam, the charity's executive director, summing up the fund-raising environment nationwide this year. From organizations like Las Americas that operate on a shoestring even in the most robust economic environments, to the Metropolitan Museum of Art in New York, which has a $1.8 billion endowment to cushion it from swings in the fortunes of its well-heeled patrons, the nonprofit world is reeling. Last year, the terrorist attacks on the World Trade Center and the Pentagon threw off fund-raising efforts and diverted philanthropic dollars to relief and related causes, so many organizations began the year at a disadvantage. Now, wealthy donors hurt by the stock market are renegotiating their pledges. Foundations have also lost money to the market, and corporations are having trouble justifying investments in charity when they cannot afford to pay their shareholders dividends. City and other local governments faced with yawning deficits are cutting their budgets. "I have never seen anything like this," said Fran Barrett, who has worked in the nonprofit world since 1969 and is executive director of Community Resource Exchange, a nonprofit organization that advises its nonprofit clients on management, budgets, how to build boards and other administrative matters. "Usually, when one well runs dry, you can run to another and the only question is whether you're quick enough to where the money is. The money isn't anywhere now." Ms. Barrett said the hard times might continue for three or four more years. But those who work in charity, naturally an optimistic bunch, insist on seeing a silver lining in the black clouds. "It forces you to prioritize and refocus," said Lilliam Barrios-Paoli, senior vice president at the United Way in New York City. "That discipline is very healthy." Around the country, organizations are working hard to turn lemons into lemonade in the most likely and unlikely ways. Most charities will not experience the kind of discipline that is required at Las Americas. Some of its volunteers from the Border Volunteer Service, a division of AmeriCorps, are supposed to receive a small salary from Las Americas, but Sister Liliane often asks them if their families can help tide them over until another grant check arrives or a religious order sends a check. Las Americas is housed in a ramshackle building in a ramshackle neighborhood in El Paso, one of the country's poorest cities. There is no heat or air-conditioning, and so much plaster has fallen off the walls the lath shows through in places. Last month, Sister Liliane was celebrating a gift of a desk and two chairs contributed by a travel agency that was going out of business. It meant that Jenny Dragseth, a volunteer who helps female victims of domestic violence gain legal status here, no longer has to work at a children's table propped up on cinder blocks. "I have never worked in such a poor, mean area as here on the border," said Sister Liliane, a native Lebanese whose order, the Franciscan Missionaries of Mary, has sent her to Egypt, Morocco and New York City. She came here in January to overhaul Las Americas' fund-raising, which dropped precipitously after the terrorist attacks. "Immigrants today are like lepers during St. Francis's time," she said. "No one is giving money for immigrants." So she started by knocking the word "immigrant" out of the organization's name. She then transformed its annual spaghetti dinner — "This is not a fund-raiser, it's a church social," she sniffed — into a benefit honoring two local immigrant advocates. Tickets were $15 to $100, and she sent them to everyone she knew. "I told my friends in New York that they had to send $250 because that's the least you can pay for a benefit there," she said. The event raised $13,000 after expenses, and 164 people attended, many of them leading figures in El Paso's legal community. That was almost double what the spaghetti supper raised but fell short of the $40,000 Sister Liliane had hoped for. She has also reached out to previously untapped foundations and new donors, with mixed success. Las Americas has secured pledges for $102,650 for the fiscal year that ends June 30 and has requested a total of $436,000 from 15 foundations and religious groups. "I am also working to build our board to add more people who can help us raise money," Sister Liliane said. She will need all the help she can get. Just last week,
the landlord told her he was selling the house to a law firm that wants
to build offices on the site, which will be just down the street from
a new courthouse. "This problem I will leave to God," she said. "But
you know, it does give us the chance to offer naming rights to anyone
who might want to buy us a building." At the other end of the fund-raising spectrum are the country's universities, which shrewdly capitalized on the biggest postwar economic boom to build fat, no, obese endowments. Universities have turned fund-raising into a competitive sport, using their endowments to measure their success much the way bonuses determine the pecking order among investment bankers. At Princeton University, income thrown off by its $8.1 billion endowment accounts for 40 percent of the budget; the endowment was up last year by 2.2 percent, in spite of the falling stock market. Giving makes up a much smaller but increasingly important source of income. Last year, Princeton's annual fund was basically flat at $36.4 million, compared with $36.7 million the previous year. "The cost of higher education has increased because of competition, but government is certainly not increasing its support, most schools have seen their endowments decline, and tuition has already gone up, up, up, up," said Brian J. McDonald, vice president for development at Princeton. "If you look at the various sources of revenue and say what can we grow, fund-raising looks like the most likely candidate." So Princeton is enlisting its faculty in its fund-raising efforts, allowing teachers to pitch their pet projects to alumni. Robert Wuthnow, a sociology professor, told a group in New York about his efforts to build the Center for the Study of Religion, for instance. Mr. McDonald also said that Princeton had sent Maria Klawe, the new head of the engineering school, to San Francisco to meet with alumni. "The appetite for these sessions is enormous," Mr. McDonald said. "It engages our alumni intellectually and reminds them in a very tangible way of our mission." The university also still encourages donors to contribute stock. "For many of our top donors, their preferred gift currency, namely appreciated stock, is not as highly valued as it was two years ago, but we believe that the economy is now at or very close to its bottom," Mr. McDonald said. "That currency will appreciate in the years to come, so it's a great advantage to them and to us to be patient." Children's Art Project Not all charities rely on donors to keep them afloat. Increasingly, charities are building revenue streams that mimic business models to bring more stability to their finances. The Children's Art Project at the University of Texas MD Anderson Cancer Center in Houston is a nonprofit that operates like a business except that all the profits are used on programs for the children who are undergoing treatment there. One unintended side-effect of the commercial models is that it subjects the charities to the same business cycles that businesses experience. "We have to pay for products and services like anyone else," said Shannan A. Murray, the director. "We have 26 staff people who need to be paid, as well as accountants and production people." The project takes artwork that is created by the children in treatment and turns it into holiday cards, umbrellas, notepads and jewelry that is then sold through catalogs and online. Roughly 83 percent of its sales are made from August through December, and last year, the terrorists struck a week after the project mailed its first catalog. A month later, one week after it sent out a second catalog, the anthrax scare made customers wary of the mail. Ms. Murray quickly dropped plans for a smaller catalog in the spring, halted third and fourth printings of cards and cut expenses. "We did everything from not ordering paper to not ordering a new printer," Ms. Murray said. "We had to make a minimum of $1.5 million to fund the programs we back at the hospital." The project cut $1 million in expenses to offset the $1 million decline in revenues, but this year it is harder to see where the cuts will be made. At the last minute, the company that had agreed to underwrite the cost of T-shirts to be given to the group's volunteers during a kickoff rally last month backed out. The group also needed a new computer system to replace one that is 12 years old, so it has taken out a loan. "It's part of a five-year-business plan," Ms. Murray said. "I thought about trying to find a donor or an underwriter, but no one really wants to underwrite a back-office system for a small nonprofit." |
