Local giving remains steady

But nonprofit groups worry that economy may hurt donations

'A cause for concern'

April 23, 2001|By Alice Lukens | Alice Lukens,SUN STAFF

Although some fund-raisers are bracing for the worst, the slowing economy hasn't hurt charitable giving in the Baltimore area.

Officials at nonprofit groups, foundations and federations around the city say donations have been steady.

"We have noticed anecdotally that there are certain donors that are holding back a little at this point," says Robert R. Lindgren, vice president for development and alumni relations for the Johns Hopkins University. "But overall, numbers have remained fairly consistent."

Thomas E. Wilcox, president of the Baltimore Community Foundation, says the foundation has seen no decline in giving. He says the up-and-down stock market hasn't affected donations because most people give toward the end of the tax year.

"Nobody does much business in philanthropy this time of year anyway," he says. "This is cultivation warm-up time."

National publications such as the Wall Street Journal have written about dot-com millionaires promising millions of dollars to philanthropy and not delivering on their promises. But no one interviewed for this article reported knowing of such incidents in Baltimore, possibly because Baltimore has never had that many dot-coms.

If the economy continues to slow, the effect on philanthropy will probably be less severe in Baltimore than elsewhere: fewer and smaller grants from corporations, foundations and individuals.

"At this point, some of it is conjecture more than actual facts," says Betsy S. Nelson, executive director of the Association of Baltimore Area Grantmakers.

In the second half of last year, the Philanthropic Giving Index, compiled by the Center on Philanthropy at Indiana University, declined 2.7 percent. A type of consumer-confidence index, it is based on interviews with executives of nonprofit organizations.

Although a slowing economy could reduce donations for nonprofit groups that depend on grants to operate, nonprofit groups tend to thrive during economic slumps, says Lester M. Salamon, director of the Center for Civil Society Studies at the Johns Hopkins University.

"Nonprofit institutions are not as vulnerable to change as for-profit businesses are," Salamon says. "Overall, they provide an important ballast to the whole economy."

A Foundation Center study released this year found slower growth among corporate foundations because of the slowdown. Nelson says corporate donations are more vulnerable to a rocky stock market than are donations from private or community foundations.

Foundation assets have declined in recent months, Nelson says, which means they might give less.

Although it's too soon to know how individuals are reacting to the slowdown, people historically continue to increase their giving during a recession, says George C. Ruotolo Jr., chairman of the group that publishes "Giving USA," an annual survey on giving trends.

Five recessions have occurred in the past 40 years, and total giving increased on average during each of them, though it increased more slowly than in nonrecession years, he says.

The only exception was in 1987, Ruotolo says, when the stock market dropped 22 percent in one day. Giving declined slightly that year but recovered the next year, he says.

"About 70 percent of the giving from individuals comes from about 20 percent of the country's wealthiest people. ... Their giving is based on far more than today's stock market," he says.

Ruotolo, president and chief executive officer of Ruotolo Associates Inc, a national consultant for charities that is based in Creskill, N.J., says he thinks the pace of individual giving will remain steady.

"Based on history, there's no reason to think that philanthropy is not going to continue to grow," he says.

But a chart in the Chronicle of Philanthropy in February showed that overall charitable giving drops in recession years when adjusted for inflation. From 1969-1970, it dropped almost 4 percent, according to the chart, and in the early 1970s, it dropped more than 5 percent.

Joel M. Breitstein, managing director for philanthropic planning at Legg Mason Trust, says he has not noticed a decline in giving, partly because he works with families who are planning for the long term and partly because most giving takes place toward the end of the year.

Officials at The Associated: Jewish Community Federation of Baltimore say giving is stronger than ever despite declines in the market. "With the decline in wages and the need for social services, our generous donors have continued to be generous, and they are supporting people at this time," says Marc B. Terrill, executive vice president of The Associated. "We are on pace to have a record-setting campaign for our organization and community."

Wilcox of the Baltimore Community Foundation says Americans are wealthier, on average, than they were 10 years ago.

"People who give are generous, and they worry mightily about those who are not as fortunate as they," Wilcox says. "So sometimes people do more in a rough economy because they know it will be tougher on those with very little than those with a lot."

But some development officials are keeping a wary eye on the market. Donna Jones Stanley, executive director of Associated Black Charities, says it is bracing for the worst.

Brodie Remington, vice president for university relations at the University of Maryland, College Park says that no alumni have withdrawn pledges because of the dot-com bust but that development officials at the school will back off from asking certain people for donations this year.

"So far, we do not see a difference in the level of philanthropic giving," he says. "But we do follow the market, and it is certainly a cause for concern."

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