Charities, still reeling, try some new tacks

In her fight against the spread of HIV in her community, Pat Christen faces the loss of a key tool in her kit: the donated funds that have helped her campaign to raise awareness.

Ms. Christen, executive director of the San Francisco AIDS Foundation, is not alone.

Across the country, small and midsize nonprofits are struggling to stay afloat in harsh economic times. While the economic impact varies widely, few regions have been shielded, and nearly every charitable service has been challenged.

The United Way of Chicago, for example, announced cutbacks of 19 percent. And in Atlanta, local United Way officials estimate a 2 percent budget shortfall.

Adding to its woes, the national organization is coming off a year in which allegations of financial mismanagement may have hurt public trust.

Nationwide, total giving fell 2.3 percent last year, according to the American Association of Fundraising Consultants (AAFRC). According to the group, this year marks the first slowdown in giving since 1993. In past years, donations grew as high as 10 percent annually.

Experts attribute this year's drop on rising unemployment and a tumbling stock market.

Art and cultural programs have been hit particularly hard, especially in New York City, according to Diane Baillargeon, an executive vice president of Seedco. To assist, her New York-based organization makes millions of dollars' worth of interest-free loans to nonprofits.

She's seen many groups abandon programs, lay off staff, and turn away those needing help.

"We've seen a dramatic increase in the number of stressed nonprofits. It's a tough economy with government funds drying up and individuals reluctant to give," says Ms. Baillargeon.

"Art programs have been truly hard hit, but even the direct human-services programs have seen dollars decrease," she adds.

At the center of the nonprofits' woes is the enduring economic uncertainty. Many experts attribute the stock-market plunge to the drop in donations, making individual donors – including many who feel tapped out after post-Sept. 11 donations – reluctant to give. Corporate donors have scaled back giving by 14.5 percent, according to the AAFRC.

Atlanta, home to one of the nation's largest airports and a center of the travel industry, has been especially hard hit.

"Atlanta was used to significant growth in our economy and our fundraising always kept pace," says Mark Dvorak a vice president of United Way in that city. "After 9/11, the travel industry workers were without jobs for months, and for some it just hasn't gotten any better."

Mr. Dvorak says many Atlanta nonprofits have struggled to keep up with the demand from travel workers, and many are reluctantly contemplating staff and service cutbacks.

Page: 1 | 2