Thursday, October 30, 2008
Catherine Wilson, Bureau Chief
Fundraising in a Recession
As the market drops and the economy plunges, and area residents lose their jobs and savings, the need for emergency assistance increases.
Local not-for-profits are already experiencing greater requests for aid and planning for more increases as the winter approaches.
Abigail Adams, the Director of Communications for the Westchester Chapter of the Red Cross, spoke to The Guardian about her agency’s
concerns. “No matter what, our work has to continue,” Adams said. “But we’re expecting a lot more responses this winter as people seek
alternative heat sources”. The Red Cross fears that local residents will turn to space heaters and wood replaces for heat for their homes, increasing the risk of fire.
To meet the increased need, the Red Cross is pursuing additional sources of funds. A new “Red Cross Fundraising in a Recession Motors” program will allow individuals to donate their vehicles to the organization. Over ninety-one cents of every dollar donated goes to our programs,” Adams noted.
“We keep our costs down because 96% of our staff are volunteers”. Those volunteers are already being stretched to their limits. “Last year,
the Red Cross deployed 12,000 volunteers nationwide,” Adams said. “This year, the Red Cross deployed 12,000 volunteers last month alone”. National disasters like the hurricane in Galveston, Texas are straining Red Cross funds. “Unfortunately, the recent news on the economy has taken the continuing devastation in Texas off of the front pages,” Adams said.Making potential donors aware of the need is one of the challenges not-for-profits face. However, potential donors should not confuse awareness of a problem with the degree of need Some not-for-profit’s ad agencies are simply better at ‘getting the word out’. A donor can determine legitimate need by reviewing the organization’s ratings and programs on websites such as www.CharityNavigator.org and www.GuideStar.org.
Not-for-profits are also required to file annual tax returns, Form 990, with the Internal Revenue Service and submit annual lings with the
New York State Attorney General’s Charities Bureau. According to the Attorney General’s website: “The Attorney General’s Charities
Bureau is responsible for supervising charitable organizations to insure that donors and beneficiaries of those charities are protected from unscrupulous practices in the solicitation and management of charitable assets.
The Bureau also supervises the activity of foundations and other charities to ensure that their funds and other property devoted to charitable purposes are properly used, and protects the public interest in charitable gifts and bequests contained in wills and trust agreements. The Bureau also maintains a registry of charities and fundraising professionals.”
Anyone donating to a charity that is registered in New York State may obtain a copy of the charity’s annual ling directly from the AG’s
office: New York State Attorney General, Charities Bureau FOIL Officer 120 Broadway New York, NY 10271 A rule of thumb for analyzing a charitable organization is to check how much of the funds raised is being used for programs. An efficient charity should keep its administrative and fundraising expenses to less than 25% of its budget. However, many charities, like the local branch of the Red Cross, are well below that guideline, only 4%. A charity may legitimately need to spend more on administrative expenses; museums need security and insurance to guard their collections, costs that are classified as administrative; whereas food kitchens average less than 2% in overhead costs.
Since the operations of not-for profits vary widely, a donor considering which not-for-profits to support should review them side by-
side. The Guardian took two well-known charities, Covenant House, and the Susan G. Komen for the Cure, and compared them. Covenant
House received only a one star rating from Charity Navigator vs. four-stars for Komen. Covenant House’s fundraising and administrative
expenses are 40% of its budget, a cause for concern, but the salaries of the top three administrators only ranged from $139,000 to $161,000,
indicating the organization was trying to keep costs down. But numbers alone don’t determine where an individual should donate their
funds. A contributor to Covenant House might deliberately overlook the high fundraising costs since the agency is the only one addressing
the needs of ‘throwaway children’ in many communities.
In comparison, Komen’s fundraising and administrative expenses were 17% of its budget, but the top administrators had salaries ranging
from $208,000 to $513,000. A closer examination of Komen’s financials revealed the organization has over $92 million in cash, $62 million in
investments, and another $35 million in pledges receivable, almost $200 million in total reserves. Their website claims the Komen “Race
for the Cure”, a series of fundraising races, is “the most successful fundraising and education event for breast cancer ever created,” but
their financial statements reveal that while the “Race for the Cure” raised $1.9 million, the expenses to run this race exceeded $2 million, for a
$148,000 loss for this event.
Fundraising materials from not for-profits are written emotionally to induce contributions. But donors should analyze these materials clearly,
and double-check the facts, before determining where to contribute their funds. In a message from Komen’s founder, Nancy Brinker, she
states, “Cancer already claims twice as many lives as AIDS worldwide. At least seven million people die of cancer each year and close to 11 million new cases are diagnosed. That’s more than AIDS, tuberculosis and malaria combined”. Ms. Brinker fails to note in that message that her organization only deals with breast cancer, not all cancers. And that many cancers have a lower fatality rate than AIDS, tuberculosis and malaria.
According to the Center for Disease Control, breast cancer diagnoses are falling from 211,000 in 2004 to 182,460 in 2008. Thanks to improvements in treatments, the death rates are also falling; breast cancer now ranks 7th among all cancer deaths. Compare this to Alzheimer’s, which is currently the 6th cause of all deaths, a ranking that will rise as the “Baby Boom” generation ages. Given greater
survival rates from cancer and heart disease, individuals are surviving those diseases and now living long enough to develop Alzheimer’s
and other forms of dementia later in life, one in every two seniors over the age of 85 is afflicted.
But the funds raised by these organizations does not correlate to the risk to the public: Komen raised $275 million last year, up from $162 million in 2006, for breast cancer, a disease that affects one out of every eight women, while the Alzheimer’s Association only raised $80 million for a disease that can potentially affect one out of every two individuals, men and women, if they simply live long enough.
Based on such confusing data, most donors contribute their funds where their interests and empathy lie. An area woman, with a family
history of breast cancer, would probably donate to Koman, despite their huge cash reserves, whereas local Baby Boomers, hoping to live well
past 80 years of age, would probably opt to donate to the Alzheimer’s Association in the hope that a cure can be found before they reach the high risk years. However, some local residents may be taking the approach of funding other interests.
Not-for-profits pay no state, local, property, sales, or federal taxes. But governments need money to operate. Therefore any tax write offs
a charity receives are moneys that have to be made up elsewhere, in higher taxes from local residents. Taxpayers are thereby subsidizing
the activities of the not-for-profits and religious organizations. Individuals willing to donate funds should make sure that the causes are
legitimate and the not-for-profits is not a front for another agenda or the founder’s personal needs.
This reporter recently attended the annual fund-raiser for the Westchester Hispanic Coalition at the Crowne Plaza in White Plains. According to their Executive Director, the purpose of the fundraiser was to “celebrate the culture and customs of the Latino community who have made their homes in Westchester”. Fundraising events also allow the organizations to honor the efforts of their volunteers and supporters who work long hours for no financial gain.
WHC honored three outstanding area women, Maria del Monte, an executive with Fuji Film, Maria Kercado, a VP with local union 1999
SEIU and an advocate for low wage workers, and a renown Westchester woman, Isabel Villar, the head of El Centro Hispano and a life-long advocate in White Plains.
Fundraising events also allow supporters to contribute to an organization in fun ways. At the WHC gala, several local restaurants showcased
their culinary skills by contributing food and staff for the evening: Sonora of Port Chester, Exotic Foods Catering of Peekskill, Mesun Los
Espanoles of White Plains, Antun’s of Elmsford, and the Crowne Plaza. The evening had an EPCOT feel to it as attendees went from table to table sampling the delicacies. WHC also provided entertainment: dancers who portrayed the range of music from a variety of Caribbean islands.
The gala showcased the talents of Danza Fiesta, Baile y Teatro Puertorriqueño, a group that is part of the not-for-profit organization, Diversity in Arts and Nations for Cultural Education, Inc. According to Sandra Arboleda of WHC, “Danza Fiesta’s mission is to use the worldwide language of dance to promote Puerto Rican folk dance as a medium to educate people in the United States on the historical aspect of the Puerto Rican culture, music and traditions”.
At the event, Danza Fiesta had the crowd at the Crowne Plaza dancing to the rhythms of the Caribbean. Local merchants also contributed
to the fundraising event by donating merchandise and services for the “Silent Auction” portion of the evening. At the WHC event, attendees bid on items ranging from gift baskets to an autographed photo of the last game at Yankee Stadium signed by Derek Jeter. Celebrities are one of the largest sources of donated items for fund raisers. The bidding for these items takes on a festive mood as attendees egg each other on to bid higher. This reporter successfully outbid WHC’s executive director for a much-needed spa treatment graciously donated by Adriana’s Spa in Eastchester.
So, while funds may be tight, and the need for help is growing, local residents can still effectively help their community and even have fun
doing so. As Abigail Adams of the Red Cross noted, “our volunteers are a wonderful group of people”. Volunteering your time, attending a
fundraising event, or simply writing a check to your charity of interest, are all effective ways of helping your neighbors in this time of increased need. Getting involved directly with an organization is one way to see how your time and money is being used effectively. But for those individuals who cannot spare the time to volunteer, the state government and national watch groups will assist you to determine where to best use your contributions.