BootLeg Betty

Non Profits Look Ahead As Wall Street Crumbles

Bloomberg News
Nonprofits Look Beyond Corporate Donations as Wall Street Reels
By Patrick Cole and Leon Lazaroff

Sept. 17 (Bloomberg) — Marc Friedman, who runs the nonprofit Building With Books, witnessed the severity of Lehman Brothers’ situation firsthand last week at the investment bank’s Manhattan headquarters.

“It was surreal being in their offices,” said Friedman, Building With Books’ chief operating officer who used a Lehman conference room for a board meeting last Wednesday. Two Lehman executives are on the board of the Stamford, Connecticut, organization that runs after-school programs.

Lehman Brothers Holdings Inc. was scrambling at the time to shore up its capital, though the securities firm collapsed and declared bankruptcy on Monday.

Building With Books, like many nonprofits, is now looking ahead and bracing for a pullback in corporate donations following Lehman’s demise, Bank of America Corp.’s purchase of Merrill Lynch & Co. and American International Group Inc.’s funding woes.

Friedman, like others, said his organization is making sure its donors are varied. Individuals cover 35 percent of its $6.4 million budget while corporations, foundations and government aid make up the rest, he said.

“What’s happening on Wall Street is challenging for us, but our revenue base is diverse,” he said.

Corporations accounted for 5.1 percent of all donations to U.S. nonprofits in 2007, according to GivingUSA Foundation, a research group in Glenview, Illinois. Individuals were the largest donor group, contributing $229 billion, or 75 percent, of total philanthropy.

More Competition

Economic troubles are expected to increase competition for funding among nonprofits that operate everything from museums to homeless shelters.

“If companies are in trouble, corporate philanthropy is one of the first things to get cut,” said Tom Pollak, program director at the National Center for Charitable Statistics at the Urban Institute in Washington.

The Greater Pittsburgh Community Food Bank, serving 11 counties in southwestern Pennsylvania, is bracing for a decline in donations.

“Some corporate donors are telling us they’ll have less to give next year,” said Joyce Rothermel, the food bank’s director, without naming contributors. “The length of this economic downturn will definitely have an impact on our future and where our energies go.”

Donors, too, have a wait-and-see attitude.

The Wells Fargo Foundation, an arm of San Francisco-based Wells Fargo & Co., is unlikely to increase its donation total next year from a current $104 million, said Tim Hanlon, the foundation’s president.

No Increase

“It’s hard to know in this economy what’s going to happen,” Hanlon said. “I don’t expect a decrease, but I’m not so sure about an increase.”

Procter & Gamble, the world’s largest consumer-products company, increased its charitable contributions 5 percent in 2007 to about $115 million, a total that won’t change this year or in 2009, said Brian Sasson, global manager of the Cincinnati-based Procter & Gamble Fund. P&G gives mainly to educational and public-affairs groups.

The General Mills Foundation, the charitable arm of Minneapolis-based General Mills Inc., also projects its giving to nonprofits next year to remain at about $21 million, Executive Director Ellen Goldberg Luger said in an interview. Its donations focus on fitness, education and the arts.

Plan B

The importance of corporate donations to nonprofit groups varies widely, said Tim Delaney, chief executive officer of the Washington-based National Council of Nonprofit Associations.

Medical institutions and private universities rely less on corporate giving than social-service nonprofits, he said.

The Pittsburgh food bank, for example, gets 9 percent of its $10.6 million budget from corporate donors including Comcast Corp. and US Airways Group Inc.

The New York Restoration Project, an environmental group founded by Bette Midler, will receive 20 percent, or $1.7 million, of its $8.3 million fiscal 2008 budget from corporate donations, Executive Director Drew Becher said.

“We’re putting together a Plan B in case some of what we have in the pipeline doesn’t come in,” Becher said. “Everyone is going through cost-cutting, and we’ll feel it in ’09.”

To contact the reporters on this story: Patrick Cole in New York at pcole3@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net.
Last Updated: September 17, 2008 00:01 EDT

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