Charitable giving declines in poor economy (8/6/09)

Aug. 6, 2009

By Tim Simard

Observer staff

A “welcome surprise.”

That’s how Kim Borsavage, director of development for COTS in Burlington, reacted when she learned Williston-based New England Federal Credit Union would be donating a large amount of money to the organization.

Last month, the credit union donated $25,000 to COTS, which is an acronym for the Committee on Temporary Shelter. COTS has served the Burlington community for more than 25 years by housing and aiding the area’s homeless. It was a cause to which credit union President John Dwyer felt it was important to contribute.

“We are involved in the mortgage business, therefore we’re involved in housing,” Dwyer said from his Williston office. “We felt it was an organization we should support.”

Borsavage said the donation came at a time when donations from companies and foundations were well below the normal range. She said COTS is struggling with the lack of funding, and the Burlington nonprofit is not the only one dealing with the economic recession.

John Connell, chief financial officer with the Stern Center for Language and Learning, located on Allen Brook Lane in Williston, said foundation endowments have disappeared and grants have been cancelled.

“It’s been a difficult year for everyone,” Connell said. “We’re very much going to have to ride out the funding lull.”

While the New England Federal Credit Union’s gift to COTS may not be an exception to the rule, the amount is larger than what other organizations are seeing. Yael Friedman, donor relations manager for the Williston-based Vermont National Multiple Sclerosis Society, said her organization has received some donations from businesses, but the amounts are far less than in previous years. While Friedman did not have exact numbers, she did say Vermont’s MS Society has had to make changes.

“Right now, we’re trying to budget a lot more realistically,” Friedman said.

It appears many nonprofit organizations are in the same precarious position. According to a study completed earlier this year by GuideStar, a data collection organization specializing in nonprofit information, 35 percent of U.S. nonprofits experienced a decline in donations in 2008. This happened while 64 percent of nonprofits said there was an increase in demand for services. A report from the National Council of Nonprofits expects a much larger funding decline in 2009.

Many organizations in Vermont also receive funding from the state. But with Vermont experiencing a $28 million budget shortfall, nonprofits have to expect the worst.

“It’s something we need to prepare for,” Borsavage said, stating that COTS survives on state grants for homeless prevention.

Most troubling for some organizations, including COTS and the Stern Center, is the drying up of monies from foundations. In a January 2009 report from the Chronicle of Philanthropy, foundations and grants lost one-third of their assets when the stock market stumbled. As the markets have leveled off, so have the grants, but many foundations have either slowed down their giving or completely stopped.

“In some cases, they were left with no money to give out,” Connell said.

That’s why the New England Credit Union gift proved so crucial to COTS. The $25,000 went directly to the nonprofit’s family centers, Borsavage said.

“We knew that we aren’t going to get that support from foundations this year,” she said.

Just like corporations and individuals, local nonprofits are having to scale back. At the Vermont MS Society, the organization has had to cut back on scholarships and financial assistance for families afflicted with the neurological disease, said Friedman.

Connell said the Stern Center has also had to cut back on scholarships and program development. He added that one-third of the Stern Center’s funding comes through donations. The organization also charges fees for some of its services, which helps keep the Stern Center afloat, Connell added.

Even though the economic recession is making it difficult to find money, nonprofits are working hard to find ways to bring in donations. Borsavage said COTS is sending a donor letter to 14,000 people this month in hopes of receiving funds. She said the August letter has proved very lucrative in the past.

A two-day charity bicycle ride is scheduled this weekend in Castleton for the Vermont MS Society. Last year, the ride raised $225,000. Friedman hopes the event will again do the same and remind people of the importance of her organization.

“Our goal is to keep talking to people and get them to connect with us,” Friedman said.

Connell said the Stern Center will continue finding creative ways to raise needed funds. He said there are still people in giving moods out there.

“Individual donors continue to support us as they’ve always supported us,” Connell said.