Special Issues 1st Draft-How the current economic recession is affecting local charities

By Laura Smith

November 17, 2008

It is safe to day that the economic recession the country now faces has affected most individuals on some level. People are carpooling to avoid the high cost of gas.  Children are packing smaller lunches with the rising prices of food. And women are no longer delving into luxuries such as weekly pedicures or spa treatments.
But what about those who serve to meet the needs of others? Charity organizations around the country, and even around the world, are cutting back on expenses and seeing a decline in donations of all sorts.
 There is less money in peoples’ pockets to give, therefore less to give to these organizations that rely so much on generosity from the public.
According to Claire Gaudiani, author of The Greater Good, America has given more than $2 trillion to charity organizations over the past 20 years. He says, “philanthropy has made a major contribution to successful capitalism.”
But now these philanthropic organizations are experiencing a bad sign of the times. What happens to successful capitalism then?
According to an analysis of donations to 74 groups by Target Analytics, a consulting firm to non-profits researched in the Community Investment Network, the number of charitable donors fell a median 3.8 percent in the first half of 2008 from 2007, while revenue declined a median 2.4 percent.
Results of a survey of charity chief executives released in September 2008 by the Charities Aid Foundation (CAF) and the Association of Chief Executives of the Voluntary Sector (ACEVO) suggests that the effects of the slowing economy are having a huge impact on charities.
Its findings showed that 72 percent have seen demand for their services increase and almost a third of the charities surveyed (30 percent) have seen individual donations fall.
This is no surprise to the events of recessions in a historical context. According to the GivingUSA Foundation’s analysis of data since 1967, people are less charitable during downturns. During recessions, giving decreased 1 percent after adjusting for inflation.
Countries other than the United States are feeling this monetary hindrance on charity organizations as well. In England for example, 17 percent of charities reported a fall in income, according to The Guardian, a British newspaper.
But these setbacks are not just occurring on a national level, they are happening in your own backyard.
The Piedmont-Triad area and Alamance County of North Carolina in general has seen a dip in giving to philanthropic organizations as well.
“This is something we’ve seen drop,” Suzanne Phillips, the Community Public Relations Director for the Piedmont Red Cross said. “We’ve seen a drop in what the United Way has given us as well as contributions and donations.”
 The American Red Cross is a national organization that focuses on three primary services: operating a national network of blood banks, working through a national network of chapters of emergency relief (storms, floods, fires), and first- aid training courses which raises revenue for other local programs. According to Peter Frumkin , author of On Being Nonprofit, the commercialized half of the Red Cross could not exist without the delivery of charitable services.
Annually, donations account for 33 percent of the Piedmont Carolina chapter’s budget, 12 percent from the United Way, and 14 percent from fundraising. “We are cautious about how we spend our money,” Phillips said.  “We try to keep it as level as possible and cut back as much as possible.” Most of the Red Cross’s clients are victims of single-family fires and in order to maintain services to them, the organization has had to be very frugal.
Having had to cut 3 staff members, the Piedmont Red Cross now only has 2 full-time employees.
The Salvation Army’s Boys and Girls Club in Burlington is also feeling the effects of the economic recession like the Red Cross.
Sherri Henderson, director of the Club, struggles day to day with the consequences of the current economic recession. The Boys and Girls Club is an after school facility that tutors and provides recreation for children while their parents work.
With an annual budget of approximately $328,000, the Boys and Girls Club receives its funding from the United Way, its annual Steak and Burger Fundraising Dinner, and some grants. Typically, it receives $80,000 from the United Way and $58,000 in pledges from the Steak and Burger fundraiser. These figures however, are not enough to survive the poor economy.
“Our expenses have increased,” Henderson said. “It seems like we are constantly trying to revise our budget to reflect the increase in supplies.”
The rising cost of gas has also been an issue. The Burlington Boys and Girls Club has four busses, two that require diesel and two that require gasoline.
“During the school year we pick up youth from 13 area schools,” Henderson explained. “In the summer we average more than 100 youth a day so we need to take two buses on each field trip.  Our expense line has doubled and there is not much we can do about it.”
Providing after-school snacks has also been an issue due to the rising cost of food.
“We have been blessed to have two local companies donate food to our club,” Henderson said.  “We also have two additional companies that have been donating snacks for our youth.  We have a household of 100 plus a day, if we did not have people willing to assist us with food we would not be able to give our children a free snack in the afternoon.”
But quite possibly one of the most disheartening aspects of the economic recession on this charitable organization has been the families who are involved with the Club.
“We have seen some of our parents lose jobs,” Henderson said. “The majority of the populations we serve were already on tight budgets. Now, in the past year, we have seen them struggle even more.”
To join the Burlington Boys and Girls Club, a family must pay $80, one of the cheapest fees to pay out of any organization of its kind. But even this payment is hurting families’ wallets. Some children are lucky to get partial scholarships but even these are scarce now.
“We know that we are valuable to them [the families] but when it comes to making the choice to pay their rent or pay for after school fee, they really do not have a choice,” Henderson said. “More than ever before we have seen parents not being able to pay for childcare.”
Thus, a few children have had to leave the Club.
“We do our best to not have kids leave,” Henderson said.       
According to an article in Newsweek by author Daniel Gross, “overall donations are down compared with 2007, and donations of used clothing and furniture to thrift shops have fallen by 20 percent.”
He also said that according to data provided by Giving USA, “charitable giving fell in real terms (adjusted for inflation) in years in which the economy was in recession.”
The Chronicle of Philanthropy also found that that 41 percent of the 500 households surveyed were already having problems balancing their expenses and 28 percent of those facing financial troubles were expected to donate less money to charity in the months to come.
Not every organization is feeling this negative effect of the economic downturn however.
Burlington’s chapter of Habitat for Humanity is staying above water as best as it can. Habitat for Humanity provides housing for families in need.
“I have worked here for 11 years and cannot remember a time when God has not
 made adequate provision for us,” said Executive Director, Robin Wintringham. 
“We operate in a very lean fashion, stewarding every donation in the best way possible,” she said. “Were we in a financial
 crisis we could access a line of credit at our bank, tap into our rainy day savings, and make appeals to the public for increased support.”
Still, there have been changes.
“The most significant effects so far from our recent poor economic times are
 increased traffic at the ReStore and more applications for Habitat houses,” Wintringham explained.
“To date our donation stream has remained steady, which is a blessing,” she added.

*to be continued…

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