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"We Believe That the Katrina Effect Was Real": Comments from GuideStar Nonprofit Economic Survey Participants


The numbers look good—49 percent of participants in GuideStar's latest nonprofit economic survey reported that contributions to their organizations increased during the first nine months of this year compared to the first nine months of 2004. Another 26 percent said contributions stayed about the same, and only 22 percent reported a decrease.

Even more encouraging, these figures are remarkably similar to last year's results, indicating that the financial situation truly has improved for many nonprofits since our first nonprofit economic survey in 2002, when 48 percent of respondents reported contributions had declined. (More information on this year's survey)

What, however, lies behind the 2005 numbers? Do increased contributions indicate that a charity is on solid financial footing, or merelythat it is no longer teetering on the edge of bankruptcy? What about organizations that just held their own or experienced a decline?

We went to participants' comments to find the answers.

Glasses Half-Full for Some, Half-Empty for Others

More than 1,300 of the 4,483 survey participants responded to the question "Do you have any comments about how your organization fared financially during the first nine months of 2005?" The greatest proportion (nearly 35 percent) discussed the increased contributions their organizations had received.

"We experienced significant growth in participation and revenue and had our best year ever," stated Kathleen Ruddy, executive director of St. Baldrick's Foundation in Pasadena. In a similar vein, Marlani Vincent, accounting manager for Episcopal Community Services, Inc. in Minneapolis, reported, "This is our best year in over 10 years."

The gains their organizations realized surprised some participants. Craig Spatola, interim executive director of Breaking Barriers Community Services Center in Sacramento, observed, "We had thought that the contributions that community members made for disaster relief would impact our fundraising and donations; however this has not been the case to date. Our donors (new and/or continuing) are contributing at the same or slightly higher levels this year as compared to last year."

Others, however, did see an effect: "We did reasonably well until the hurricanes hit in late August," an unidentified participant from Omaha reported. Although overall contributions to his or her nonprofit increased modestly, "with fuel prices jumping, we have seen a decline in donations, as well as attendance at special events. Weekly church tithing has been down since June. People are telling us they feel unsure about the economy."

An anonymous respondent from Jackson, Mississippi, wrote: "We did well, although we're very concerned about how Hurricane Katrina will affect 2005 year-end giving." A St. Louis participant commented, "Financially, the organization fared much better than in previous years. With the recent spate of natural disasters, however, we expect to see donations dropping off."

Other factors made the glass half-empty for organizations that saw modest increases in contributions. Mary Gatlin, development director of The Cascadia Wildlands Project in Eugene, Oregon, noted, "Grants are way down—it's a tough time for the organization so we're focusing on individual giving. We've started a new major donor program and are actively working to build our finances through it."

"Income was up," wrote Eric Burger, executive director of the Great Falls Rescue Mission in Great Falls, Montana, "but our expenses are growing beyond income." Elain Gause, CEO of the Girl Scouts of Utah, echoed his comments: "Increasing consumer costs and gas have increased our expenses. This is a large concern for the coming months and years."

Although contributions to Volunteer Center of Bergen County in Hackensack, New Jersey, increased modestly during the first nine months of the year, executive director Janet Sharma said, "We are biting our nails. To date what has been our lifesavers are several donors who have private family foundations who are committed to our cause and provided significant support."

Participants from nonprofits whose contributions remained about the same as in 2004 expressed similar concerns. "The first nine months have been somewhat status quo, but the next nine are what have us worried—United Way campaigns and municipal budgets from which we received donations are just getting underway. With the continued disaster relief needed and the upcoming winter months, it seems more than likely that any contributions we may be getting will go down. High energy costs are going to hit our consumer population very hard, increasing their need for services and decreasing their ability to contribute to service costs," an anonymous participant stated.

Comments from organizations where contributions decreased ranged from "Well, we managed to scrape by ... managed to cut the budget, so our annual deficit was slightly less ... culture is a hard sell! Hope 2006 will be a wee bit easier!" (Hunter Todd, chairman, The 39th Annual WorldFest-Houston) to "This year has been a constant struggle to keep up with bills. Even the many fundraisers we've held didn't do well. Increasingly difficult was the fact that the demand for our services doubled. It left us feeling hopeless, unable to help so many in need" (Chrissy Tomkiewicz, president, A Helping Paw, E. Wareham, Massachusetts).

Conclusions

If survey participants' comments are representative, then people throughout the sector continued to wrestle with funding issues in 2005, despite the economic gains that many organizations experienced. Concerns about donor fatigue are real, and other factors are also making nonprofit representatives uneasy.

Even in light of these challenges, however, some see the glass as half full. As Ira Faro, development senior director of the Lehigh County Conference of Churches in Allentown, Pennsylvania (which saw a modest increase in contributions), stated, "We believe that the Katrina Effect was real. Donors at all levels made significant contributions to Gulf Coast relief efforts that consumed a significant portion of their discretionary charitable giving capacity. On the other hand, we are of the opinion that the images of poverty that Katrina media coverage displayed can, in the long run, enhance fundraising on the local level as organizations such as ours bring forward to a more poverty-conscious citizenry the face of poverty on the local level."

Suzanne E. Coffman, Sara Saphos, December 2005
© 2005, Philanthropic Research, Inc. (GuideStar)

Sara Saphos is an undergraduate at the College of William and Mary and currently a data management intern at GuideStar. Her analysis of 1,321 narrative comments from the 2005 GuideStar nonprofit economic survey formed the basis of this article.

Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.
Topics: Charitable Giving