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October 26, 2001/Cheshvan 9, 5762, Vol. 54, No. 7
Nonprofits feel funding pinch
BARRY COHEN
Editor
Contributions to local nonprofit agencies are down this fall because of the one-two-three combination of increased giving to victims of the Sept. 11 terrorist attacks, the nation's economic downturn, and cutbacks in state government funding.
"We're in shock," said Gail Parin, president and CEO of Jewish Family and Children's Service. Since Sept. 11, financial contributions are down 93 percent, she said. Also donations to the agency's thrift store are down 70 percent because people are not buying new items and giving old, used products, such as furniture, clothes and computers, to the thrift store, she added.
"On Sept. 12, financial contributions stopped," said Terri Wogan, community relations director of St. Vincent DePaul in Phoenix. Thrift store sales were down by 40 percent, she said.
Not only were there fewer items to sell, but also "like in the retail market," fewer shoppers are coming in to spend money, said Wogan.
Representatives of the Valley of the Sun United Way will not know the full effects of the combination of contributions to victims of the terrorist attacks and the economic downturn until Nov. 15, the end of the 2001 fund-raising campaign, said Nicole Magnuson, senior vice president of marketing and communication.
The goal is $47 million, and pledges of $22.7 million have been received, she said. These amounts are comparable to the same time last year, when the goal was $45 million and $20 million in pledges had been received, she added.
However, the difference between this year and last year is the economy. Motorola, Intel and Honeywell have laid off workers and other companies are out of business, she explained. United Way depends upon sizable corporate donations to meet its campaign goals, she said.
"This year has been a completely different (economic) environment, and then you throw Sept. 11 on top of that," said Magnuson. People have the option of earmarking contributions to the Crisis Response Fund for victims of the attacks. For that reason, said Magnuson, she does not know how much money will stay local or how United Way will close the $25 million fund-raising gap to reach its 2001 goal.
Art Paikowsky, executive vice president of the Jewish Federation of Greater Phoenix, said he understands concerns about a weak, inconsistent economy.
"It does not take a rocket scientist to understand that when the economy is better, it contributes to giving, and when it is not in good shape, there is a negative result," he said. However, he noted, "I think there is an overreaction here" about the weakness of the economy and its effect upon contributions.
The local federation has sent $38,000 to the United Jewish Communities campaign to aid the victims of the terrorist attacks. In addition, Paikowsky said, in Baltimore and in "another Jewish community comparable in size to Phoenix," contributions from major donors are up this year. The local federation's major donors' dinner for the 2002 campaign is not until Jan. 30, he added.
Valley nonprofits also face the challenge of reduced state funding. Seventy percent of the JFCS budget comes from government-sponsored contracts, said Parin. Some programs already have been eliminated because of state cutbacks.
On Nov. 13, Gov. Jane Hull will hold a special session to deal with a mounting state deficit, said Parin. According to an article in the Arizona Republic earlier this month, Hull said the state deficit could reach $1.6 billion over the next two years.
"I am afraid funding for (JFCS) programs dealing with child welfare and families will be cut," said Parin.
Only 3 percent of St. Vincent DePaul's budget comes from government agencies, said Wogan. However, she added, if state funding for social service programs is curtailed, the institution will feel the effects.
One example is volunteers who help those struggling to pay rent and utilities to receive government funding, she explained. As these resources dry up, more and more people will turn to St. Vincent DePaul for assistance, including food and clothing, she said.
Local nonprofits are devising a number of ways to compensate for financial strain.
"We're not panicking," said Parin. JFCS is applying for grants from local and national private philanthropic groups and foundations, she said. In addition, she urges utilizing the tax credit for the working poor, which allows Arizonans to give up to $200 to qualified 501(c)3 groups as a state income tax reduction.
Wogan said St. Vincent DePaul is addressing the need for increased contributions in its quarterly newsletters. Also, a number of holiday food drives have been planned.
The United Way plans to educate potential givers at corporate lectures about the needs that exist in the community, such as domestic violence and homelessness, said Magnuson. "We will say the best way to help the crisis is to give a one-time gift now and then continue to support the local community from then on. ... We need to shift people's mindset," she said.
During the 2002 annual campaign, Paikowsky hopes the community pulls together. "You may think at a time like this, contributions would be diminished," he said. "But we serve the purpose to make the world a better place. One way to respond is to give."
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