Editorial: Handling the money crunch

From ANIMAL PEOPLE, Jan/Feb 1995:

It is axiomatic in fundraising that half the dollars raised by any campaign come
from the ten biggest donors––the coveted “high donors,” whose gifts not only finance good
works, but also permit the quest for additional donors. Even in charity, it takes money to
make money, and without a lump sum to invest in printing and postage, nonprofits have no
means of appealing to the small donors who provide the other half of their support.
High donors are an endangered species this winter, a phenomenon remarked
across the charitable spectrum. From animal shelters and sanctuaries to veterinary schools
and zoos, administrators tell us more people are chipping in, but total donations are down
because big gifts haven’t come. We’re seeing the same thing in the otherwise encouraging
response to our own holiday appeal. And we’re hearing from apologetic former high donors,
including some foundations, that the reasons they’re not giving as much as before have
nothing to do with our work: they’re just tapped out. Economic uncertainty accompanying
the change of political power in Washington D.C. brought a sharp pre-holiday slump in the
money markets, both hurting private investors and cutting into the residuals from which
foundations make grants. People in government jobs are anxious to see how projected cost-
cutting and restructuring will affect them––and this doesn’t just involve federal employees.
As responsibility for the poor, the sick, the elderly, and the disabled is returned to states
and municipalities, state and local budgets will also be restructured. That in turn affects
still more people, including employees of firms that sell to government.

The post-election blows came as support for charities generally was slipping. An
Independent Sector study published in October found that average household charitable
donations fell from $899 in 1991 to $880 in 1993––a drop of only one quarter of a percent,
but still scary to the humane sector, which has rarely raised more than 1% of the total chari-
ty dollar. Independent Sector attributed the slip to economic anxiety: 73% of the 1,509
people surveyed worried about money in 1993, up from 67% two years earlier.
While many of us try to figure out how to do as much or more with less, a ques-
tion highly problematic to those of us already on shoestring budgets, it’s clear that animal
protection is going to need more individual gifts this year than ever, just to keep up the pre-
sent level of service. Because animal control and rescue are among the last items funded by
local governments, humane societies that depend upon animal control contracts to meet
operating costs may get clobbered. They can either bail out of animal control, which often
means leaving the field to bounty hunters and bunchers who sell strays to laboratories, or
look to donors to make up for losses.
Because low-cost neutering programs are a proven money-saver for communities,
relative to catch-and-kill animal control (see the hard data in our June 1994 issue), they
should have a better chance of keeping whatever public funding they now attract––but
“should” and “will” are two different matters. Low-cost neutering not only saves tax
money; it also demonstrably prevents more suffering per dollar spent than any other kind of
humane program. Yet it has always been a tough sell to government at any level. Again,
the call on private funding is sure to increase, meaning the need for individual gifts.
Even if basic humane services and neutering programs succeed in making up
expected shortfalls, a ripple effect could hit other animal-related charities: if donors just
reallocate support, without the donor pool or amount of donations increasing, funding will
be drawn away from advocacy and political work, or sanctuaries, or publications.
Whatever happens, the biggest and wealthiest groups are both in the best position
to maintain programs until better times, and best able to do more fundraising just as the
cost of fundraising is going up. The postal rate increases going into effect January 1 mean a
mighty jump in nonprofit mailing costs, the third in 26 months. Humane Society of the
U.S. development director Art Keefe recently told The Chronicle of Philanthropy that this
means HSUS will spend $150,000 more on postage in 1995––up from $2 million spent in
1994 to mail 20 million appeals. Having spent more than a third of all receipts on further
fundraising throughout the five years we’ve monitored the tax filings of animal charities,
HSUS has the reserves to make that kind of investment. Organizations that put proportion-
ately more into programs and less into fundraising and accumulating assets are in a much
different situation. In general, the more dedicated a charity is to program service, the more
it’s going to be hurt––especially from the loss of high donors.
This likelihood could be averted if those potential high donors who are still able to
give direct their giving wisely, with careful attention to how their money will be spent.
Unfortunately, a Chronicle of Philanthropy survey of 167 wealthy donors to humane soci-
eties, published November 15, suggests that they tend to be more generous than astute.
Looking at patterns of giving, the Chronicle of Philanthropy found that 29% give mainly in
connection with social events, which make giving fun but siphon off resources from organi-
zations that lack a committed, well-organized volunteer auxiliary. Twenty-five percent
give to maintain a family tradition of giving; 17% give to improve their community; 16%
give chiefly from empathy and generosity; and 13% give from religious beliefs.
Asked to identify their reasons for giving, 69% said they give “to protect innocent
animals”; 36% give because “helping others in need is part of my personal values”; 32%
believe “it is everyone’s responsibility to help animals in need”; 29% appreciate “the per-
sonal attention I get from high-profile people”; 27% give to earn social recognition; 27%
“value the continuing business and social relationships” they maintain through charity work;
23% said their parents “always emphasized the importance of caring for helpless animals”;
20% are “part of a community that cares about animals”; 17% said “the humane society’s
programs are an important community effort”; and 17% believe “caring for animals is a
community responsibility.”
A mere 8% are concerned that a humane organization “is businesslike in managing
its resources”; just 7.2% care that an organization “has a history of demonstrated effective-
ness and success.”
This study demonstrates in a nutshell why balls, concerts, and celebrity-centered
promotions continue to bring in big bucks for the organizations that provide fun-and-games
to attract celebrities, while many of the most efficient, effective, and accountable organi-
zations struggle to keep the lights on.
The value of service
But before concluding that fun-and-games rather than diligent, frugal program-
oriented service are the way to go, humane organization leadership should also mull the
findings from a study of how the general public perceives charities, published in the
December 13 edition of the Chronicle of Philanthropy. “Humane society” ranked sixth
among 96 choices in popularity of the cause, with 42% public approval. “Society for the
Prevention of Cruelty to Animals” ranked 17th, with 34% approval. Both ratings are very
good; the warmer view of “humane society,” however, indicates that the service-connect-
ed link to sheltering means more to donors than the advocacy role implicit in the term
“SPCA.” “Humane society” dropped to 14th place in the category of “most credible,” with
49% affirmation; “SPCA” remained 17th, with 48%. Paradoxically, SPCA moved up to
12th place in organizations most often supported, as 15.4% of respondents donated;
“humane society” slipped to 14th, attracting 13.6%. But “humane society” placed 13th
among organizations “strongly supported,” while “SPCA” dropped out of the top 20.
In short, service may not matter much to high donors, but it matters immensely to
average donors. A further indication that service is important emerges from noting that
“Save the Whales,” purely an advocacy issue, was 15th among causes most opposed, 16th
among the causes considered least credible, and 9th among causes never supported, as
51.6% of respondents had never given a cent to it.
The evidence indicates humane organizations would be well-advised to postpone
building projects, and other big investments, unless the funding comes from bequests and
big gifts they wouldn’t otherwise get, and instead concentrate upon maintaining or improv-
ing basic services––the things that build longterm goodwill. It is worth remembering that
while high donors may be attracted by momentary glitz, bequests tend to be based on more
substantial relationships, and bequests are likely to be the most important source of new
income for established charities of every sort for the next 20 years. Based on demographics,
Cornell University economists Robert Avery and Michael Rendall estimate that annual
bequests to U.S. charity will grow––in real dollars––from $74 billion by 1.4 million people
in 1994 to $144 billion by 2.2 million people by the year 2000, with the peak not to come
until 2014 or 2015, when 3.9 million people will leave more than $330 billion to charity.
Humane donors meanwhile might consider that making a few large donations to
particularly effective organizations does more to help animals than scattering small dona-
tions to many, some of which will spend all of a modest contribution just trying to get more
money out of the same donor. In explicit terms, a gift of $100 or $1,000 means a lot to
ANIMAL PEOPLE, or any small charity. To larger and richer organizations, it may
mean only that you’re worth a harder hustle next time.
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