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PHILANTHROPY (CORRECTED) Jan-14-2009 (950 words) xxxn

Nonprofits embark on new ways to raise funds during latest recession

By Dennis Sadowski
Catholic News Service

WASHINGTON (CNS) -- The new faces coming through the doors at Catholic Urban Programs in East St. Louis, Ill., tell Joseph Hubbard it's bad out there.

People in their 40s, 50s and 60s -- those who held working-class jobs that kept the economy going -- are showing up for food, clothing and help with paying the heating bill in greater numbers than ever for the program, which is operated by the Diocese of Belleville, Ill.

While the program has been carrying out the corporal works of mercy for 37 years, Hubbard and his staff are scrambling to meet new and growing needs.

"This is the worst economy since Herbert Hoover. We went through the recession in the 1970s and the '80s and this is the worst," said Hubbard, who founded Catholic Urban Programs in 1971 and has been working with East St. Louis' poor for nearly 47 years.

Despite the ballooning need, the program has seen cuts in funding from traditionally reliable sources such as religious communities and foundations. Hubbard said he has had to spend more time raising funds from new benefactors, including a broader, more diverse group of individual donors.

The program's experience parallels those of organizations across the country as foundations and religious communities have reduced or even eliminated grants and gifts to long-standing programs. With financial portfolio losses ranging from 30 percent to 60 percent in 2008, many funding agencies have been forced to scale back their giving programs to protect their own financial future.

"It'll be a tight year for (funding agencies,)" said Frank J. Butler, president of the Washington-based Foundations and Donors Interested in Catholic Activities, or FADICA, an association of 50 private foundations and charitable agencies. "They're all trying to live up to the commitments they've made. They're struggling like the average person would."


Butler said local nonprofit agencies will face more competition from each other for funding and that they will be required more than ever to demonstrate they "have the very best practices in the way they operate."

"If you have a good charity and it's run well, you shouldn't be that worried," he said. "Your donors are going to stick with you."

The Raskob Foundation for Catholic Activities in Wilmington, Del., has seen the value of its portfolio decline by 30 percent, said Fred Perella, executive vice president. Despite the loss, the foundation's board at its semiannual meeting in November approved about 160 grants -- out of an estimated 600 applications -- for $2.2 million, a near normal amount, Perella said.

The Internal Revenue Service sets minimum distribution amounts for foundations, but foundations can exceed them in any funding cycle. However, Perella posed a serious question for foundation officials to consider: How high can distributions go and for how long, especially when portfolio values are shrinking?

"We're pretty sure (the market losses are) going to reduce the available funds we have," he said. "(The market) is going in the wrong direction."

The impact on the programs Raskob supports, like Catholic Urban Programs in Illinois, remained unclear. By mid-January Perella and many of his counterparts across the country had yet to go through a full application-to-funding cycle since September's near economic collapse, and thus have not yet heard dire stories of agencies having to shutter their doors unless vital funding comes through.

The Chronicle of Philanthropy reported that more than 100,000 nonprofit groups will fail during the next two years in the aftermath of the September 2008 financial meltdown.

The economic slide that has forced corporations and foundations to tighten their budgets also is pushing agencies large and small to scale back how much they seek from donors as well as come up with more creative ways of asking in order to continue their ministries.

At Mercy Health Partners in Knoxville, Tenn., a community with little heavy industry that has not felt much of an economic slump, officials are seeking smaller contributions for hospital projects.

"We're scaling back the big $1 million ask," said Carlton Long, regional vice president of philanthropy for Catholic Healthcare Partners, Mercy's Cincinnati-based parent company. "We're doing more of the $10,000 and under asks."

Citing stock losses and smaller returns on other investments, some individual donors have slowed paying pledges for Mercy's most recent capital campaign. Long said donors are promising to pay their pledges but over a longer time period.

Meanwhile, at Catholic Charities USA, the country's economic woes have had a positive impact on donations. Patricia Hvidston, senior director of development, said the agency took in slightly more in 2008 than in 2007.

"The data is showing we have more donors than in '07 and the average gift is down just a little bit. To me that says everybody in this country is hurting, but our donors really understand with compassion that there are others hurting even more," she said.

Emphasizing the agency's Campaign to Reduce Poverty in America on its Web site and other new media solicitation methods, Catholic Charities has been able to reach new audiences, Hvidston said. By including touching images of poverty on the Catholic Charities' Web site, Hvidston said the agency has been able to show how much greater a need exists today than in the recent past.

Hvidston also expects that nonprofts in all areas will have to look at ways to get their message to new audiences.

"There's going to be an opportunity in this recession for groups who are willing to collaborate to value their common purposes and see how they can use resources, energy, spheres of influence to accomplish more" with less money, she said.

END


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