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Organizations Fight Recession to Continue Services
BY STEVE WEATHERBE, REGISTER CORRESPONDENT
When the economic downturn hit in late 2008, Seattle’s Fulcrum Foundation board and staff were coincidentally, and perhaps, providentially, already engaged in “stress-testing” the fiscal soundness of their efforts to support thousands of Catholic school children.
“We wanted to know whether we had the resources, in a worst-case economic scenario, to support the 3,000 scholarship students we were already committed to, through to Grade 12,” reports the foundation’s executive director, Joe Womac. “Well, the downturn turned out to be our worst-case scenario.”
Fulcrum, one of several independent fundraising organizations set up across America to support Catholic school systems, did not see its donations fall off, reflecting the findings of the nonsectarian Giving USA Foundations’ just-released “Report on Philanthropy.” This showed giving down 3.6% overall, while giving to religious organizations declined less than 1%.
However, giving to educational organizations decreased by the overall average of 3.6% and to foundations by 8%, while giving to organizations providing human services increased by 2.3%.
Meanwhile, giving from foundations dropped by 8.9% (reflecting the shrinkage in investment portfolios), while individual giving held steady.
The problem for Fulcrum wasn’t with individual donations. These, mostly gathered at a gala dinner held each February, declined marginally. Indeed, the February 2010 event was Fulcrum’s best ever, drawing 1,200 people, grossing $1.38 million and netting $800,000 for scholarships and emergency supplements for the Seattle Archdiocese’s 71 schools.
Increase in Need
But Fulcrum’s income from investments fell sharply. Meanwhile, “In early 2009 we saw that applications for scholarships were up 25%,” says Womac, calling it an expenditure-side result of the downturn.
What did Fulcrum do to meet this surge in demand? It got personal.
Fulcrum borrowed a strategy from the world of foreign aid, inviting donors to “Fund a Student” with an $850 — gift earmarked for an individual child. “You can’t imagine a better investment than taking a student and putting him in one of our amazing schools,” Womac says. “We raised another $350,000 — enough for 400 kids.”
Womac said the approach, which includes a letter from the student to the donor to make it even more personal, has been successful because “it’s so easy for people to wrap their head around this, so easy to see that their money goes a long way.”
Some donors supported more than one child — sometimes many more. “One local company supported 100 kids,” Womac said.
Cuts, But No Layoffs
Catholic Relief Services, the foreign disaster and development aid arm of the U.S. Conference of Catholic Bishops, also was hard hit by the downturn. Like other agencies, it responded by striking a committee, coming from an organization with 6,000 staff in the U.S. and overseas, and a budget of $800 million.
But CRS first created a website where the staff was invited to make cost-cutting suggestions, said Michael Wiest, CRS’s executive vice president for charitable giving. Salary cuts were widely preferred to layoffs, he said. “People would rather take a cut than see someone else’s job disappear.”
As a result, a graduated scale was created which saw 10% salary reductions at the top (Wiest lost 8.7%) down to 1% at the bottom. In addition, 75 positions were eliminated by attrition; expensive benefits such as vacation-time carryovers year-to-year were eliminated; and a planned reduction in programs in East Asia, Eastern Europe and South America was advanced by a year.
These cuts weren’t easy, says Wiest, since CRS has one of the lowest overhead budgets in the charity field, a meager 6%. “Our donors love that it’s so low,” says Wiest, “but we are currently looking at whether it still makes sense.”
Part of CRS’s problem is that it has grown significantly in recent years, partly because of huge infusions of grants from the U.S. government and nonprofits such as the Gates and the Howard Buffett Foundations. Their grants contain some allotment for administration, but typically not enough to handle the required expansion of head office services, according to Wiest.
Appeals for disasters like Haiti’s devastating earthquake in January attract generous floods of cash ($140 million so far), but all but 6% must be spent directly on programming. This means, ironically, that the more CRS has to spend, the tougher its administrative challenges.
A year into the downturn, the fiscal picture has brightened enough to restore salaries and benefits. And none too soon. “The cuts had an unintended consequence,” says Wiest. “Other agencies were luring away our people, especially overseas, because they didn’t take the same salary cuts as we did.”
Roger Conner, public relations director for Catholic Charities USA, says its revenues fell off “by 30%” in 2009, forcing the umbrella organization for 170 diocesan charities nationwide to curtail operations, which it did without laying anyone off.
“That was not true of our member agencies,” he told the Register. “Some of them did have to cut staff.”
The national organization countered the economic situation with new marketing approaches and two signs — one electronic and one stationary — in Times Square. “That got us some news media attention,” said Conner.
Catholic Charities USA also regionalized its national appeal with a postcard campaign that used both specialized images of poverty and “bullet points” or discreet messages appropriate to the geographic area.
It also used a new slogan — “Now, More Than Ever” — to remind its potential donors that, as hard hit as they might be by the downturn, the people served by Catholic Charities were hit much harder.
By the end of 2009, the agency had seen a resurgence of giving so that it was able to meet its reduced budget.
Audience Loyalty Helps EWTN
At the Eternal Word Television Network in Alabama, donations also took a serious hit in the last quarter of 2008, and remedial measures were taken. By the end of 2009, the fiscal side of operations had never looked better.
EWTN is now “in 160 million TV households around the world,” according to the network’s CEO, Michael Warsaw. That’s a long way from where it was founded “in a garage in Irondale, Alabama, with $200” in 1981 by Mother Angelica, a Poor Clare nun.
Warsaw reports that donations fell by 5% ($2 million from $45 million in 2007). “It was difficult times for us,” he noted, especially since 2008 required coverage of the Eucharistic Congress in Quebec City, the papal visit to America and World Youth Day in Australia.
On the expenditure side, EWTN developed a “tiered approach,” according to Warsaw, with staff cuts being far down in terms of preference. Cuts in staff did not have to be made. Cutting travel, marketing and advertising and freelance production were enough to see the organization through.
“In the long term,” says Warsaw, “we knew we couldn’t sustain marketing reductions, but our audiences are very committed to us, and it didn’t hurt us in the short term.”
Confirming the findings of the Giving USA study, EWTN saw donations from individuals decline little. There was a bigger and longer decline in corporate or foundation giving — money that was earmarked for EWTN’s heavy capital needs — but this too has rebounded.
Despite cost-cutting measures, EWTN lost $1 million in 2008, which it made up for out of reserves.
On the revenue side, EWTN differed in its response from Fulcrum, electing to continue relying on the audience’s loyalty. “We have a low-key approach,” says Warsaw. Differing from the on-air appeals of evangelical Protestant TV, EWTN relies on regular e-mail and snail mail messages.
Confidence in the audience was well deserved: Revenues climbed 2% above 2007 levels and 7% above 2008.
“We have always put our trust in Providence,” says Warsaw, “and it has never been misplaced. We are also very blessed in our audience’s high level of commitment.”
Pro-Lifers Maintain Support
Stephen Phelan, communications manager at Human Life International, says the $4 million-a-year pro-life agency saw donations decline but the number of donors increase, perhaps, Phelan speculates, in response to the perceived threat to life posed by the Obama presidency. The organization tightened belts by not filling vacancies. The agency is preparing for worse next year, he says, based on some forecasters calling for a second downturn in 2011.
Priests for Life saw a decline in giving from wealthier sources, but none from the rank-and-file pro-lifers who comprise the bulk of the group’s donors, says the group’s national director, Father Frank Pavone. The organization’s budget has grown in spite of the downturn, now standing at $12 million.
“Our donors stay faithful to us because we stay faithful to them, listening to them, incorporating their suggestions wherever it is helpful, and serving their needs,” says Father Pavone, “People respond to service, and that’s a key fundraising principle.”
He adds, “We rely on a very large base of small donors, a base that is always expanding because of our constant travels and media. The downturn in the economy does not affect the small donors as much as it does the large ones.” Steve Weathebe writes from Victoria, British Columbia.