Tough times for community needs

Not-for-profits strategize to build donations and retain earnings as economic conditions sour

Story by Kurt Rentmeester

AN UNCERTAIN ECONOMY and a reduction in donations will make the last      quarter of 2008 and the kick off to the new year a challenging time for not- for-profit agencies, holiday giving programs, regional gift endowments and other organizations that rely on community generosity, as well as stock market stability to provide funds.

The Boys & Girls Brigade’s Christmas Giving Program is feeling the stress of the nation’s economic downturn. Donations of gifts are down and fewer families and businesses this year are stepping forward as sponsors.

In 2007, the Neenah-based youth leadership agency collected more than $30,000 through its Christmas giving program, and was able to assist 478 families and more than 1,200 children in the Neenah and Menasha area.

As of the beginning of November, Christmas giving donations lagged by about $5,000 compared with the same time last year, according to Wendy Mikolanz, Christmas giving program coordinator. In addition, fewer individuals and businesses have adopted families to assist.

“We are a little behind this year,” Mikolanz said. “Is there a correlation with the economy? We think so.”

More than 500 families are expected to apply for the program this year, said Pat Kroiss, development leader at the Brigade. Families are referred by churches, schools, the community health departments and other organizations.

“I think we are concerned about the effects of the economy on donations,” Kroiss said. Last year, the organization received more requests from children for pillows and blankets than it had ever experienced.

Kroiss said she hopes more people make donations this year on behalf of the Boys & Girls Brigade, a 501c(3) non-profit organization.

“We’re hoping people will stay focused,” Mikolanz said. “From a Christmas giving point of view, I want people to think this is a special way for neighbors to help neighbors.”
 
United Way challenges
LOCAL UNITED WAY AGENCIES are struggling to keep pace with the past year performances  in their annual campaigns.

More than halfway through its annual campaign timeframe in mid-November, Oshkosh Area United Way Executive Director Sue Panek said the agency was at about 40 percent of its $1,075,000 campaign goal. She would have preferred to be at the 50 percent mark by that point.

Panek said she attributes the slowdown in fund-raising to delays in reporting by some of its main contributors, some of which have gone from local ownership to becoming a part of national or multi-national operations. But it’s also been harder for individuals to give.

If the Oshkosh United Way fails to meet its $1.075 million campaign goal, the situation will put more pressure on the 49 human service programs the agency supports. If the money isn’t there, those agencies will have to find the dollars elsewhere or cut services, she said.

“We’ve had some very nice successes with the campaign,” Panek said. “A few have said they’ve not been able to give this year. In the past, it has not been as common for companies to say that.”

Fond du Lac Area United Way Executive Director Tina Potter also said the agency is about 10 percent behind its $800,000 campaign goal as of mid-November.

One of Fond du Lac’s largest contributors, Mercury Marine, has been struggling as a result of lagging sales in the boating industry and has laid off production employees during the past year. Another longtime United Way supporter, Charter Specialty Steel, recently announced it will close its doors by the end of the year, Potter said.

“When workplace giving is the backbone of your giving and you have layoffs, you’re losing ground,” Potter said.

In addition, flooding in the Fond du Lac area earlier this year has placed additional pressure on other local agencies there. The United Way set aside $10,000 last June to help families victimized by the flooding.

Endowment strategies
COMMUNITY FOUNDATIONS EMPLOYING endowment funds – which support local causes using the interest earned from financial investments – all are searching for innovative ways to work around the plummeting stock market and deflated real estate market.

At the Community Foundation for the Fox Valley Region, President and CEO Curt Detjen said managing such endowments requires greater skill and strategy than it had in the past.

In May, the foundation hired an investment advisory firm to analyze its investment program, structure and performance.

“That, for us, was fortuitous timing, in light of the market turbulence,” Detjen said. “Our investment portfolios are well-positioned for the market recovery that will inevitably happen.”

At the same time that endowment funds are growing at slower levels – if even growing at all – donations tend to be lower as well.

While donors prefer to donate appreciating securities and real estate because of the tax advantages it can provide, they have been taking more time in recent months and moving more cautiously when making contributions in this turbulent financial market.

With the current economic downturn, he expects donations will take longer to come to fruition. Assets that were appreciating in value are now more likely to either be appreciating more slowly or depreciating.

Following the most recent economic recovery in 2003, Detjen said there was a dramatic increase in donations in late 2004 after economic confidence was restored and the stock market recovered. If a recovery begins again next year, donations could increase by the end of 2009 and into 2010.

“I would expect a similar donor response, but only after confidence is restored in the economy and the markets have priced-in the recovery scenario,” Detjen said.

For the time being, long-established endowments will not be as affected by the current economic downturn in terms of spinning off interest for annual contributions, said Eileen Connolly-Keesler, president and CEO of the Oshkosh Area Community Foundation. The economy is a greater concern for endowments that were established only a year or two ago.
Funds in long-established endowments experienced strong earnings during the 1990s, she said. Earnings for some funds were at about 16 percent as recently as two years ago.

Connolly-Keesler recalled a situation in which a donor who passed away in 1985 left more than $800,000 in his estate to help those in the community with basic needs. The fund is now worth more than $2.3 million, she said.

“Even in bad times, we can spin off 4 to 5 percent annually,” Keesler said. “So that’s more than $120,000 (from the above-mentioned fund) to give in donations and grants.”

Endowments comprise 90 percent of the Fond du Lac Area Foundation’s assets, said Joe Braun, director of finance and development for the foundation. Such a strong proportion of endowments has helped anchor the organization’s funds in the most challenging of times.

“Our strong endowment is structured to take advantage of highly productive years in the market and also to withstand economic downturns,” Braun said.

Similar to policies at many other foundations, the Fond du Lac Area Foundation projects its available grant money based on a five-year trailing average to decrease volatility.

“That vision has prepared us for times exactly like these,” Braun said. “The board of directors, with the assistance of the investment committee, will, however, continue to closely monitor the situation and may consider adjusting our spending policy if the negative markets continue for any extended period of time.”

In the past year, the foundation awarded more than $700,000 in grants from its endowed assets, he said. Braun expects the foundation will provide about that same amount next year.
 
Focus on basic needs
GIVEN THE NUMBER of Fox Valley residents who have lost their jobs in recent months, the Oshkosh Area Community Foundation directed its grant committee earlier this year to narrow its focus on basic needs – food, clothing and shelter.
This year the Oshkosh foundation became a beneficiary of the annual U.S. Oil Golf Outing, established strictly to improve funds available for basic needs of community residents. The Fox Valley community foundation has also received funding for basics needs through the U.S. Oil charitable event.

The Oshkosh foundation was successful in securing sponsorships totaling $190,000, which U.S. Oil in turn matched with $250,000 of its own money. To build the fund, U.S. Oil asked the foundation spend only 10 percent annually – or about $44,000. In addition, Connolly-Keesler said the J.J. Keller Foundation also agreed to match 10 percent of the fund total annually towards contributions to community basic needs.

“So the $44,000 becomes $88,000,” Connolly-Keesler said. “It essentially doubles the amount we make available to the community.”

Within three years, she expects the fund will exceed $1 million.

Kurt Rentmeester is a freelance writer based in Kewaunee County who has been previously employed by daily newspapers in Manitowoc and Sheboygan.