In early March, YWCA Oklahoma City remained optimistic about sponsorships for its yearly fund-raiser, Purple Sash. At a time when foundations and corporations are cutting back on charity spending, Jan Peery, CEO of YWCA Oklahoma City, was sad to see a few sponsors back out, but wasn't in a panic.
"We are seeing a few sponsors say they are not doing sponsorships this year, but a few have increased their sponsorship," Peery says.
Regional Food Bank of Oklahoma lost sponsors for special events in April and May, and Executive Director Rodney Bivens says the drop was directly tied to the economy.
"Our two special events - Chefs' Feast and Feeding Hope and Letter Carriers' Food Drive - have seen a decline in sponsorships this year, and I'm certain it's a direct reflection on the current economy," he says.
According to a recent report in Philanthropy Journal, the corporate sector accounted for nearly $15.7 billion in money and in-kind donations in FY08. That makes up about 5% of all charitable support in the U.S. But with unemployment climbing and dire economic predictions abound, it's unclear how the corporate sector will respond to the growing need of nonprofits and the tightening of budgets.
Unfortunately, as the economy goes, so do expendable dollars.
When the economy is healthy, corporate giving shows a yearly increase of 3%; on the other hand, giving drops 2% yearly during a recession.
"The big question is, 'How long is this recession going to last?' That's what all the nonprofits are wondering," says Bob Spinks, president of United Way of Central Oklahoma. "The problem is the economists don't have a model to base this recession on. This is the sixth downturn I've been through here, and when there is a downturn, fund-raising becomes a challenge."
TIGHTENING THE BELT
Many of United Way's corporate and foundation partners are encouraging nonprofits to analyze their events on effectiveness and cost.
"Organizations need to take a good look at their events. Are they really beneficial? If you compute the staff time into the expense side of an event, are you making beneficial profit? That's the message we're hearing from our partners," Spinks says.
Although businesses recognize the need for corporate giving, they are tightening the belt.
"They all say they are not able to support these events at the level they had in the past," Spinks says. "They know the need is increasing, and with the conditions, it's more challenging to raise money. What this means for nonprofits is tightening the belt there, too, and making do with what you do have."
David Chernicky, chairman of New Dominion LLC, agrees, saying he expected the economy's negative impact on charitable giving "will be one of its saddest legacies."
While he says New Dominion remains committed to continuing its charitable activities "to the fullest extent possible," he added that because of the economy, the company is taking additional time to consider its plans.
"We only will scale back on our activities as a matter of last recourse," he says.
Chesapeake Energy also indicated its corporate giving policies have changed. In 2008, the company gave more than $40 million to education, health, social services and other causes; however, this year, officials say it is working with organizations in identifying how to make the greatest impact.
"During this economic downturn, Chesapeake's charitable giving approach continues to look for ways to help organizations make the biggest impact in our community, while also being creative in finding other ways to support and partner with beyond traditional dollars, such as offering volunteers and manpower assistance to organizations," says Teresa Rose, director of community relations. "Chesapeake also recognizes that while funding dollars for nonprofits are reducing, operational costs remain static."
It's not all doom and gloom just yet, Peery says. Although YWCA Oklahoma City is dependent on donations and giving, loyal donors are still showing support.
"Where we are seeing a big hit is in foundation income," she says. "Several foundations have said they are not taking new applications or are just not funding anything at all right now. As far as loss of foundation funding, we're seeing that right now."
Because many foundations are based on the revenue of the parent company, if the revenue is down, then the foundation's ability to give to nonprofits suffers.
"Of course, our services are not decreasing by any means," Peery says. "It's always worrisome in a down economy. We also have a fiduciary responsibility, so if the funding is not there, we have to look at what services we'll have to cut. We hope that knowing how vital nonprofit services are to the well-being of a community, the corporations will continue to support these services in the longterm."
For other service organizations, such as Regional Food Bank of Oklahoma, a cut in funding means less food to the hungry in Oklahoma.
The Food Bank's regional distribution system program makes 52 food deliveries monthly to 36 communities for pickup by agencies in surrounding areas.
"For the first time in the history of the Food Bank, we're distributing more food than we're bringing in. Demand is spiking, and we've seen donations stay pretty flat," Bivens says. "We are hopeful that this trend reverses itself soon."