Posted October 1st, 2002

One Year Later: A Different Mix

Soon after the events of September 11 last year, America ’s nonprofit community began hearing mixed messages. On the plus side, it was estimated that over two-thirds of U.S. households opened their wallets and gave more than $2.2 billion to relief efforts. Millions of donors were connecting with nonprofits—some for the first time. Some observers speculated that out of profound tragedy might emerge a new appreciation of the nonprofit sector.

But many organizations not directly involved in aiding victims and their families faced uncertainty. Would their regular solicitations for ongoing worthy activities be well received? Additionally, in some regions incoming mail, with much-needed gift revenue, was held up for months due to the anthrax crisis. Some organizations decided to cancel fall solicitations, sacrificing revenue and ultimately leading to financial strain that continues for some.

Despite these obstacles, many assumed that the temporary disruptions of fundraising would fade. The diversion of even $2 billion surely would not cut too deeply into the unprecedented total of over $210 billion given in the previous year, so diversion of funds was not seen as a long-term problem. Barring further attacks, most believed America’s nonprofits would bounce back and perhaps end up even stronger due to the renewed appreciation of the role of nonprofits on the heels of 9/11.

What a difference a year makes

As we observe the first anniversary of September 11, quite a different picture may be emerging. Alleged mishandling of 9/11 donations by some charities continues to be featured in the press, fueling distrust and displeasure in the American public. Some of this concern may be well placed, but much appears to be a result of popular misunderstanding of legitimate overhead expenses and direct costs associated with raising and responsibly distributing funds. Unfortunately, perception can too often become reality.

Add to the mix a number of scandals involving charities that have received prominent press attention and the declining stock market’s impact on capital fund development, and the “big picture ” can be quite distressing to nonprofit professionals and donors alike. Indeed, a Chronicle of Philanthropy/Harris Interactive poll reported in The Chronicle’s September 5 issue reveals that 29% of Americans say they are less likely to give to any charity today than they were before 9/11. For planned giving professionals working with older donors, other news may be relevant. According to the same survey, only 8% of Americans age 65 and over had more confidence in major charities after September 11. This compares to 34% of 18-24 year olds who reported having increased confidence.

Mixed performance

We are hearing from organizations that have frozen or cut budgets, instituted hiring freezes, or have laid off employees and cancelled various initiatives. But we are also hearing from many organizations of all types that their results are keeping pace with or exceeding those of prior years. What are these organizations doing differently?

First and foremost, nonprofits that have “stayed the course” appear to have generally been rewarded. Even in bad times, the core supporters of virtually any well-managed, vital, and necessary cause or institution will remain reliable contributors. Strong roots hold, and history tells us that these organizations can not only survive—they can even grow in adverse conditions.

Successful organizations that have faith in their missions continue to be vital and believe that their donors will agree. Ironically, while those with “non-emergency ” causes at first felt that their mission could be a hindrance to success after 9/11, in the end their deeply rooted and permanent objectives proved to be a reliable base. Donors who believed strongly in education, healthcare research, conservation, famine relief, easing of human suffering, and a host of other causes and institutions before 9/11 have continued to believe afterwards. But this seemed neither a certainty nor a well-understood conclusion in the early days last fall.

Moving ahead and back to basics

We should all be proud of the way that many millions of Americans stepped forward to contribute to 9/11 relief efforts, but we should not be surprised if this groundswell proves to be relatively fleeting. The most loyal, most connected, most generous contributors have always been the distinct minority among any group of supporters. This will continue to be the case even as efforts are made to incorporate a portion of first-time donors into a lifelong pattern of giving. In short, it is possible that the 29% of Americans in The Chronicle’s poll who are less likely to give are among the post-9/11 surge of donors who were not giving before last fall in any event. Perhaps this statistic merely signals a return to more normal times.

The task at hand for those charged with stewarding relationships with older, long-term members and donors—and with educating this small, vital minority about gift planning— remains largely unchanged. The job involves saying “Thank you!” over and over again; communicating the news of good work done by the organization; listening to the concerns of this small but important group; giving ample opportunities for people to plan gifts in ways that make sense for themselves; and waiting patiently for results.

A case in point

One client recently e-mailed her report of a four-fold increase in the number of people notifying the organization that they have included it in their estate plans. Clearly, this organization is not suffering from the rampant lack of confidence among donors that is now being so widely reported in the press. The mission of this organization is obviously one that remains vital in the minds of core supporters. Some clearly believe that this mission may even be more important after 9/11.

But, why so many new bequest expectancy notifications in the summer of 2002? The answer may be related to the increase in overall estate planning activity after the 2001 tax act and September 11. We know that millions of middle-class to more affluent Americans have made appointments with estate planning attorneys since May 2001 to have their plans updated to take into account the phased-in repeal of the estate tax. We also saw reports that will-making software was sold out at many office-supply chains soon after September 11. So, another silver lining may be that dramatically increased estate planning activity may well help many organizations in the longer run.

Consistency is key

Will your organization or institution benefit from increased estate planning activity among your constituents? The answer depends on whether or not you have gotten the message out to them regularly and consistently that you encourage and welcome this kind of special support. It also depends on whether or not your case for support is strong, if your organization is well managed and responsible, and if it has a good record of success coupled with a strong plan for the future—perhaps looking 5 to 10 years ahead. Further, those who offer charitable gift annuities and similar gift opportunities should be prepared to assure their donors that they are prudent in their financial affairs and do not take undue risks in managing the underlying funds that ensure payments.

None of these prerequisites for success can be manufactured quickly, but none need be beyond the reach of organizations willing to invest time and effort in thinking about a brighter future and then consistently presenting those thoughts to the ones who care the most. The last year has left many understandably shaken and confused, but those who survive and thrive in today’s environment are rising to the challenge as they realize that the ground underneath is still steady and the work to be done remains vital and appreciated, perhaps as never before.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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