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Archive for Tuesday, November 21, 2006

Burned by scandals, more donors cultivate grassroots charities

November 21, 2006

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— Americans give generously, but that charitable spirit recently has been under assault.

High-profile scandals at United Way and the Nature Conservancy, along with criticism of the Red Cross' response to Hurricane Katrina, have fed a growing unease about big-name nonprofit organizations. Today, 71 percent of the public thinks charities waste too much money, a recent New York University survey found, up from 60 percent three years ago.

Individuals gave $199 billion of the $260 billion that charities received last year, about 76 cents of every $1 collected, and the bulk of it came from households with incomes of less than $100,000. Excluding $5.83 billion in one-time donations for victims of hurricanes, earthquakes and other disasters, and adjusting for inflation, individual giving last year was stagnant, dropping 0.1 percent.

Worries about the economy and rising energy costs could explain that, according to researchers at Indiana University, but others point to mistrust as a factor.

Feeling singed by the recent troubles at charities, many people are thinking twice about where their money goes and aiming more of their dollars at grassroots groups close to home.

Giving circles

"I stopped giving to the United Way a while ago because of concerns about abuses and the amount of money that gets siphoned off for administrative costs," says Donna Lee Yesner, a single mom in Bethesda, Md., and a partner in a law firm who now focuses her giving locally. "I was discouraged, and I didn't know where else to give."

Yesner found an alternative two years ago, when a friend asked her to join Many Hands, a newly formed group of more than 100 women who each contribute $1,000 a year and then collectively award $100,000 annually to a local charity.

Susie Berenson, also of Bethesda, founded Many Hands out of frustration over her family's annual hodge-podge of donations. She got the idea from a magazine article about charity clubs, known as giving circles.

Berenson says she knows she tapped a pent-up need because it was so easy to find members. Those who have time serve on committees dedicated to finding and doing background checks on local charities in three categories: health care, education and the arts. A charity from each category is eventually selected to give a presentation to the entire group, which then votes on which organization will get the bulk of the money.

Many Hands' first gift of $100,000 went to Our Place, DC, which helps women who have been in jail or prison re-establish themselves by remaining drug- and alcohol-free and staying out of trouble. The donation amounted to 14 percent of the organization's revenue for the year. The second year's $100,000 gift went to the Young Women's Project, which supports underprivileged teen-age girls, and was nearly 25 percent of that organization's revenue.

Closer to home

Donors say finding these "micro" charities - often operating on a budget of $2 million or less a year - and making sure they're legitimate can be tough. One way for individual donors and giving groups to check out charities is through two annual catalogs that began publishing four years ago. The catalogs evaluate nonprofit groups, and they bring attention to smaller charities many people otherwise would not know about.

"The large organizations feel very distant to many people, that's what I hear," said Barbara Harman, head of her family foundation, who this year published the fourth annual Washington area "Catalogue for Philanthropy," which features 70 to 80 charities. She got the idea from the success of a similar catalog started 10 years ago by the Ellis L. Phillips Foundation.

Harman launched her catalog after learning how hard it was for donors such as herself to find information about local charities. People can give through the catalog, which passes the donation along to the designated organization, or they can give directly to the charity.

The Washington catalog raised $466,000 for local charities in its first year, $830,000 in its second and $1.25 million last year. A "Catalogue for Philanthropy" also is published in Massachusetts, St. Louis and the Bellingham, Wash., area.

In many instances, donors also become volunteers.

"The real issue is that people want to feel engaged. They are looking for their passion," Harman said. "It's not like taxes. You don't have to do it."

United Way's worries

United Way spokeswoman Sheila Consaul said the charity knows that individuals are increasingly bypassing large charities: The number of people giving to United Way fell to 13.6 million in 2004, the latest year for which data are available, down from 17.6 million in 2000, the first year data were collected.

Despite the drop, United Way's revenue from individuals has grown because the average size of each gift has increased, reaching $243 in 2004, up from $187 in 2000.

Even so, United Way executives are troubled. To lure people back, Consaul said, the charity is trying to better communicate what it thinks are the benefits of giving through United Way: It's easier to give to multiple charities at once, overhead costs have fallen to less than 13 cents for every dollar donated, donors can specify any local charity, and United Way officials do the homework of making sure a charity is legitimate.

And plenty of individuals do give through the giant charity. That's the case for Maria Fiore of Silver Spring, Md., who volunteers at Higher Achievement, an organization that tutors and mentors promising underprivileged youth, and says she's impressed with how effective the program is. Fiore has $500 automatically taken out of her paycheck every year and given to the United Way, earmarking it for Higher Achievement.

"For me, it was really important that once I started to volunteer with them that my money went to them, too," she said. "It's just easier through the United Way. I don't have to think about it."

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