Survival of the Poorest
A glut of nonprofits compete to demonstrate the most need
by Lisa Baker

As a stream of precious dollars pours southward for the draining and rebuilding of the Hurricane Katrina states, some Oregon nonprofits, specifically those whose mission is far removed from disaster relief, feel themselves floating toward an uncertain future.

A series of crises—9/11, the tsunami of 2004, and this most recent storm-caused catastrophe—have prompted Oregonians to give generously, something that gladdens the hearts of anyone whose calling is emergency humanitarian aid.

But charities outside that mission know that with each large-scale disaster can come a decided sucking sound in their own budgets as contributors redirect their dollars to more pressing needs.

Even those arts, environmental and local social service charities that have reaped healthy donations in the face of disaster relief say it’s not enough to make up for recent losses in government funding due to budget cuts, losses in invested funds, or for increases in need.

A case in point: Habitat for Humanity, whose mission is to build low-cost housing for low-income people. The national real estate boom has spurred the cost of land and building materials ever higher at a time when recession-battered residents need help getting into permanent housing.

“We can’t compete with big builders for land, so land is further and further out of reach for us to purchase and keep affordable for a family,” says Portland Habitat’s Executive Director Steve Messinetti. “Meanwhile, we’re not seeing many donations of land, probably because it is so valuable.”

It would seem a typical occupational hazard in the teeter-totter world of nonprofit management. But in Oregon, there are complicating factors.

One is the rise of private funding in public education, where local foundations make donations for everything from school sports to computer equipment. Donors who might have devoted dollars to any number of charities find themselves called upon to give to their children’s schools instead.

Another and likely more critical factor is the modest number of locally-headquartered corporations, which are a traditional source of nonprofit grants. The number has dwindled further in Oregon in recent years as companies have relocated or merged with out-of-state corporations, some redirecting their giving to their new communities. Other companies, while no longer locally-based, are still on the go-to list and participate in Oregon projects. Louisiana-Pacific, Meier & Frank (now owned by May Department Stores Co.), Fred Meyer (now Kroger), Willamette Industries (now Weyerhaeuser), and U.S. Bank are just a few of the big businesses that have changed location or ownership in recent years.

As corporate deep pocketbooks are snatched up by other states, the number of nonprofits in Oregon is swelling. Kay Sohl, executive director of Technical Assistance for Community Services, whose job it is to help nonprofits stay on their feet, says competition for survival is keen.

“We’re creating new nonprofits in Oregon at a rate of hundreds every year,” she says. “Now, some are social clubs, but many are intended to be charities, so there’s a certain amount of fretting about whether we need all these new organizations.”

Fretting because, while some groups genuinely have an original mission or at least a new way to approach a problem, others are duplicating the work of existing organizations.

Directors of several nonprofits agree.

They say start-up organizations are muddying the waters where donors are concerned, siphoning money from established groups and then dying from lack of efficiency a year later.

Carole Morse, president of the PGE Foundation and manager of community giving for Portland General Electric’s corporate side, says the situation is serious. “I hesitate to use the word crisis, but there has been this proliferation of nonprofits and the new organizations that come…Let’s just say there is some redundancy involved. I’m always asking, ‘Do we really need to set up a new 501(c)3?’”

Morse says three HIV-AIDS nonprofits recently sprouted in Portland, each taking on as its mission a small part of the AIDS puzzle. One was formed to support women and children with AIDS, its primary calling a camp experience for AIDS-affected children. Another offered activities and support for kids with AIDS. Both missions ended up needing rescue after having captured initial grants. Their rescuer: Cascade AIDS Project (CAP), Portland’s longtime resource for AIDS sufferers. Thomas Bruner, a consultant who works with CAP, says the organization feels the pinch when new groups come to the fore.

“It’s more competitive than it’s ever been, which means it’s just harder to get your message heard and your brand recognized through the clutter,” Bruner says. “You have to work harder, spend more money differentiating yourself. It’s been an enormous challenge over last decade.”

One of the reasons for the proliferation is the relative ease of nonprofit set up, Bruner says. Not only does the process require little in the way of legal expertise, but philanthropists are especially drawn to start-ups. “They don’t like to give ongoing support to organizations. They love to give start-up funding, new venture funding. They love to birth new endeavors,” he says. “And so, in the nonprofit world, there is constant tension to do new things, start new things, in order to get the dollar.”

Bruner says he hears complaints from funding organizations about the huge number of nonprofits requesting money, but he says, “Somebody’s writing these checks to get these groups off the ground initially, so they can’t turn around and complain about the nonprofit sector being so glutted. I’ve said to many donors, ‘Well, I don’t disagree, but you have birthed this monster…Some of these groups would never have gotten further than the kitchen table if you had not funded them to begin with.’”

He and other directors of established nonprofits say newcomers would do well to merge with existing groups rather than forming their own. But they say newcomers are often resistant to such an idea.

The competition is affecting environmental groups, too.

Kevin Kasowski, development director for the Oregon Environmental Council, says the number of conservation groups makes raising money difficult. “It’s a significant factor. We know of 30 different organizations here in Oregon that have a professional staff—not just a local volunteer group—that are actively fundraising. And so we hear from a lot of prospective donors that they’re being asked by a lot of nonprofits.”

Morse, of PGE, said the number of formal funding requests to PGE Foundation has nearly doubled since 2001, but “I don’t know if that really tells the story because the calls we get have been increasing over the years as well. A lot are organizations used to getting government funding and now they don’t and they need help. Even the government comes to us,” she says. “Schools come to us, and we then give to their education foundations.”

Morse says along with serious requests come the ridiculous. “It amazes me what people ask us to do. One guy wanted us to give money to build a parking garage under his church…and he was earnest.”

One result of the phalanx of outstretched hands is a major pullback by funding organizations—not a withdrawal of funding, but a more careful targeting, Morse says. “It’s why companies like ours are more strategic. We ask ourselves what we can do well. What’s good for our customers? What do our employees want to do?”

Duncan Campbell, founder of an Oregon timber investment firm who is well known for his charitable giving, says that while there is “a lot of emotion” in the creation of each new nonprofit, “There’s a lot of rebuilding of the wheel rather than collaborating or joint venturing or becoming a part of something—a better thing. It’s hurting the effectiveness of programs.”

Campbell says that of the funding requests he receives, he favors those with evidence-based requests—those that take on a demonstrated need with a solution that works. “There’s permissiveness in our culture that’s encouraging someone with almost any idea to start something. Personal egos are involved. Those don’t last very long, maybe nine months to two years, and then they fall away. In the meantime, they clog up the system.”

Nowhere is the overabundance more pronounced than in the arts, where new groups seem to pop up daily, especially in the realm of dance and music, funders say.

The newest are two nonprofits, each created to perform concert versions of musicals, and three other organizations created to interest low-income children in instrumental music.

“On the one hand, people find our region fertile ground for developing arts programs, but our funding for it is abysmal,” Morse says. “There’s no government funding for the arts like there is in other states. I see on the (PGE) Foundation side a huge number of arts requests.”

Virginia Willard, who tracks arts giving by corporations for Northwest Business for Culture and the Arts, says the biggest donors to arts—aside from PGE—are Wells Fargo Bank and U.S. Bank, but that arts organizations are increasingly going to small businesses for help. “We depend on small businesses. They aren’t as visible, but they are vital here,” Willard says.

A help to arts organizations is the newly formed state Cultural Trust, which matches contributions to certain arts groups with tax credits and gives grants each year directly to organizations that promote arts and culture. While the trust is increasing its giving—grants totaled $1.3 million this year compared with $772,602 last year—it takes time to build wealth significant enough to defray costs of Oregon’s growing cultural sector, arts supporters say.

Lucy Buchanan, director of development for the Portland Art Museum, says it’s difficult to wait for cash support to catch up with the vision she and others have for world-class facilities in the Northwest. It’s been especially difficult on the museum’s expansion plans. “Let’s put it this way…we launched our campaign to renovate two weeks after 9/11.”

While competition will always exist between humanitarian issues and ongoing programs such as the arts, Buchanan says she believes the arts are a quality of life issue and an important support to the economy of a community. She says a city that is looking to draw new businesses to its core—businesses whose employees and prospective clients alike are drawn to a city alive with culture—would find the museum an asset. “You really need a great artistic presence for economic vitality,” she says.

Although donor support has doubled the museum’s budget in recent years and fundraising for the museum’s $25 million expansion went well, difficult economic times made it “a very challenging time for the museum, probably from 2002 through 2003. Even 2004 was really hard,” Buchanan says. “But we have seen since last summer some loosening of things, a little more confidence among folks that the economy is stabilizing and that the world is not going to end with terrorism.”

But it is terrorism and the natural disasters in recent times that have prompted Oregonians who never gave before to write checks. And some of those who began giving with 9/11 or the tsunami are continuing the habit.

Matthew De Galan, chief development officer for Mercy Corps, which offers humanitarian aid around the world, says that after 9/11 and then again after the tsunami in Indonesia, his organization saw gifts from donors they’d never heard of before. For the past two years, gifts from Oregon and Washington have combined to comprise half of all Mercy Corps funding domestically.

He says that with each new disaster, each new pressing need, more people dig into their pockets. “Everybody steps up,” De Galan says. “And corporate donors are giving at levels never seen before—just amazing corporate generosity.”

But disasters come and disasters go. In between, there is “donor fatigue.”

It’s what they call it when the same philanthropists are asked again and again to come to the rescue. Especially for an ongoing need that doesn’t appear to be satisfied with any amount of money.

Kay Sohl, executive director of Technical Assistance for Community Services, says philanthropists of every stripe grow weary of some ongoing social causes that don’t seem to diminish despite pots of money. Homelessness, a fashionable cause a few years ago, is now less favored for targeted giving because it seems in the eyes of donors that the problem has worsened, she says. “Then there’s a sense of, well, we’ve been giving on that and we see even more homeless people downtown.”

Bruner says new causes often upstage older ones. Some come into vogue because they are true crises; sometimes, they simply capture the imagination of the media and donors alike, he says.

“The world is full of important issues, but we have a short-term attention span. We love to rally our troops to fight the battle, get the victory and then move on. It’s harder for us to dig in for the long haul; we get excited, but then we get bored.”

The “in” issues, aside from natural disasters in recent years, have been breast cancer, and more recently, methamphetamine, Bruner says. “Nobody’s arguing that meth is not at a critical stage or that finding a cure for breast cancer is not crucial…That’s the hard part. They are all worthy causes. All important.”

The only answer is to broaden the base of donors, nonprofit groups say.

It’s particularly necessary as the older guard of givers and today’s successful baby boomers pass on their fortunes to their heirs.

Just what, the nonprofits ask, will the heirs do with all that money?

“That’s the $64 million question,” says Bruner. “There is a lot of discussion about that in the nonprofit industry nationally. And it makes sense: Over the next generation, we will see the single largest transfer of wealth at a time when the sum of indications is that the recipients of that wealth are not as civically engaged or as generous as their parents’ generation.”

It’s why nonprofits are reaching out to the younger generation now, hoping to groom them for a life of generosity, Bruner says. “We have to give our time and attention to the future generation of givers, engage them at a young age even if their giving at the moment is at a low level.”

And so, it’s time to retool the old, staid fundraising events to appeal to youth.

It’s something the Children’s Relief Nursery has taken to heart. The organization, dedicated to preventing child abuse, launched its Portland Iron Chef fundraiser, modeled on the melodramatic but popular Food Network cooking competition. It was rewarded with some fresh-faced donors. “I think it captured them pretty well,” says Kathy Walsh, the nursery’s development director. Another gala event, an arts celebration in the trendy Pearl District, auctioned off rocking horses, each embellished by artists. Food was served by Aura, a new restaurant that molds itself into a contemporary chic shape that draws young downtown professionals. “And the DJ was playing some ‘with it’ young music,” Walsh says. “It was a youthful event…That crowd was quite young and hip and…with it.”

Walsh says capturing youth is key to the future for many charities, but she worries potential donors in their 20s and 30s may take more convincing because they “never had any hardship…That’s really a generalization. It’s not true for everyone, but a lot have never had to really worry, especially in Oregon where we’ve had a boom time for 20 years now.”
Portland Art Museum also is in the hunt for youth, using exhibitions focusing on contemporary works and a “Young at Art” membership program, which offers certain incentives—“late night” theme parties, for example—in exchange for a small amount of yearly cash. It even gets with the youth lingo, promising members “the goods” when they sign up. A sample museum party invitation: “Food, wine and cocktails will be available as you groove to beats from Portland's hottest DJs. Dress fine for this once in a lifetime opening event! Join YAA that evening and apply your entrance fee to your membership - plus enter to win a trip for two to Hawaii!!!”
Bruner, of Cascade AIDS Project, says his group in the old days threw a slew of what he calls “Cast of thousands-Cecil B. DeMille” events, including a fashion show and a “black tie Oscar night thing. It was dreadful. Two didn’t make any money. One lost money and all six drove everybody crazy because we were going back to the same well each time.”

Retooled, Cascade now puts on only two events a year. One, “Art for Life,” targets a higher socio-economic demographic. A second event in the fall, AIDS walk, draws from a wide spectrum of givers. “We strategically targeted different kinds of people on purpose so the events don’t compete with one another for attendance or sponsorships.” The result: A cool million—three times the money raised during six gala events previously.

But not everyone aims for hip and cool. Ernie Unger doesn’t do much in the way of galas.

Even so, the Eugene Mission he directs receives about $1.56 million each year from a mix of sources, from various Lane County church donations to proceeds from newspaper recycling.

Executive director of the Eugene Mission for the past 45 years, Unger is familiar with lean years—like 2001—a tough year for many local charities. But he doesn’t worry much. Doesn’t spend time designing the next new-fangled fundraiser. When asked about money, he says, “Well, I think it’s going pretty well.”

Why so well?

“I think we’re pretty simple here,” he says. “We do food, shelter and clothing. We don’t try to do a multitude of things.”

The other key, he says, is philosophical. Unger says it’s about trusting, not in people or in government, but in a greater power. “We just trust the Lord. We stand on His promise that He’ll take care of us.”

BrainstormNW - Oct 2005

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