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Weak economy inhibits charitable giving

  • COURTESY UH FOUNDATION
    University of Hawaii student callers Cayla Fukushima and Joshua Melden work the phones for the UH Foundation, whose latest capital campaign raised $336 million through June 2009. The money supports areas such as scholarships, library acquisitions, equipment and other resources that enhance the student experience. The student callers make 150,000 calls per year in support of UH.
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Even as the economy strengthens, Hawaii’s nonprofit organizations will continue to have a difficult time raising money in the near term, according to several leaders in the philanthropic community.

Many corporations and private donors won’t feel comfortable returning to their pre-recession giving levels until they are more certain about the strength of the economic recovery and outcome of proposed tax policy changes, the leaders said.

"The good news is that the world is flush with cash, especially the U.S. The bad news is that there is so much uncertainty that nobody really wants to give up their cash," said Barry Weinman, venture capitalist, philanthropist and chairman of the University of Hawaii Foundation’s board of trustees.

The key for nonprofit groups trying to maintain their funding levels in the current environment is not to panic and to focus on continuing to cultivate relationships with donors that believe in their mission, said Roberta Healey, chairwoman of the board of directors of the Association of Fundraising Professionals.

Healey and Weinman were among the 350 speakers and attendees at the Conference of Nonprofit Communities of Hawaii held recently in Waikiki.

"Generous people – whether or not they are giving less – still care about causes that matter to them. And they want to be the change they want to see in the world," Healey said.

"So the worst possible thing a fundraiser can do is to stop maintaining strong and effective relationships with people who want to be involved with the organizations that we represent."

Nationwide, charitable giving fell 3.6 percent to $304 billion in 2009 from $315 billion in 2008, according to a report from the Giving USA Foundation and the Center on Philanthropy at Indiana University. It was the largest decline since the foundation began its annual reports in 1956.

In Hawaii a poll done by the Hawaii Community Foundation in 2009 showed that people planned to significantly cut back their charitable giving as a result of the bad economy, said Kelvin Taketa, the organization’s chief executive officer.

"I think people have hoarded their money, and I don’t think that it is over," Taketa said. "The anecdotal evidence suggests that the trend continues. Even though there is the potential for lots of gifts out there, it’s the uncertainty around the economy and equally so the uncertainty around tax policy. The same way it’s putting a damper on private investment, it’s also putting a damper on charitable investment."

Weinman said that despite the challenging environment the UH Foundation was able to exceed its goal in its most recent fundraising campaign by following the basic philosophy of staying engaged with donors and listening to them.

The foundation’s latest capital campaign had a target of $250 million, and the organization raised $336 million through June 2009.

"It shows it can be done. That was testimony to the people who work for the UH Foundation," Weinman said. "Going forward, unless uncertainty becomes more certain, then people will be a little concerned about giving."

In addition to issues with the economy and tax policy, the move of some Hawaii corporations to the mainland and the eventual departure of Sen. Daniel Inouye from Congress will make for a difficult fundraising environment for years to come, he said.

"So at UH Foundation we’re planning for those very disturbing events as we get ready for our next campaign, which begins in July, which is a $500,000 campaign," Weinman said.

"We not only have to do what we did before, we have to double up in an environment where I think we’re losing a lot of the corporate donors. And we may be losing a lot of people who are benefiting from the Hawaii economy, which may not be as resilient going out four or five years."

There is room for nonprofit groups to succeed in this difficult environment if they pay attention to what the community expects from them, he said.

"Not to slam the Honolulu Symphony, but the symphony never understood who their customer was. They thought it was their board, their patrons and themselves. And so consequently I don’t think they did a very good job in the community, and they lost the community support," Weinman said.

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