Miami Herald - July 28, 2002
Cara Buckley, cbuckley@herald.com

"I'm kind of panicking right now," said Sheri Kaplan, founder of the Center for Positive Connections, an HIV support center in North Miami. "We literally could close in three months. I'm pushing people to pop out grant proposals. But there's more competition for foundation funds.

"As for corporate [donations], with the stock market, I don't even want to go there. Foundations base their giveaway money on the stock market too."

Nonprofits have already suffered a difficult year. Corporate giving began to fall last year as the economy cooled, and fell further after Sept. 11. According to Giving USA, a charity tracker, corporate donations fell 14.5 percent in 2001. Individual donations surged after the terrorist tragedies, and over the year fell just 2 percent. But with the stock market's tumult whittling individual, corporate and foundation portfolios, many nonprofits are gearing for harder times.

"We're all nervous," said Oren Wunderman, executive director of the Family Resource Center of South Florida. Corporate donations to the center, which accounted for 15 percent of its income stream, fell by half this past year.

"The foundations are being hit, and a lot are sending letters telling us they're going to give us considerably less or skip a year," Wunderman said. "We're trying to step up fundraising, and cultivate individual donors, but they themselves have fewer reserves."

The Dade Community Foundation, which is funded largely by bequests, has $70 million invested and targeted earnings of 9.5 percent. This year, its earnings are at 2.8 percent, meaning fewer dollars are available for increasingly needy community groups.

"There is zero question about how this is going to hit," said JoAnne Chester Bander, CEO of the Donors Forum, a Miami-based association made up of 115 regional grant makers. "One of the members was talking about it in a meeting. Their assets are down, and no one knows where their bottom is. I am not aware of one foundation, from the biggest to the smallest, who is not feeling the effect."

South Florida's relatively weak corporate base has left the region's nonprofits reliant on individual donations, and general uncertainty about the economic future leaves them particularly vulnerable to fluctuations in wealth.

Mergers and consolidations have pulled money away from local community groups, because corporations tend to give to the cities where they are headquartered. South Florida's nonprofits suffered after First Union's buyout of Southeast Bank, the folding of Eastern and Pan Am Airlines, and Blockbuster's departure from Fort Lauderdale.

"Individual gifts are the backbone of nonprofits," said Ruth Shack, president of the Dade Community Foundation. "And I think concern about the future is going to make people hold their dollars tighter."

Grant makers said donors are still meeting their pledges, but the amounts have dwindled.

"People who are significant donors are not giving at the same pace," said Peter Bermon, chair of the United Way's investment subcommittee in Miami. "They're giving us $5,000 or $7,000, not $10,000 like last year."

SHRINKING DONATIONS

Applica Inc., formerly Windmere, the Miami Lakes appliance manufacturer, began trimming its donations to recipients like Miami City Ballet and Gables Stage three years ago due to low earnings.

The company expanded its giving program this year based on expectations of a stronger economy. But Barbara Garrett, the company's senior vice president of governmental and community affairs, projected the stock market would cause more penny pinching.

And lower earnings mean fewer donations.

Foundation grants for 2002 have already been budgeted, so the fallout of falling stock prices will not fully take shape until year's end.

"Everybody seems to be in a wait-and-see mode," said Linda Carter, president of the Community Foundation of Broward. "It's hard to tell, because giving in South Florida is always light over the summertime. But I would imagine it's going to be tighter."

The effect could resonate for years. Foundations usually adjust grant amounts based on their financial health over the previous one to three years. Donations from Royal Caribbean, Carnival and American Express, foundation leaders said, are certain to be down.

"We haven't been hit yet," said Martha Fugate, director of Project Yes, a Miami-based diversity-training group. "But we know foundations are going to give us less money because there's less pie to go around."

Carter and Shack both said their foundations' portfolios were diversified enough in mid- and large-size stocks, international capital markets and fixed-income stocks to weather the stock market storm. But nonprofits, stung by corporate and individual cutbacks, are increasingly short of resources.

GROWING NEED

The need for social services in South Florida has grown because of hospitality-related layoffs. Even though individual donations surged after Sept. 11, money poured from South Florida to New York and Washington, D.C., leaving local groups in the lurch.

"Demand for service is higher at the very time nonprofits can't afford it," Carter said.

Wunderman of the Family Resource Center has had to reduce his staff from 104 to 84. Hardest hit, he said, were programs that provided parenting skills to families accused of child abuse or neglect. With family support from the center's counselors, children were able to return home from foster care or were not removed in the first place.

"Our agency is dependent on general revenue, what the Department of Children and Families gets and can give us," Wunderman said. "If the general revenues continue to lag, the only thing we can do is increase fund raising or reduce more staff."

Positive Connection relied on private foundation grants as its main income stream, but the sources dried up last fall. Kaplan turned to the city and county for help and got it, but there is no guarantee those funding sources will be renewed.

Two other AIDS support agencies have closed in the past two years, and Kaplan and her staff can barely keep up with the increased demand. More volunteers have been enlisted. Plans to expand the staff were forced on hold. The budget cannot accommodate a desperately needed computer.

"It's the less-glamorous services that will be hit, the services that are closest to the ground," said Shack. "The drug-treatment programs, the children's services, the areas where people cannot stand up for themselves."

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