Union Rescue Mission on L.A.'s Skid Row provides food, clothing and shelter to more than 1,000 people a day. But thanks to this month's Wall Street meltdown, some of those people may have to make do with less help.
The non-profit charity had already been hit hard by this year's economic slowdown, the related mortgage meltdown and skyrocketing fuel prices and now it's bracing for a loss of donations as investors lick their wounds.
"We were already off 17 percent in our donations before the latest Wall Street crisis hit two weeks ago and since then, the drop has been even more pronounced," said Chief Executive Andy Bales. "Everyone is a bit panicked and concerned and holding on to their money. We're looking at where we can cut, where we can make savings."
Union Rescue Mission is hardly alone.
All over Los Angeles, non-profit charities and clinics are being slammed by the Wall Street carnage as wealthy donors that have been their lifeblood have suddenly closed their wallets. And many cultural institutions that so far have escaped direct harm are increasingly anxious that their fundraising will plummet in coming months as foundations and wealthy contributors re-evaluate their portfolios.
The crisis couldn't have come at a worse time, right at the start of the peak fall and holiday donation season in which many non-profits hope to raise enough money to carry them through the rest of the year.
"There's a tremendous amount of anxiety during this important fundraising and giving window," said Regina Birdsell, chief executive of the Center for Nonprofit Management in Downtown Los Angeles, which counsels more than 500 local non-profit organizations.
That anxiety is being reflected in charity boardrooms. According to an informal survey of two-dozen non-profits conducted last week by the Center for Nonprofit Management, after the Business Journal inquired, more than two-thirds said their boards had met in the previous 10 days to discuss the potential impacts of the Wall Street crisis. Roughly one-third said they were seriously considering staff cuts and service reductions to deal with expected funding shortfalls. And virtually all said they were scrambling to come up with new revenue sources.
What's more, many charitable health and human service organizations have already had their finances stretched by the state's prolonged budget crisis, just as demand for their services has been increasing. Birdsell said some had to dip into emergency lines of credit just to keep operating and are now especially ill-equipped to face the drop in donations resulting from the Wall Street debacle.
"There will be hard choices made very quickly about whom not to serve and what services will not be available," Birdsell said. "That's coming very soon."
One big factor behind the squeeze has been a flattening of corporate donations this year that now threatens to become a decline. According to Elise Buik, chief executive of the United Way of Greater Los Angeles, most companies have committed to maintaining last year's contribution targets or to very slight increases. By comparison, corporate giving campaigns for United Way in 2007 were up nearly 10 percent from the previous year.
That's right in line with nationwide figures compiled last month by the Chronicle of Philanthropy. Two-thirds of the companies the publication surveyed said their giving levels would remain the same as last year, while 21 percent said they expected to increase their donations.
But that was before the Wall Street meltdown. Now, with buyouts of distressed institutions sweeping the finance industry traditionally one of the biggest and most reliable sectors for corporate donors there's concern that companies will pull back.
"The non-profit world has had as major funders companies like Washington Mutual Inc. and Countrywide that have had financial difficulties or mergers. With mergers, what ends up happening is that charitable contributions end up being cut almost in half," said Ritchie Geisel, chief executive of Bienvenidos Children's Center Inc., a downtown Los Angeles-based provider of children's services that expects a significant falloff in corporate donations this year.
In response to the Wall Street crisis, Ritchie said Bienvenidos has accelerated plans already in the works to create a separate board whose main mission will be to target "major gift fundraising."
But not everybody has been hit so hard. Indeed, some of L.A.'s prominent cultural institutions with major capital campaigns are continuing to see substantial checks roll in as if the Wall Street meltdown had never happened.
For example, the Los Angeles County Museum of Art is set to make an announcement Sept. 29 of a major donation for the second phase of its makeover, which includes the renovation of LACMA West at Wilshire Boulevard and Fairfax Ave. and the construction of an adjacent building. The donation is apparently big enough to draw the scheduled attendance of Los Angeles Mayor Antonio Villaraigosa.
Similarly, the Natural History Museum of Los Angeles just received a $1 million check last week as one of its major donors sped up delivery of a multi-million dollar pledge, according to Tom Jacobson, senior vice president for advancement. The museum is planning a major renovation of its 95-year-old buildings.
But these donations had long been in the works. Local nonprofit experts say the greatest risk is to future contributions.
"Some large donors may not have had their portfolios hit quite yet; a month or two out and they may see the losses and pull back," said James Ferris, director of the Center on Philanthropy and Public Policy at the University of Southern California.
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