By ROGER RECK

Whenever the U.S. economy slides into a recession, charitable contributions are among the first targets of corporate cost-cutters. David Hamlin, in the Nov. 17 issue of the Business Journal, argued that in tough times non-profits need the support of business more than ever.

Unfortunately, his plea and others like it will go unheeded by many corporate contributors. The Chronicle of Philanthropy, the bible of the fundraising profession, recently quoted an authority in that field as predicting that more than 100,000 non-profit groups in the United States will fail in the next two years. That’s just a small fraction of the 2 million non-profits in the United States, but the others are likely to find the going rough in these difficult times.

The hard fact of life is that corporate America just can’t be expected to continue contributing as much to charities when earnings have tanked and companies’ net worth has shrunk dramatically.

But this doesn’t mean that CEOs should take an ax and start chopping their charitable contributions indiscriminately. Rather, they should take a new look at their philanthropy and ask, “What are we getting for what we give to these charities? What good are we accomplishing?”

In the 30 years that I’ve been involved in fundraising for non-profits, I’ve observed that most CEOs don’t focus on what they want to achieve with their philanthropy. Rather, they just respond to the pressures they feel from charitable organizations and their backers usually, people who are in a position to help or hinder the business of the companies they approach.

Checking viability

A review of a company’s philanthropic programs should begin by determining whether the recipients of its gifts are really viable organizations. All too often, corporate chieftains OK a contribution after doing little more than reading a non-profit’s proposal.

But what won’t be apparent from most proposals is whether a non-profit is really viable. CEOs should start their reviews with the realization that many non-profits shouldn’t even exist. It’s easy almost too easy to start a 501(c)3 organization. As a result, there are more than 32,000 501(c)3 organizations in Los Angeles County alone.

At any given time, many of those non-profits are teetering on the edge of insolvency. And all too often, they don’t have the infrastructure or knowledge to support the cause for which they were created. They’re not well versed in fundraising, finance or human resources. Instead of focusing on their mission, their CEOs have to spend much of their time frantically trying to raise enough money to meet their payrolls.

Now, more than ever, CEOs should to get to know the organization right down to its base. This means insisting on seeing five years of financials, and interviewing not just staff members but volunteers for the organization.

CEOs or their trusted deputies should make site visits to make sure the organization is delivering the services for which it’s seeking funding. They should also determine how much is spent on each individual served by the organization.

By this criterion, one of the most efficient non-profits in the country is the Girl Scouts of America. To deliver its broad range of services, it spends only about $250 a year on each of the 2.6 million girls in Scouting.

The other end of the spectrum is extreme. A certain Los Angeles group that was created to help children at risk was spending an astounding $100,000 per child served. It came as no surprise to me that this organization foundered.

Obviously, the amount of expense per capita will depend on the extent of the services provided. A non-profit that serves meals to the indigent will experience a much lower cost per person served than one that operates a residential facility dedicated to the care of drug addicts.

CEOs should also take a close look at any of their charities that receive money from the government. If the bulk of a non-profit’s budget is funded by federal or state funds, corporate contributions usually are just an add-on; they really don’t need that money.

It all comes down to this: CEOs who bring closer scrutiny to their philanthropic programs will almost invariably realign their priorities. The weaker, less-effective non-profits will fall off their lists, lessening the need to trim contributions to those that have proved their ability to carry out their mission.

Roger Reck is managing partner of Reck & Associates LLC, a fundraising organization based in Los Angeles.