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Hard times start at top 

Market’s blow to assets to be felt by charities.

OUR HOUSE: Executive director Georgia Mjartan.
  • OUR HOUSE: Executive director Georgia Mjartan.

Many of the people reading this article are reeling from the blow dealt their savings, thanks to October's sudden and steep drop in the stock market, a plunge that followed a year's decline.

But there are those who don't have retirement funds to feel panicky about. They're worried instead about finding or keeping a job and keeping a roof over their heads. They need help getting back on steady ground. They're turning to shelters and food pantries for help, organizations that rely on the generosity of individuals and foundations to offer it.

And there's the catch: As asset values tank, so will philanthropic dollars, but the need for them will grow greater.

It's too soon to know exactly how severe the impact will be on private giving or foundations — indeed, many Arkansas foundations are heavily invested in Wal-Mart stock, shares of which are selling higher today than they were at the first of the year — but the struggling market bodes ill for grant-seekers in the year to come. And a recent survey by Guidestar, a non-profit that tracks charitable giving, found that 39 percent of U.S. charities in the Southeast (including Arkansas) report a drop in gifts so far this year, compared to 2007.

“Times are hard for everyone,” observed Heather Eason, president and CEO of the Arkansas Community Foundation, a public foundation that oversees more than 1,000 donor funds. Foundations whose investments took a hit may struggle to meet multi-year commitments, Eason noted, while the demand on them “to support non-profits is up … like [support for] direct-service non-profits, food pantries, women's shelters, those doing the hard work out there. Their expenses are going up, and any who have endowments, their savings are going down.”

Our House, a shelter for the working homeless on the grounds of the old Veterans Hospital on Roosevelt Road, is one of those non-profits who are caught.

“It's a double whammy for us,” said Georgia Mjartan, executive director of Our House, which raises its $550,000 yearly budget from gifts and grants. She expects grants from foundations to decline, and says the agency is already beginning to feel the crisis' effect on individual givers: Our House's annual Tie One On fund-raiser, to be held in December, is having trouble getting the sponsor support it's had in the past.

“One thing I want to make clear: We're not seeing people being less generous,” Martjan said. They're giving their time, if not their money; volunteer numbers are up. Our House has long been able to serve dinner to its residents daily with the help of churches and other service groups; now, Mjartan said, “there's so much interest, we have different groups providing lunch, too.” Volunteers know that if they themselves are hurting, “the poor among us must be feeling it even more.”

Our House serves about 1,000 homeless individuals, including hundreds of children, a year. Its clients include men and women who've lost their jobs because they couldn't afford gasoline, people who are finding they have to compete with better-educated former middle-management employees for their low-paying jobs. They are people having a hard time finding affordable housing. “Try finding a two-bedroom you can rent for $400 a month,” Mjartan said. “They're not a whole lot of units.”

As luck would have it, Our House is in the midst of a $400,000 capital campaign to renovate space on its campus to house families. Raising money now means “we have to get creative,” Mjartan said. “We're asking for less from more people.” In-kind contributions are important: Redstone Construction Group, for example, donated $40,000 worth of asphalt and labor toward the renovation. Important contributions of food come from Potluck and the Arkansas Foodbank Network.

Over at Potluck, a food rescue agency, executive director Carol Herzog describes the situation as “a big pie in the face.”

“We're all feeling the pinch,” she said. Potluck has trucks to fuel, drivers to pay, refrigeration to run to preserve perishables. (Ironically, while non-perishable food donations are drying up, perishable are rising, because the restaurants that are among Potluck's 195 food donors are seeing a downturn in customers, leaving more food unconsumed.) Herzog said she's not worried about the hurt put on Potluck's endowment fund; everybody is in the same boat. But she said it “will be interesting to see” how well the charity's annual fund-raiser — the “Not at All a Ball” non-event that invites supporters to contribute what they would have spent going out to a gala — does in March.

 

Assets reported on 2008 tax returns for most private foundations will look very different from those included in this philanthropy report.

The Charles A. Frueauff Foundation, for example, reported fair market assets of $124 million on its 2007 return. But as of Nov. 4, assets stood at $90.9 million.

Unlike many foundations, Frueauff doesn't award multi-year grants, so there are no outstanding promises that won't be filled. What will be the impact on Frueauff's giving? “The likelihood of picking up new agencies is slim,” president David Frueauff said. “We'll really focus in on hunger, really focus in on shelter, really focus in on social areas that are going to be so impacted with the economic downtown,” he said.

Foundations don't want to make gifts from the corpus of their holdings. They want to make gifts from earnings; Frueauff shoots for a return of 8 percent, to pay for grants and operation.

But, Frueauff said, “now would be the time you would consider doing that.”

 

One of the supporters of Our House is the United Way of Pulaski County, which has just begun its annual fund-raising campaign. Its goal is $5 million. So far, executive director John Nazzaro said, things have gone well, and he expects individuals to continue to be generous.

But corporations — which make 30 percent of the gifts to the United Way — are especially likely to pull back on giving, he said. Nazzaro acknowledges a certain amount of concern about what institutional donors will be able to give to the United Way. “A lot of them are banks,” he said.

Even in August, corporations were predicting their giving would be flat or somewhat reduced next year, according to reports in the Chronicle of Philanthropy. October's precipitous drop makes those predictions more certain.

The Pulaski United Way supports dozens of non-profits. Depending on need, Nazzaro said, the United Way may increase what it calls “venture funding,” which supports new programming created to meet particular needs. It has the flexibility to shift funds to respond to the different economic climate; smaller non-profits, he said, are unlikely to be that flexible in their budgeting.

 

In September, just days before the bottom fell out, the University of Arkansas at Little Rock went public with its campaign to raise $75 million for scholarships, faculty and bricks and mortar. But UALR is in good shape — it's already raised $51 million toward its goal, Bob Denman, director of development, said. Of the $51 million, $10 million is in pledges.

The economy is “something we have to be sensitive to, especially when we're building a relationship with a donor or prospect,” Denman said. It may take longer to reach the dollar goal, he said, but the deadline of 2011 gives the university some breathing room.

Denman said planned gifts, pledges of money from estates, have totaled $4.7 million since 2005, an amount higher than all the planned giving to the university prior to that date. UALR received 18,000 gifts last year; Denman said it will be interesting to see what happens in the year to come.

 

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