Tough times put strain on local charities

The situation in the arts isn’t pretty. Hospitals feel the pain. Foundations are shakier than they once were. And some colleges are struggling to make the financial grade.

Across the board, local nonprofit institutions are watching their investments shrink while their donors face growing demands on their own tenuous finances, according to interviews with dozens of nonprofit officials.

Some agencies — such as charities that provide assistance with food, medicine and utilities — see the need for their services rising while their resources decline. Some former donors, officials said, are now asking for help.

“In my experience, this is the worst we have ever gone through,” said Mike Hardin, who has volunteered since 1982 at Church of the Holy Cross’ social ministry near Spaghetti Junction.

Hard statistics on the fiscal health of nonprofits are not available. But a survey late last year said 80 percent of 240 metro Atlanta agencies reported “unprecedented” requests for help, but only one in four could meet the demand, according to the United Way of Metropolitan Atlanta. Sixty percent had reduced spending on such items as office supplies, and 20 percent had laid off staff or reduced hours or services.

Donors with some of the deepest pockets, private foundations, are losing a significant portion of their investment income because of the decline in the stock market. A January survey by the Chronicle of Philanthropy said the overall value of holdings by foundations has shrunk by nearly 30 percent nationally.

“Nonprofits have to be careful in this environment,” said Russ Hardin, president of the Robert W. Woodruff Foundation and several other local foundations spawned by the founders of Coca-Cola and its bottlers. The stock market decline lopped about $600 million from the Woodruff foundations’ portfolios last year.

As more people lose their jobs and health benefits, many metro Atlanta hospitals are reporting a spike in patients who can’t pay their bills. And while investment income has plummeted, the credit crunch has increased hospitals’ costs of borrowing money. Piedmont Healthcare, citing the instability of the debt market, recently decided to delay construction of a $194 million hospital in Newnan.

On college campuses, endowments have plunged 20 percent or more even as more students need financial aid. Increased requests for scholarships “are just starting to hit,” said Peter Rooney, vice president for development at Oglethorpe University.

On the spiritual side, the Barna Group, a California survey group that specializes in Christian institutions, reported in December that one in five Americans surveyed were cutting back on their gifts to churches — many by at least half.

Arts and culture groups are in a similar bind.

More than half the arts groups questioned in a 19-county survey reported decreased revenue, ticket sales and donations year over year as of November.

The Breman Museum of Jewish Heritage, the Atlanta History Center and the Michael C. Carlos Museum at Emory University each have eliminated an exhibition from their schedules because of the difficulty of getting corporate sponsorships.

“The vast majority of arts and cultural institutions are experiencing a tremendous amount of financial stress,” said Lisa Cremin, director of the Metropolitan Atlanta Arts Fund. Corporate sponsorships are down as much as 70 percent, she said.

There is good news in some quarters. Last month, the Atlanta Ballet announced new donations totaling $10 million, including a $3 million gift from the Michael C. and Thalia N. Carlos Foundation — the largest gift in the ballet’s 79-year history. The Carlos gift was secured in the summer, before the bad news hit.

But the full effect of investment losses on foundations has yet to be felt, many said. Some local players said they expect to maintain giving at previous levels this year, but that the plunge in asset values will play out in lower giving in coming years.

COLLEGES

Endowments are shrinking

Some students at Atlanta’s Oglethorpe University are living in a new dormitory called Phase 2.

By luck or providence, the university raised about $11 million in pledges to build it and two other dorms — South Hall and Magbee Hall — before the economy tanked last fall. Most pledges are being paid on schedule, said the university’s vice president for development, Peter Rooney.

Now the question is when someone will come up with a big enough gift to give Phase 2 a new name.

In the meantime, Oglethorpe faces some of the same challenges as half a dozen other Georgia colleges and universities surveyed by the AJC. Endowments are down 19 percent to 25 percent at a time when demand for financial aid is expected to increase.

At Emory University, the shrunken endowment means a loss of $50 million to $60 million a year, said Mike Mandl, the university’s executive vice president for finance and administration.

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CORPORATE GIVING

Foundations solid for 2009

The money is likely to flow as usual this year to charities from foundations backed by some of Atlanta’s biggest companies or their founders. But giving will probably decline next year, even as hard times have created more need for foundations’ help.

“We’re in a recession and we all live in the same economy,” said Russ Hardin, president of the Robert W. Woodruff Foundations and several related foundations created by Coca-Cola founders’ or bottlers’ fortunes.

The Woodruff foundations, the largest such family of foundations in the Southeast, will give about $100 million this year, similar to earlier years. But the giving will ratchet down in coming years in reaction to their shrinking investment portfolios, Hardin said.

He said last year’s stock market rout chopped about 23 percent — roughly $600 million — off the value of foundations’ portfolios, which had been worth $2.7 billion at the end of 2007.

Brenda Skidmore, president of SunTrust Foundation, likewise said the organization will maintain its charitable giving this year at the same level as in earlier years, about $14 million.

“We obviously think demand is going to be much greater this year,” Skidmore said. The foundation, which is funded by investment earnings and contributions from the Atlanta-based bank, contributes money to a wide range of nonprofits.

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ARTS

Fewer shows, grants add up to ‘lifeboat strategy’

What effect is the economy having on the New Atlanta Shakespeare Tavern?

“It’s crushing us in a vise,” said the Midtown troupe’s artistic director, Jeff Watkins. “It makes every day about money, not theater, and I spend all my time trying to get another $6,000 in the bank.”

The theater has canceled a production scheduled for spring, Stephen Sondheim’s “A Little Night Music.” In recent seasons, donations made up a quarter to a third of the tavern’s $1.4 million annual budget. Watkins had projected a 10 percent increase in patron donations, but 2008 ended with the same total ($47,000) as the year before. Although the theater has doubled its foundation grant applications, Watkins said these have “all but dried up,” having received just $45,000, down from $135,000 this time last year.

Grants from the state, city and Fulton County keep the theater operating for one week each. For the coming year, Watkins expects donations to cover less than 20 percent of costs.

With the tavern’s credit line of $150,000 almost full, the theater has shifted to its “lifeboat strategy,” including planning smaller shows that require fewer cast members for next year.

“Last year, we had one of our best ever, now I’m living in terror of the coming summer months, when we do fewer performances,” Watkins said.

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HOSPITALS

Pain felt from investment losses, rise in uninsured

WellStar Health System felt the recession’s wrath in November.

The nonprofit, Marietta-based hospital organization lost $16 million that month, most of it from investments.

From July through November, WellStar’s investment losses were about $55 million — roughly 12 percent of its portfolio, said Jim Budzinski, WellStar’s chief financial officer.

More financial damage came from the shrinking of operating margins, as WellStar’s five hospitals have seen a 10 percent increase in uninsured patient visits.

In addition, Budzinski said: “We are not hitting our goal in our fund-raising. When it comes to major gift-giving, we are behind last year’s levels.”

Negative financial trends also have hurt other metro Atlanta hospitals. Several nonprofit hospital organizations, including WellStar, cited “decreased elective procedures, rising uninsured populations and hospital employee layoffs” in refusing to help Grady Memorial Hospital in its recent request for $30 million in assistance.

On the investment side, Emory’s hospitals, Northside Hospital, and Gwinnett Medical Center each report drops in returns. Children’s Healthcare of Atlanta says it has seen a 22 percent reduction from total invested assets while its gift-giving is flat. Still, Children’s is continuing a $43 million project to renovate Hughes Spalding at Grady.

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PRIVATE SCHOOLS

Decent outlook for the long run

Like the leaders of other Atlanta area private schools, David Fincher knows his campus will survive the recession. But it will do so with a few scrapes.

Already Fincher, president of Greater Atlanta Christian School in Norcross, has watched the school’s endowment drop by 26 percent from its peak of about $31 million in the spring.

The endowment doesn’t pay for the school’s day-to-day operations, but it supports five key areas, including financial aid.

Private school leaders across the country say their endowments have dropped between 20 percent and 30 percent. Only large private schools typically have endowments, with the average fund about $20 million, according to the National Association of Independent Schools.

While Greater Atlanta Christian is concerned, Fincher said the endowment is quadruple what it was a decade ago. Since many private schools have no endowment at all, the school is in a better position than many, he said.

Don Robertson, headmaster at the Walker School in Marietta, compared the money to an individual’s retirement account.

“As long as you’re not planning to tap into that money anytime soon, you should be OK in the long run,” he said.

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RELIGIOUS COMMUNITY

Collection plates not nearly as full

At Providence Missionary Baptist Church, the sanctuary is only heated for weekend services. The traditionally hearty between-services breakfast has been reduced to pastries and fruit.

With collection plates and endowments hurting this year, Atlanta’s religious community is balancing harsh economic realities with scaled-back expectations:

• The Temple, Atlanta’s largest Reform synagogue with 1,450 families, recently rescinded its decision to raise its dues.

• Hillside United Methodist Church in Woodstock cut its 2009 budget by 10 percent.

• Charitable giving to the Georgia Baptist Convention was down last year from the previous year, though it rose 1 percent to 3 percent at the end of 2008.

• And at a recent meeting of African Methodist Episcopal church bishops, leaders decided to cut the annual conference from four to three days and combine other meetings throughout the year.

Despite all that, religious leaders say hard times tend to bring out the best in people.

“Naturally, we have people who are unemployed because of the recession,” said Furqan Muhammad, head of Masjid Al Muminum, a 150- to 200-member mosque near Turner Field. “But the spirit for donating has not decreased.”

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CHARITIES

Requests go up as donations decrease

The economy is driving more people to ask nonprofits for help — even as donations are unable to keep up.

At the Atlanta Community Food Bank, the main regional source of supplies for charitable pantries, donations wavered, but a burst at the end of 2008 meant the agency took in more food than in 2007. Still, rising demand means it can’t stock up to prepare for the upcoming slow season for food drives.

“Everything coming in is going right out the door,” said Bill Bolling, the food bank director.

Other charities also are reporting problems:

• Emmaus House, an Episcopal Diocese ministry that provides services such as food, rent and utility payments, said in December that it was $106,000 short of its $300,000 goal for the year while requests for help were up 50 percent.

• MUST Ministries, a food pantry serving Cherokee and Cobb counties, reported in late 2008 that donations were down 25 percent while demand was up 30 percent to 40 percent.

In late 2008, the Community Foundation for Greater Atlanta, recognizing the need, stepped up with $200,000 in grants for regional charities. All told, the foundation said it awarded a record of about $90 million last year.

“Some foundations are going to ramp up giving, even if it eats into their base,” said Rob Smulian, the foundation’s vice president of philanthropic services. “The need is not going down. It is staying high and growing.”

That is true at the Center for Working Families in south Atlanta. Eight months ago, it held one session a week to which 15 or 20 people would come for job training, help with taxes or services such as food stamps, President David Jackson said. Now, it holds four sessions a week.

Jackson said he sees many asking for help for the first time, such as Samuel Holland, 45, of Atlanta.

Holland works in Atlanta’s hurting hospitality industry. He was working overtime at a hotel two years ago. Now, he works 18 to 26 hours a week while supplementing his income with yardwork. He sought help with job training and applying for food stamps.

“It’s dwindling,” Holland said. “I can see it every month.”

Staff writers Russell Granthan, Catherine Fox, Pierre Ruhe, Laura Diamond, Tammy Joyner, Andy Miller and Christopher Quinn contributed to this report.