As Companies Shave Aid, Nonprofits Suffer the Sting

The National Center for Children and Families, which runs programs for troubled area kids, was ecstatic recently when it landed a $2 million contribution from one Washington area corporation and a $1 million pledge from another. The money was to help pay for $15 million in new facilities on the center's Bethesda campus, including a gym, cafeteria, volunteer training center and art therapy rooms.

But then hard times and budget cuts struck both companies. Sorry, said the $2 million giver, but may we spread that out over five years? We're sorry, too, said the second company, but we've got only $250,000 to spare.

Now the expansion is on hold, said a disappointed Sheryl Brisette-Chapman, the center's executive director.

To these parched times for nonprofits, add this: evaporating corporate support. Each year, corporations channel millions of dollars in cash and products to local nonprofits, but these days, that valuable source of funding is shrinking. Among the reasons are the sour economy, corporate financial scandals, company mergers and the business world's changing tastes in philanthropy.

Many nonprofits -- arts organizations, in particular -- are reluctant to talk about their sagging support for fear of antagonizing business donors that have promised to come back when conditions are better. But it's clear that times are tough.

Jennifer Cover Payne, executive director of the 1,000-member Cultural Alliance of Greater Washington, said many corporations are cutting back or even eliminating their donations. Instead, she said, they are offering employees to sit on nonprofits' governing boards and providing other voluntary help.

Others are keeping up their usual donations but refusing new requests for money.

Four years ago, "It was fat city," Payne said, but now the situation is bleak. "This is the worst I've seen it in the 91/2 years I have been here," she said.

Nationally, corporate donations dropped sharply in 2001, rebounding slightly -- an estimated 10 percent -- last year to $12.2 billion, according to the AAFRC Trust for Philanthropy, which attributes the increase mostly to improved record-keeping by corporations, especially of their donated products.

Locally, an annual survey of the top 25 corporate philanthropists, launched five years ago by the Washington Business Journal, found that business donations to area nonprofits doubled in that time, to $102 million in 2002. But that total was down 10 percent from 2001, the first decrease since the survey began. And Journal publisher Alex Orfinger thinks it could get worse.

"This is going to be a very challenging year," he said. "The challenges that the business community has faced over the last three years are really hitting the nonprofit community this year."

Larger arts organizations say they're holding their own so far.

Kennedy Center officials say they've managed to keep their corporate support at 20 percent of all donations.

Retail chain Target Corp. and telephone giant SBC Communications Inc. this year stepped into the Kennedy Center's "Corporate 300 Fund," its highest tier of donors; at the same time, E-Trade Financial and Boeing Corp. reduced their donations, and other corporate backers have dropped out of sight. Among them: scandal-touched Tyco International Ltd. and US Airways Inc., which recently emerged from bankruptcy proceedings.