NCPA - National Center for Policy Analysis

Charities In A Bind As Philanthropists Fail To Meet Pledges

October 11, 2002

Charitable donors as wealthy as Ted Turner have recently announced that they will have trouble meeting their funding pledges in today's economic environment.

As a result, many organizations are being forced to lay off workers, leave staff positions unfilled and tell grant seekers not to bother applying.

Leaders of charitable organizations -- fearful of alienating wealthy donors -- rarely name those who have failed to ante up. And when word leaks out, bad feelings between donors and recipient organization are often the result. Most donors make good on their pledges when their finances recover.

  • The secrecy makes figures on overall shortfalls difficult to come by.
  • But the Community Foundation Silicon Valley, for example, has experienced a 54 percent fall off of funds flowing into its donor accounts.
  • As of year end Sept. 30, 2000, the Ford Foundation enjoyed assets of just under $15 billion -- a figure which two years later barely topped $9 billion.
  • Giving more than doubled in the 1990s, rising to $210 billion last year -- or a 2.3 percent drop after adjusting for inflation.

The current situation is worse than that of the early 1990s, observers say, because so many sectors of the economy are affected, starting with the failure of the dot-coms, through the faltering telecommunications, information technology, media and venture capitalist industries.

Source: Stephanie Strom, "Cultural Groups and Charities Are Feeling Each Bump on Wall Street," New York Times, October 11, 2002.


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