Arts Get Whacked by Rich as Companies Face Losses in Endowments

By Patrick Cole of Bloomberg – March 4 (Bloomberg) — Corporations and wealthy individuals are donating less to nonprofits, with arts groups taking the biggest hit, according to two new studies.

Of 158 companies polled by the economic-research group the Conference Board in February, 45 percent said they have reduced their 2009 philanthropy budget and 16 percent are considering it. The survey said 35 percent of the companies will make fewer grants in 2009 and 22 percent are thinking about it.

When asked what they anticipate as their biggest challenge this year, companies cited an increase in the number of grant requests, inadequate financial resources and declines in the value of corporate foundation endowments.

Smaller endowments are “a problem that’s very real,” Carolyn Cavicchio, senior research associate at the Conference Board, said in a telephone interview. “Everyone’s stock is going down. If the stock continues to go down and you’re making grants from that, you’ll have less money to give away.”

Arts and culture will see the biggest drop, with 41 percent reporting a decrease in resources. Environmental causes will see the biggest increase, with 28 percent.

A Bank of America study said rich individuals — 700 people polled had household incomes of more than $200,000 or a net worth of at least $1 million — gave an average of $4,792 to the arts, down 71 percent from $16,465, between 2005 and 2007, the latest data available.

Digging Deeper
By comparison, giving to health-related causes rose 51.2 percent to $12,013 during that same period, the study said.

“This is a tougher time for arts organizations,” Patrick Rooney, interim executive director of Indiana University’s Center on Philanthropy, said in a recent phone interview. “When you’re providing human services or feeding the hungry, people understand that maybe this is a time to dig a little deeper. Helping an arts organization? That’s a tougher sell.”

The Bank of America report was compiled by the Center on Philanthropy.

Giving to charity by the wealthy overall decreased 9.7 percent to about $80,200 from $88,800, the study said.

According to a Center on Philanthropy study, during the past four decades donations fell an average of 1 percent in recessionary years and increased an average of 4.3 percent in non-recession years. In 1974, the worst recessionary year, charitable giving fell about 5.4 percent from the previous year.

“There’s a chance that 2008 or 2009 will be worse than that,” Rooney said. “We don’t want to say the sky is falling, but we think there will be some pain and suffering.”

To contact the writer on this story: Patrick Cole in New York at pcole3@Bloomberg.net.

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