Boom times are over, but giving survives

Despite an economy as bleak as any, most charities in Washington state have held their own, preserving much of $1 billion gained during the economic boom and providing many of the services the new money made possible.

The culture of generosity that in the late 1990s transformed the landscape with new museums, libraries, homeless shelters and food banks — and even set out to cure a disease or two — continues today, during war, layoffs and more than a few bitter dot.com memories.

But the giving, though strong, has flattened.

The mood is less giddy. Big checks aren't written quite so quickly. More questions are being asked, fewer charitable foundations are forming and charities are spending more money to raise money, according to a Seattle Times analysis of nearly 2,600 nonprofits and a review of 40 of the state's top foundations.

As a result, nonprofits are working harder to maintain what they've built. In some cases, they are cutting.

"Pretty much anything you wanted to do, you could," said Cheryl Cobbs, executive director of Fremont Public Association, a Seattle nonprofit that helps 25,000 of the area's poor with housing, food, transportation and counseling. "Now, you've still got plans, but you're trying to hold on to the good work you started."

Fremont Public, which got boosts in private donations and government money in the late 1990s, added programs such as one to counsel people in temporary housing and another that sells used cars to poor people.

The agency also paid off a $2 million mortgage on its new Wallingford building, hired workers and raised pay.

More recently, Cobbs said, as the economy worsened, the nonprofit has cut a nutrition program for senior citizens and a program called SPICE, which paired senior citizens with kindergartners and first-graders at Seattle's Whittier Elementary. SPICE held its final session last week.

"But we are still doing more in the community than ever," she said. "The foundation from the '90s is still there."

The Seattle Times' study included a look at nonprofits' tax returns each year from 1997 to 2001, the most recent year available, and philanthropic foundations from 1998 through 2002.

Among the findings:

• The more than $1 billion gained in contributions and grants from 1997 through 2001 was just a part of the growth for nonprofits. Overall revenue — which includes money-making services and investment income — grew by more than $3 billion, with most of that growth coming in the late 1990s.

• Forty of the state's most generous foundations — organizations that distribute money to charities — reduced giving from a high of $380 million in 2000 to about $374 million in 2002, still well above the nearly $200 million they gave in 1998.

• Big charities did better than smaller charities during the height of the boom and continued to grow as the downturn began, while smaller charities have continued to struggle.

• Some charities have struggled more than others. Contributions and grants were up for health, human services and religion; giving fell for the arts, education and environment.

Overall, though, the level of contributions appears to be defying the odds.

More than three-quarters of 281 Northwest nonprofits reported increasing or holding steady in fund raising during the past three years, according to a fall 2003 survey for The Collins Group, a Seattle fund-raising consulting firm.

United Way of King County, for instance, brings in more money per capita than any other major United Way in the nation. The growth has continued this fiscal year — if a bit more modestly — with $92.6 million raised. The difference between the region's economic woes and its continued generosity reflects not just the wealth that survived in foundations' bank accounts, but the tenacity of individual donors, who together account for most of the region's charitable giving.

"Philanthropic giving is really deeply driven by personal values," said Patrick Rooney, director of research at Indiana University's Center on Philanthropy. "The tax code matters, the economy matters, but once people start giving, they continue to give."

The high-tech connection

It wasn't too long ago that philanthropic institutions were springing up like new dot.coms.

New tech millionaires and billionaires committed billions to expand the arts, aid the environment, feed the hungry, and most ambitiously, in the case of the Bill & Melinda Gates Foundation, seek a cure for AIDS while trying to wipe out malaria and polio.

(With assets of $25 billion, the Gates Foundation is so huge it was excluded from The Times analysis to avoid skewing the findings.)

Microsoft co-founder Paul Allen was also giving away millions, funding ventures such as Experience Music Project.

It didn't take long for a few of the other set-for-life rich to begin giving.

Lisa Wissner-Slivka, 41, a former Microsoft program manager, retired in 1993. Her husband, Ben Slivka, also retired early after creating Internet Explorer. The Bellevue couple in 1998 created the Wissner-Slivka Foundation and joined Social Venture Partners, a fledgling philanthropy made up largely of tech workers who not only gave money, but got personally involved in the programs they supported.

By 1999, as the economy peaked, the Wissner-Slivka Foundation was worth nearly $10 million. The value increased so quickly that in 2000, the couple scrambled to give away enough money to meet Internal Revenue Service requirements.

At the same time, new companies formed, some hoping to become charitable heavyweights in the tradition of Boeing and Weyerhaeuser, among the state's largest corporate donors. Drugstore.com, the Web-based pharmacy, set aside 200,000 stock shares to endow its foundation, the value rising quickly to $12 million.

But riches funneled to nonprofits in the 1990s didn't come solely from the tech sector. Huge stock-market gains allowed older foundations to make unprecedented contributions. Founded in 1946, The Seattle Foundation saw its assets increase sixfold from 1993 to 2001, when it was worth $308 million.

It was only natural for charities in line for the money to think big, too.

Officials at The Salvation Army of King County planned new services and buildings and brought in enough new money to nearly complete the wish list:

• In Seattle's Chinatown International District, $1.4 million was spent to add room for 35 homeless veterans at the William Booth Center.

• On Capitol Hill, work began on a $1.3 million residential rehab center that serves 18 substance abusers.

• In White Center, work began on a $7.5 million community center with a senior center, food bank and social-services office; a gym, multipurpose room and chapel are already open.

As the recession took hold, however, The Salvation Army was forced to reconsider other projects: Fund raising for construction was scaled back from $15 million to $10.5 million. A new Renton food bank was put on hold and a Bellevue community center that was to cost $2.7 million, will for now be housed in a more modest, modular building.

A lag in contributions wasn't the only problem. As layoffs struck and workers began losing jobs, The Salvation Army was pushed to provide food and shelter for a growing population of poor, said Maj. Joe Posillico, general secretary for the northwest division.

While some 126,000 were turning to The Salvation Army in 1999, the number grew steadily, this year reaching more than 154,000.

The charity found itself half a million dollars in the red last year, Posillico said, the result of slowed donations, rising insurance costs and about $250,000 contributors wanted sent to East Coast victims of the Sept. 11, 2001, terrorist attacks. To break even, the charity this year laid off 13 full-time administrators and a handful of other employees.

Slump triggers retreats

The events that turned the Seattle area's optimism to caution and then alarm came in a flurry: The stock-market plunge. Dot.com layoffs. Sept. 11. Boeing layoffs. An official recession.

"We went from thinking in terms of almost endless possibilities to reality," said Paul Shoemaker, director of Social Venture Partners Seattle.

As tech-company stock prices spiraled, so did charitable portfolios:

• Investors in GreaterGood.com, a Seattle Web site that used online shopping to raise money for charity, sold the company for a fraction of their investment when advertising dwindled.

• The foundation of drugstore.com, lost much of its value, in less than two years dropping from $12 million to $300,000.

• When the stock of online multimedia giant RealNetworks plummeted, the value of the foundation of company founder Rob Glaser dropped, from $162.5 million in 1999 to $36 million in 2001.

By 2002, 17 of the area's top foundations had cut contributions to charities. Paul Brainerd, founder of The Brainerd Foundation and a major backer of Washington environmental groups, was among those refusing to retreat. He sent a letter in December 2001 urging other foundations to keep up funding for environmental groups. He warned, "we all lose when fragile, often newer, groups wilt and expire as income streams dry up."

Shifting tactics to stay in business

Just this year, there were some spectacular crises, brought about by the faltering economy and by internal problems that went largely undetected when times were flush.

Deeply in debt, ACT Theatre struggled to stay open. The head of public-television station KCTS resigned amid news of mismanagement and debt. Bellevue Art Museum, after moving into a grand new building, closed it in September.

Nevertheless, many foundations and charities remain ahead of where they were before the boom, with new buildings and new programs.

To keep the money flowing, they are refocusing their missions and developing new survival skills.

Foundations funded by Paul Allen continue to have diverse goals, from protecting the environment to furthering the arts to erecting buildings.

But the emphasis, especially in health and human services, is on helping nonprofits become more efficient in doing their work instead of coming up with flashy new programs to attract foundation dollars.

"We're encouraging them to strengthen their programs from within," said Peter Berliner, Allen foundations' senior program officer.

At Social Venture Partners Seattle, membership is broadening, the high-tech hotshots of the late 1990s are being joined by doctors, lawyers and educators. The organization also is working harder to keep donors, by informing them with more frequent phone calls and progress reports.

Charities, meanwhile, are focusing not just on corporate givers and very wealthy individuals but also on smaller donors. ArtsFund, formerly Corporate Council for the Arts, is expanding a workplace campaign that operates much like United Way's. Next year, employees at 70 local businesses will be able to donate to ArtsFund with automatic deductions from their paychecks.

"Those people who are left in the workplace are doing well," said Peter Donnelly, president and chief executive of ArtsFund, which helps arts groups pay operating costs.

Fund raisers for The Humane Society for Seattle / King County are doing more of what they call "prospecting": trying to find wealthy new supporters while taking a closer look at regular donors who might be persuaded to give more.

Any pitch must also demonstrate that money is spent well, added Greg Golliver, The Humane Society's manager of fund development. Coffee mugs and key chains have given way to thank-you notes that detail the society's plans and accomplishments.

"They've always wanted the money spent correctly," he said, referring to donors. "Now it seems they really want to see the good that's being done."

New strategies or not, donors continue to write checks during tough times. Such a commitment has proven critical to an Eastside nonprofit, Hopelink, which this year helped 50,000 people through food banks, emergency housing and transportation.

During the late 1990s, checks for $50,000, even $100,000, came in from people the agency had never met.

Such displays of largesse are less frequent these days. Hopelink even had to make cuts this year; food-bank hours were slashed, for example. But deeper cuts have been avoided, said Linda Benson, Hopelink's director of development, in large part because the number of "average people" making contributions to Hopelink has gone up.

While the checks are smaller, more have come in, a sign, Benson said, that people are seeing neighbors and friends in need.

"It's getting very personal," Benson said. "Everybody knows somebody who's in a terrible situation."

Warren Cornwall: 206-464-2311 or wcornwall@seattletimes

Beth Kaiman: 206-464-2441 or bkaiman@seattletimes.com

Cheryl Phillips: 206-464-2411 or cphillips@seattletimes.com