Charities Weathering The Economic Downturn Is the nation's economic crisis reducing people's desire to donate to charity? Farai Chideya takes a look at how the economy is impacting charitable giving with experts George Ruotolo and Jeremy Schlittenhart.
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Charities Weathering The Economic Downturn

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Charities Weathering The Economic Downturn

Charities Weathering The Economic Downturn

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From NPR News, this is News & Notes. I'm Farai Chideya. If you find money running tight, how much are you going to give away? That's a question facing charities around the nation and the world.

With people losing their homes, their jobs, or simply their sense of security, are Americans ready to open their wallets to give? Joining me now is George Ruotolo, he's chair of the Giving Institute, an organization that supports philanthropic endeavors. Welcome to News and Notes.

Mr. GEORGE RUOTOLO (Chairman, Giving Institute): Hi there.

CHIDEYA: So far, what kind of ripple effect are you seeing on nonprofits and charities?

Mr. RUOTOLO: Well, I think there's obviously a psychological impact that we're all dealing with in watching our money disappear, and I think that's affecting it. Statistically, all we can talk about is what happened in 2007, and it was actually a pretty good year from a philanthropic standpoint.

And that was caused by the fact that the first two quarters of 2007 were strong, and it made up for a lackluster performance in the last two quarters, giving rose at about 3.9 percent in 2007, and it rose across the board in all sectors.

CHIDEYA: In tough times, can you make any generalizations about what's happened in the past? What do people support during tough times, and what do people choose not to support?

Mr. RUOTOLO: Since 1967, there have been six recessions, ranging in duration from eight years to 16 years. What we find is the longer the recession goes on, the more it impacts philanthropy.

But the amount of change overall in 40 years, during recessionary period, is only down one percent, when you adjust it for inflation. So it really isn't awful news. The loss of philanthropy during those three recessions that were longer than eight months, and they were in '69, in '73, and in '81.

During those periods of time, philanthropy dropped off about three to four percent, so it dropped off more significantly, when the recessions went on for a longer period.

CHIDEYA: What about domestic versus international? You know, there's been a lot of focus on really dealing with the needs of people in other nations. You've even heard during the presidential campaign, candidates say what they want to do in terms of reaching out to the world community, but there are limited amounts of wealth, you know. And do you know anything about whether or not people...

Mr. RUOROLO: Yeah, absolutely. The way we analyze giving in this country, is we have a number of different sub-sectors, and I'll name a few of them, one is religion, the other one is health, social service, human services, and Jeremy might be glad to hear this, but actually in the area of human services, for one, and another one is international affairs, giving actually did better than the others sub-sectors during this period of time.

One of the factors with international giving is - would be disasters, and certainly human services. The need is more prevalent when you have a recession, and I think people might direct their philanthropy - people, corporations, foundations might be directing their philanthropy more towards what they see as a real serious systemic need in the society at that point.

You know, we like to talk about, you know, the need versus the want. And when you think about the arts, and in some cases even education, those are wants, as opposed to feeding people and allowing people a place to live, and for people who are homeless. So, I think people become more focused on the actual need during these recessionary periods.

CHIDEYA: Well, it's a perfect time to bring in Jeremy Schlittenhart, community-relations specialist with Goodwill Southern California. How're you doing?

Mr. JEREMY SCHLITTENHART (Community Relations Specialist, Goodwill Southern California): Good. Thank you for having me.

CHIDEYA: So, you guys are known for a couple of things by most people. One is running these stores where everybody goes to get fashion, and house wares, and things like that.

Another one is doing direct service to people with the money that you get from donations, and from the proceeds of running the stores. How does that picture fit together in a time of need like now?

Mr. SCHLITTENHART: Well, I think with the economy, the way it is now, people are kind of turning their eye towards goodwill and retailers such as us, and saying, you know, how can I get more bang for my buck? How can I stretch my dollar? Their perception is changing, they're coming into our stores, they're shopping and they're saying, wow, I didn't realize, you know, I - the stuff I could find here.

CHIDEYA: Is the majority of the money that supports Goodwill's programs coming from the stores or is it just a small part?

Mr. SCHLITTENHART: Its majority - majority of it is coming from the stores. And Charity Navigator, I don't know if George has heard of this, but Charity Navigator...

MR. ROUTOLO: Yeah. I've heard of it.

Mr. SCHLITTENHART: They rated us four stars for the seventh - for our seventh straight year. And they also - you know, the general public will be happy to know, why we're really promoting this is the fact that 93 cents of every dollar donated goes to our programs and services, that support job training and workforce development.

You know, oftentimes, you'll see nonprofits in the 80, 85 percent toll(ph) range, that's really good, but we're at 93 percent. So people know - I think the understanding, you know, of what we do, the job - you know, the job development, workforce development, like that.

CHIDEYA: Give me a concrete example of a program, you know, because when you hear job development, it can mean a lot of things. But if someone walks in, you know, to get some training, what specifically might they do?

MR. SCHLITTENHART: Resume building, one-on-one career counseling, different job industries, these are all things that the general public might not now Goodwill does. But when they go to our stores, and they make a purchase, that money will go back into our programs and services.

CHIDEYA: How much do you think, George, that people pay attention to things like charity ratings? I mean, you know, a lot of people give, because someone asks them, you know, someone is walking around in the office and has an organization that they support, and you're like, well, I like Harry, so I'm going to give money to Harry's group. How much do people actually take a strategic look at where they're giving?

Mr. RUOTOLO: I think that it's - we're in a situation right now, where people are going to continue to support the charities that they've been supporting historically. And it's really incumbent upon those organizations, those charities, to make sure that they communicate - exactly what Jeremy was talking about - that they communicate how effective they are in raising money, and spending their - those dollars exactly where the person or the donor determined it should go.

So, I think that that's kind of a standard right now for our business. People, who are very serious about philanthropy and give away large sums of money, either as an individual or through a foundation, will go back and track how those funds were used, and how effective that generosity was to the ultimate need.

So, to answer your question, there are a number of different websites out there that people can visit, that will really talk about the effectiveness of the organization. And I think it's becoming more and more prevalent.

CHIDEYA: Jeremy, what about strategies? Do you change your strategy at all, to try to make sure that you can do what you need to do during this period, and recognizing that your model is somewhat different from a lot of organizations, where you are on a model of selling products, you know, getting donations of products, and then reselling them more so than reaching out and say, mailing out donation forms.

Mr. SCHLITTENHART: Right, I think our model pretty much stays the same. I think what you find is people can't control gas prices, rising food cost, but what they can control is how they become more smarter and savvier on how they shop.

And I think we're seeing that more at our Goodwill retail stores. You know, again our model will stay the same, but we see more foot traffic, you know, in times like these.

CHIDEYA: George.


CHIDEYA: Strategy. What do groups do in a time like this?

Mr. RUOTOLO: Well, you know, as you were talking about giving institute, really what we are is an association of firms that only work with nonprofits, only work with philanthropy, and advise them how to advance their mission. So, what we talk about is that during this time, and during a slow down or a recession, it really is incumbent upon the nonprofit to communicate more effectively with the donor, and to make the donor feel like they're very, very important.

To explain to the donor that in fact, the needs that they had last year when the economy might have been a bit stronger still exist, and how important their generosity and their philanthropy is. We even recommend that you thank donors for no reason. Donors that have given to you in the past. You just call up, and you say, we just want you to know how important your support has been, and this is what we've been able to do with your donations.

So, the communication has to be ramped up during recessionary times. And the donor has to - again, getting back to the point that you raised earlier, the donor has to be very clear that most of their generosity is going to the cause.

CHIDEYA: George, I have one final question for you.

Mr. RUOTOLO: Sure.

CHIDEYA: Slightly different in nature. A lot of people have been emptying their pockets for the presidential campaign, or for local and statewide races, because, you know, they feel so passionately about this election. And we've seen these record numbers of people giving. Has that changed the amount of money that's available to go to charities and nonprofits?

Mr. RUOTOLO: What we found is that it really doesn't have any effect, because people have a mindset towards charity, that is different and distinct than their mindset towards politics, in terms of the way they invest or give money. We did some additional statistics real quickly, that it showed both the year before - the year of an election. This is - goes back to 1968, the year of an election, and the year after an election that philanthropy grew at a greater rate, than it did normally over the course of that 40-year period.

Now, we don't have any economic information as to why that happened, but so much of charity and so much of philanthropy is how people feel about themselves, and there might be an uplifting of people's spirits after an election. There's a certain amount of hope that comes with a new presidency.

CHIDEYA: Well, George and Jeremy, thank you.

Mr. RUOTOLO: You're welcome.


CHIDEYA: George Ruotolo is the chair of the Giving Institute, an organization that supports philanthropic endeavors, and he joined us from NPR studios in New York, and Jeremy Schlittenhart is a community-relations specialist with Goodwill Southern California. He joined me in our NPR West studios.

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