Corporate downsizing is fueling invention of new fund-raising models
From George Eastman to Thomas Golisano, Rochester long has been known as a city that values giving.
"The interesting thing about philanthropy is what it means," said Jennifer Leonard, president and CEO of the Rochester Area Community Foundation. "Typically we use ‘philanthropy’ to mean giving that has a strategic purpose, (usually) associated with an organized program like a foundation (with a) focus and goals (for) the gift itself."
The most significant change in the years Leonard has observed philanthropy in Rochester has been "a decline in corporate giving and an increase in individual and family giving through foundations," she said.
Peter Carpino put it another way.
"Over this 25-year period, there was heightened competition for philanthropic dollars," said Carpino, president of the United Way of Greater Rochester Inc.
Observers say the changes have been driven by a shift in the region’s economy from one dominated by large manufacturing companies to one based on smaller businesses clustered primarily in the technology and sales sectors.
"The companies themselves (were) leaders in getting philanthropic things done in Rochester, Kodak especially," Leonard said. But, as large-company employment has fallen, "all that has changed. … (T)he corporate giving has become a company-by-company decision."
Carpino described a key dynamic.
"In 1989, this United Way had 212,000 donors to the annual campaign," he said. "We wrapped up last year with about 90,000 donors. This reflects … our inability to keep track of these people."
Experts note other trends that exacerbate the challenges: the tendency of young workers to change jobs frequently, a loss of population, a tighter rein on public spending and a decline in household income.
"(Household) income over the last 10 years has dropped astronomically," she said. "My understanding is that locally it’s a half-billion dollars a year less.
"If you take out that much income, you’re also taking out that much capacity to give. That’s a perspective on the future: People have less money in their pockets."
In addition, she said, "people are moving away and taking their money with them."
Further, "the downturn in state spending has affected a lot of the traditional human service operations," Leonard said. "They have seen shortfalls in state funding and delayed contracts, (and) they’ve seen constrained individual giving because of the recession."
On the other hand, some sectors have held up well.
"Organizations that work with major donors have had a roller coaster of a decade," Leonard said, "but are doing pretty well because major donors are generally doing better than the middle class."
Carpino foresees a fundamental restructuring of local efforts to encourage charitable giving.
"The United Way was a fabulous model for an old economy," he said. "And what we have been about here in Rochester is reinventing ourselves so that we are a relevant new model for a new economy."
That model includes outreach to smaller businesses and to the self-employed.
"If we can get 20 percent of the small-business market-about 7,000 of the 35,000 small businesses in Rochester-to give $250 a year, we (would) raise $1.75 million," Carpino says.
Leonard also noted an increasing desire by donors to control how their gifts are used.
"Historically people (had) more faith in institutions, and a little less personal focus with what they wanted to accomplish with their giving," she said. "Today and into the future, what we see is people taking more charge with their giving, being more strategic. They can now do it not just through a private foundation, but they can create a donor advised fund."
To encourage the donations of young professionals, RACF has established NextGen, a giving circle initiative.
"(W)e’re certainly focused on the money that we have to raise for the year," said Matthew McDermott, advisory committee chair for NextGen, "but we’re equally focused on the member engagement and education that we provide. … We give members some basis to make these decisions. It’s more than just writing a check."
While acknowledging the vast philanthropic efforts of Eastman and Golisano, McDermott talked about the reality for today’s young givers. "Most young professionals aren’t in a position where they’re going to be able to build a new wing at the hospital," he said, "so this is a way to get involved at a more modest level, learn about philanthropy, and find areas that are a good fit.
"Each person has their own interests. NextGen really allows members to learn about all those areas and learn where their interests lie for future involvement."
Online giving offers another avenue for attracting givers, be they young individuals or those running or working in smaller businesses.
United Way is about to roll out "a new web-based giving platform that will make it much easier for small and midsize businesses that want to give back to the community," Carpino said, "but because of their size did not want to participate in the United Way campaign."
"(Online giving) will clearly grow and become much more common as the Millennials come into their own," Leonard said.
Todd Butler, president and CEO of the Ad Council of Rochester, finds encouragement in "the increasing democratization of philanthropy. … Social media are making it easier and easier for individuals of average means to tap into their networks and raise significant funds in a relatively short period of time."
Another strength of the younger generation, Leonard said, is its preference for volunteering, which could translate into dollars.
"People who volunteer are far more likely to give," she said. "It’s a great sign if young people are giving. … Capturing the imaginations of young people and involving them in volunteering and charitable giving has been the best investment we made to the future of philanthropy."
Said Carpino: "What we need to do, and are doing, is to reinvent ourselves and develop a model and a platform that will enable us to meet community needs (as fully as) they have been met in the past."
Katherine Alexander was a Rochester Business Journal summer intern.
10/12/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.