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Neediest Cases

'Tis the season to be worried, say charities facing steep declines in donations.

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Julia Erickson was ready for things to be bad, but not this bad. The executive director of City Harvest had enjoyed unprecedented donations last winter, in spite of -- or perhaps because of -- widely broadcast fears that non-9/11-related groups would suffer. Private foundations and corporations gave her emergency-food-distribution charity an extra $1.2 million. But this year, much of that support vanished. Between July 1 and October 31, City Harvest brought in about 10 percent fewer corporate dollars and a staggering 25 percent less in foundation support than usual.

The stars are aligned for a charity crisis in New York -- fended off for a year by 9/11 sympathy, but arriving now with force. Charities bank on the holiday season for most of their donations. But now that Wall Street bonuses have vaporized and Bloomberg has pulled an early-season Grinch with his property-tax hike, people may feel like charity has to begin at home. Many groups report that individual donations are already down this year: City Harvest was behind 15 percent for the third quarter, and Citymeals-on-Wheels is down for the first time in 21 years, by almost 10 percent -- which translates into 20,000 fewer home-delivered meals.

The worst news of all is the imminent city and state budget cuts, since so many charities rely on government contracts. In past recessions, corporations have picked up some of the slack -- but not in this market. "Certainly we've gone through fiscal crises with city government, but even in those times we haven't seen the stock market fall in the same way," says Hildy J. Simmons, who manages about 45 family foundations and trusts for JPMorgan Private Bank. "It's a triple whammy with the corporate side. Earnings aren't what they used to be, and with so many mergers, you have fewer corporations to go to for support." The AT&T Foundation, for example, decreased its grants budget by more than 10 percent this year, from $45 million to $40 million. Next year looks like it will be lower still.

Foundations make cuts quietly, often calling it narrowing our mission. "We're more apt to make fewer grants rather than lower the level of giving," says AT&T's executive director, Timothy McClimon. But sometimes, so as not to abandon a nonprofit, they economize: Instead of underwriting as much as $300,000 for the Lincoln Center Festival, AT&T is giving $100,000 to Lincoln Center's "American Songbook" series.

"It means not filling positions," says David R. Jones, president of the Community Service Society, whose endowment is hovering at about $118 million, 8 to 10 percent less than last year. "It's restrained new initiatives for the poor."

And if things get worse, many nonprofit workers could become needy cases themselves. While New York gained 4 percent more jobs in the past decade, a cuny study shows that the nonprofit sector boomed by 25 percent. What happens when next year's cuts start? "We have some reserves to operate the way we planned, but that won't really last through March," says City Harvest's Erickson. "We're just now coping with the fact that it's not going to get better."


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