By Jill Rachlin Marbaix
The holiday season is a crucial time for charitable organizations, since many get as much as 50 percent of their annual donations in November and December. And though the economy seems to be turning around, almost every nonprofit group is eager for donations this year. Charities get money from a variety of sources--corporations, foundations, and federal, state, and local grants--but most come from individual donors. While total giving rose dramatically in the '90s--in 2002 Americans gave $241 billion, up from $117 billion in 1993--last year's increase was a mere 1 percent, actually a shortfall of 0.5 percent when adjusted for inflation.

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Many groups are feeling the long-term effects of state and local budget cuts, a drop-off in corporate profits as well as in personal discretionary income, and reduced grants from foundations with portfolios badly damaged in the recent bear market. In the first nine months of 2003, almost as many nonprofits reported decreases in giving as reported increases, according to a new study of 660 groups by GuideStar, a national database of U.S. charities.

Even organizations that are holding their own face problems: Seventy percent of those polled by GuideStar said that revenue gains were offset by an upswing in demand for services. Triangle Family Services in Raleigh-Durham, N.C., provides mental health and consumer credit counseling and emergency housing to more than 5,000 low-income individuals and families annually. This year it secured some new funding but still needs to compensate for last year's $185,000 deficit and an ever needy community. "We help 40 to 60 families a year find housing; now we get over 200 calls a month," says President and CEO George O'Neal.

The bigger the better. Smaller nonprofits are hurting more than big ones. "The name-brand charities are still pulling in a lot of money and reaping the benefits of having pulled in money for the last 10 to 20 years," says Trent Stamp, executive director of Charity Navigator, an independent watchdog agency that tracks more than 2,500 charities. The Red Cross, the Salvation Army, and the American Cancer Society all did well in 2002, topping the Chronicle of Philanthropy's ranking of the nation's 400 largest charities last year. But overall, private donations to the 400 dropped for the first time in 12 years. Among those with down years: Harvard University, off 30 percent from 2001. Still, observes Stamp, "their fundraising crisis is a lot different than the local women's shelter, which may go out of business without continued support."

Indeed, human and social services like homeless shelters and food pantries are among the hardest hit. "Last year we ended up in the red for the first time, about 10 percent over our $34,000 budget," says Kathy Howe, executive director of Chicago's Irving Park Community Food Pantry. Things are getting worse. Four months ago, the pantry fed 750 people each month. Now it serves 1,250. "We closed our doors early last month for the first time ever," says Howe. "They say the economy is better, but certainly not by us."

The arts and humanities are also pinched. State and local budgets for the arts have been slashed, donations have dropped, and tourism and ticket revenues have fallen off, says Paul Clolery, editor-in-chief of the NonProfit Times. For some groups, the consequences have been fatal: The Florida Philharmonic and the Colorado Springs Symphony closed for good this year. For others, they have been very painful: The Brooklyn Museum of Art closed for two weeks in August.

The Colorado Shakespeare Festival lost 40 percent of its revenue last year, as state funding for the arts was eliminated and $32,000 in grants dried up. The festival slashed its operating budget, laid off 20 employees, and is shrinking the number of plays to be performed in 2004, its 47th season. It has been rough, says Producing Artistic Director Richard Devin, but like many nonprofits, it's trying to hang in there and wait for the economy to truly take a turn for the better.