What's Your Story Idea June 13, 2008, 12:01AM EST

Philanthropy Has Seen Better Days

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The idea for "Philanthropy Has Seen Better Days" came from Sarah Hoddinott. A non-profit fundraising expert and social media enthusiast, Sarah is a product manager at Advanced Solutions International. She resides in the Washington, D.C. area.

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As individual donors say they're no longer able to give, nonprofits are forced to turn even more toward securing the largesse of Corporate America. Only one hitch: Many U.S. companies are also hurting financially these days, pinched by soaring commodity costs, a globally skittish credit market, and uneasy customers. "As we continue to see the economy suffer, we can't say that our giving will continue to go consistently up," says Kimberly Davis, president of the JPMorgan Chase Foundation (JPM), which donated $110 million in 2007. Investment bank Credit Suisse (CS) is a major donor to the Food Bank for New York City, and plans to match the $6.7 million it gave in 2007, despite losing $2.1 billion in the first quarter of 2008, says Eric Eckholdt, the executive director of Credit Suisse Americas Foundation. "We will take into consideration the rising demand challenging the food nonprofits when support for Food Bank and other similar organizations are reviewed this year," Eckholdt said.

Dwindling Profits and Contributions

Corporate giving is often based on the company's financial success the previous fiscal year. In 2007, corporate foundations increased their giving by 7%, and donated approximately $4.4 billion, according to the Foundation Center, a New York philanthropic research organization. Donors are expected to honor pledges they made the previous year, but the economic climate of 2008 will likely make gifts planned for 2009 more modest, philanthropy experts say. Carolyn Cavicchio, a researcher at the Conference Board, a business membership and research group, says: "Companies strive for a mutually beneficial relationship with nonprofits," and that means small, grassroots groups may be pinched most on corporate giving. Smaller nonprofits often find it difficult to provide what a company needs: recognition, transparency, and a method to engage its employees with charity work.

Still other companies are looking beyond cash as a way to supplement their giving. This year, besides donating $20 million, United Technologies (UTX) is launching a philanthropic program to encourage employees to volunteer and provide their expertise to nonprofits. Utility bills have become an overwhelming expense for some of the company's charities, says Andrea Doane, United Technologies' director of community affairs and corporate giving. As a result, the manufacturer assembled a team of experts to help these organizations cuts energy costs. "This is absolutely not a substitution of funds," Doane says of the effort. "We just like to say: 'How can we do more with less?' and we're lending [nonprofits] that sort of thinking."

Big Givers

Full data for 2007 are not yet available, but in 2006 total nongovernment philanthropic donations surpassed $295 billion, a 4.2% increase from the previous year, according to the Giving USA Foundation, a philanthropy consulting nonprofit in Glenview, Ill. The U.S. has nearly 1.5 million nonprofits, and while most donations (75.6%) are from individuals, the reverberations from Wall Street's challenging year will directly affect nonprofits. "We haven't seen any real effects yet, but philanthropic giving is usually a lagging indicator," says Mary Kay Leonard, group vice-president for investor relations at United Way of America. "We're anticipating less giving in the coming year. Corporate giving will be totally dependent on how individual companies are doing."

American Express (AXP) budgets about $32 million yearly for philanthropy, and it anticipates little change in that amount, despite an uncertain business outlook. "When there are tough economic times, you have to focus on what's important to you as a company," says Timothy McClimon, president of the company's foundation. General Electric (GE), which matches employees' donations, says its workers' giving rose 5% in the first quarter of 2008, to around $12 million. "Things are tightening a bit in the second quarter, but we haven't seen employees back off on what they give," says Bob Corcoran, president of GE's philanthropic foundation. Last year the conglomerate's total philanthropy was about $160 million; GE plans to give slightly more in 2008, Corcoran says.

Such funds aren't likely to trickle into the sparse BedStuy pantry, where some clients "come in wearing their suits right after they get off work in the city," says Dawson. Tougher times, she says, will probably produce even more people who need help feeding their families.

Tatyana Gershkovich is an intern at BusinessWeek.com.