count on donors
by Seth Hemmelgarn
Each December, nonprofits approach people one more time to ask for money as the calendar ticks down to December 31, the last day to make donations for tax purposes. Most messages are similar to the one AIDS Emergency Fund recently sent.
An email blast from the agency tells how, despite advances in prevention and treatment, many people "will not suddenly fully recover and re-enter the work force." Thousands still need help from the 30-year-old organization, which helps people pay for housing, utilities, and other needs.
"If the average person interprets the good prevention news to mean that AIDS is over, it will push people living with HIV/AIDS farther off the radar of compassion and generosity," the message says, before stating – in bold red letters – "That's why we need your help now, more than ever."
Mike Smith, AEF's executive director, indicated his agency really means it. Without the help the emergency fund and similar organizations provide, "all the money the city is spending on medical care and everything else is wasted. If people can't live safely and stably with food and shelter, they're going to end up at SF General, at the emergency room," Smith said in a recent interview, referring to San Francisco's county hospital.
Such messages appear to be increasingly important as local nonprofits look to individual donors for support in a time of budget cuts at the state and federal levels and among foundations. There are also different ways for people to gauge how well their money is being spent.
Smith said government funding, which accounts for roughly half of his agency's revenue, has been "relatively steady." However, foundation support has decreased, so AEF's had to make up the difference with corporations and individuals.
Like others, Smith, whose nonprofit has a budget of about $2.1 million and serves 2,250 clients, said even small donations help. He pointed to AEF's long-running Penny Jar campaign.
"It's still $50,000 a year in change in penny jars, so it really does add up," he said.
Lance Toma is executive director of Asian and Pacific Islander Wellness Center, which offers HIV testing, primary health care, advocacy, and other services.
"We've been focused on building our individual donor base," Toma said, and the organization has seen an increase of about 5 percent in individual donations each year. One reason the nonprofit, which has a $3.9 million budget and 3,000 unduplicated clients, needs the help is "We've seen less and less multi-year private foundation grants recently," Toma said.
Besides reaching out to donors through direct solicitations and events, API Wellness has also been collaborating with other agencies. One example is the "Paint the Castro Red" campaign, where, on World AIDS Day, agencies encouraged people to patronize businesses in the largely gay neighborhood, and participating venues donated a portion of their sales.
AIDS Legal Referral Panel is another agency that's been involved in the Castro campaign. Gregory Curatolo, a 57-year-old San Francisco resident who's living with AIDS, said the nonprofit has helped him with legal issues related to housing, among other things. The housing problem stemmed from poor ventilation in a smoking neighbor's apartment that allowed smoke to come into Curatolo's home, which made him ill.
"It was fixed within a week once they got involved," he said of ALRP.
As he's been doing for years, Roger Doughty, executive director of the Horizons Foundation, encourages donors to think about the long-term health of LGBT-related nonprofits. Like other agencies, Horizons, which gathers funding and funnels it primarily to LGBT organizations, is relying more on individual contributions. Since the economic downturn, grant making from many private foundations has declined.
Doughty said that points to the value of the endowment Horizons has been building.
"It's always going to be true that public money, government money is going to go up and down, up and down," as is foundation support, Doughty said. Such sources "have thousands of social issues they're trying to address. We are only one, so they're never really going to fit the bill for our making sure that we gain equality, that we take care of people in our community who need help and support, and that we build the type of community we want. That leaves us, LGBT people ourselves," he said.
The endowment – where the principle stays in place and the earnings will be available for grant making – is worth about $4.5 million. With a bequest the foundation knows is coming, that figure will grow to approximately $6.5 by late 2013.
(Photo: Courtesy Isaias Guzman)
Isaias Guzman is only 18, but he was immediately able to state that it costs the San Francisco-based Gay-Straight Alliance Network about $5 to raise $100.
Guzman, co-chair of the fundraising committee of GSA Network's board, learned the figure at a meeting where members were planning how to spend the nonprofit's money. The network does everything from assisting GSA clubs around the country to supporting school safety legislation.
The organization is "extremely efficient," Guzman, a UC Berkeley freshman, said. Data such as the cost to raise $100 can be important because it offers an indication of how much money a nonprofit is spending on fundraising rather than client services.
AEF is one of many agencies that spends much more to raise $100 than GSA Network. To determine that cost, Charity Watch, a national organization that monitors nonprofit finances, excludes government grants and some other revenue from groups' total income from contributions. Based on the calculation, AEF's cost to raise $100 is about $44, according to data the nonprofit filed with the IRS for the 2010-11 fiscal year.
But Smith said the $44 figure doesn't take into account the time and money it takes to get the government revenue.
"You're assuming there isn't a cost to us to get government money," he said. "To get there, you have to assume that none of us spend any time or any effort, and the government money is handed to us each year, and it's not," he said.
When the government funds are included, AEF's cost to raise $100 is approximately $15, which is also what the national watchdog Charity Navigator lists for the group.
Smith points to the percentage of total expenses that are spent on fundraising as a better indicator of efficiency. For 2010-11, that figure for his organization is about 14 percent, according to its tax data. The median percentage for the 27 nonprofits that the Bay Area Reporter examined, which includes organizations not specifically related to HIV/AIDS work, is about 10 percent. Financial statements for 2011-12 indicate that AEF's spending on fundraising has remained steady.
Using financial and other data, Charity Navigator gives AEF a rating of three stars overall. (The maximum rating is four stars.)
The watchdog group has given the same rating to San Francisco AIDS Foundation, based on data for the fiscal year ending June 2011. The rating stands in stark contrast to where the agency was about two years prior to that. Using data for the fiscal year ending September 2009, Charity Navigator had given SFAF one star overall.
With a budget of about $24 million, SFAF is the largest AIDS-related nonprofit in the city, providing everything from HIV tests to clean syringes for intravenous drug users. The 30-year-old organization assists tens of thousands of people each year. Neil Giuliano, the agency's CEO, has previously spoken of how he's been working to increase efficiency since he joined the agency about two years ago. That effort has included cutting some fundraising costs.
Whether someone is an individual donor, a participant in the AIDS/LifeCycle bike ride, or chooses another way to give, "Our responsibility is to be good stewards of our donors' resources, and their contributions," Giuliano said, and work to move "toward the accomplishment of our mission, which is to end HIV and AIDS."
How successful SFAF is in its progress toward reaching that goal illustrates a point the Movement Advancement Project included in a report it released this month.
"While a certain level of financial due diligence is helpful, the best way to tell whether a nonprofit deserves recognition and support for its work is to look closely at an organization's programs, activities, and ultimately, outcomes," says the report from MAP, which works to aid efforts toward LGBT equality.