TERENCE SMITH: In the aftermath of September 11, individuals, corporations and foundations across the country raised over $1.5 billion for the victims' families. That's generous, but it amounted to only a small percentage of annual giving in this nation, which exceeded $200 billion last year. The future, however, is uncertain. According to the Philanthropic Giving Index, which assesses the climate for charitable giving, nationally, confidence among fundraisers has declined by over 8% since the summer, the largest drop since the index was established.
To assess the state of philanthropy and giving in the post-9/11 world, we're joined by Barttam Gregorian, president of the Carnegie Corporation, a grant-making institution founded by Andrew Carnegie in 1911, prior to his current position, he was president of Brown University; and by Mario Morino, chairman of the Marino Institute and venture philanthropy partners, which makes social investments to non-profit organizations serving children in the Washington area; and Stacy Palmer, editor of the "Chronicle of Philanthropy," an independent newspaper that covers the sector. Welcome to all of you.
Mr. Gregorian, this is the season for giving, but there's an important distinction between philanthropy and charitable giving. Can you explain it to us?
VARTAN GREGORIAN: Yes, all giving is charitable, but there are two kinds of giving. One is out of pity-- out of sympathy, occasional-- and the other is long-term, strategic investment. And I believe that, therefore, giving covers it all, but we should know the differences.
TERENCE SMITH: Right. Stacy Palmer, give us a status report, if you will, on the two sectors.
STACY PALMER: Well, in the charitable giving world people are pretty nervous. Fundraisers are waiting right now to see what's going to happen. This is the busiest time of year in philanthropy. That's when all the checks come in. So everybody is waiting to see how the year-end giving will go, and it doesn't look too good right now in some parts, because people gave very generously to the September 11 events, and the economy, which is what always affects charitable giving, it isn't very good, so some people can't afford to give as much as they once did. But on the brighter side, we're seeing some groups doing very well, and people really feeling a sense of giving back, and community that was rekindled after September 11. So it's a very mixed picture in the world of charitable giving. For foundations, it's pretty tough because a lot of them have lost a lot of money in the stock market, and so they are not going to have as much to give in their next giving cycle.
TERENCE SMITH: Okay.
VARTAN GREGORIAN: Can I jump in?
TERENCE SMITH: Yes, go ahead.
VARTAN GREGORIAN: Let me just add one other factor. According to independent sectors, we have 1.4 million charitable organizations in this country, and 80% of American households contribute on the average $1,650 a year. The nice news is that 75% or 76%have said that they'll be continuing to give on the same level as before.
TERENCE SMITH: Mario Marino, give us your perspective on it, particularly the impact on the social services that are provided by so many organizations.
MARIO MORINO: I think, you know as we have said there is optimism for overall giving. But the reality as we're is that there is a supply-demand issue in the social services area where the funding, the supply of money going to social services is going down -- and at the very time in this economy climate, where we're seeing a very tremendous rise in the need, the demand for these services. There is one of the issues we have to look at now and certainly moving forward.
TERENCE SMITH: Stacy, this decline, is it because people gave all their money to 9-11-relate things? Is it because they are worried about the economy? Is there only so much money to go around?
STACY PALMER: It's a little bit of all of those things. Some people who gave to September 11 efforts gave very generously and they can't afford to give anything else, especially if they are worried about losing their jobs or something like that. People who lost a lot of money in the stock market aren't inclined to give the kinds of gifts that they were giving in the past couple of yrs. So it's a combination of things. There's so some concern that in the dispute over the Red Cross and the handling of the donations, some people don't trust charities quite as much as they did a while back. So that's why they are looking very locally, supporting their own communities but they may not trust some of the big national organizations as much as they once did. So that's also affecting things not just their pocketbook.
TERENCE SMITH: Mr. Gregorian, give us the perspective from the foundations. Portfolios are down, but foundations invest in the society in the long term, is that going to be changed?
VARTAN GREGORIAN: It's not going to be changed because we're here for the long term. And Mr. Morino and others are also helping long-term strategy, the venture capitalists and venture philanthropy as well. One of the problems that we should stress, however, is the fact that veracity and transparency are going to be two issues as Stacy mentioned that are going to be crucial for us. After September 11, we brought many organizations at Carnegie to see how we can coordinate our efforts and we emphasize one thing: that out of the New York tragedy we have to come up strong, forthright, and at the same time, educate the public about the issues, what is equity, what is investment, what do we do because otherwise, Stacy, is correct, they may suffer, our reputation may suffer.
TERENCE SMITH: Given these controversies that you're talking about, should people feel confident these delays they give to a charitable organization that the money will actually go to where they intend it to go?
MARIO MORINO: Yes, I think they can. I think people just need to take more time to find out, as Vartan just said, where they should put their money. What are the organizations doing the best jobs? I think today people can make some simple calls, local, community foundations have very good tempos of what is going on in their cities. The other foundations have spent program officers who know the space quite well and they have more online data services like... Where you can find programs to give. So I think that the question is maybe a giver has to take maybe an extra step to figure out where they can put that money with some confidence.
TERENCE SMITH: Stacy, the giving goes on, who is giving and what? Do you still see the very large contributions by wealthy individuals, or are they declining?
STACY PALMER: The number of very big gifts has really slowed down a lot. We have seen a dramatic fall-off in the number of these hundred million kinds of gifts that in the past couple of years were becoming very common and charities were just thriving on those very, very large gifts. But we have still seen a couple of examples. Just the other day, for example, the trustees at Bard College got together and they decided they that wanted to give $120 million that doubled their endowment. And they said that they considered that a September 11 gift. They were think being their values and what was most important it them, and higher education was what mattered to them. And they wanted to make sure that the college was strong. And that's a very interesting kind of gift. I think that's the way a lot of donors, both small and large, are thinking this time. They really want to make a difference. They are thinking very hard about their gifts and I think that's actually the wonderful thing that we've seen after September 11, a rethinking of what matters most, what's important and charities always benefit when that happens.
TERENCE SMITH: And the trustees gave that from their own....
STACY PALMER: From their own pockets yes, absolutely.
VARTAN GREGORIAN: The nice thing is that small people, quote unquote, give the largest amount in America and that is part of our tradition as Mr. Morino mentioned, on a community level, a national level we see that individual Americans have given overall 80% of the giving comes from individual Americans.
MARIO MORINO: One thing I would add on the effectiveness of the giving itself is I think and certainly as Vartan Gregorian says, we can be a lot more effective in a sense of what we're doing because what we find (a) the new people have a lot to learn from the established foundations, number one, in terms of what is possibility, but two, we come across... at least our experience -- there are great leaders in our community. They have proven programs and models, and what they need, they need resources to help them grow their organizations, improve their management to in fact more deliver more value to people very much in need. I think that's a change in the al location of funding that is very important to recognize.
VARTAN GREGORIAN: I think that's a great important factor. We at Carnegie have decided to help non-profit organizations to improve their management and because their health is important to us.
TERENCE SMITH: And didn't - Stacy let me ask you - didn't that come to a head a bit after 9-11 when so much was given so quickly to so many?
STACY PALMER: It taught us all about how charitable founds are distributed and both the good and the bad. There's a lot of criticism that goes on and people learned a lot about that. It's important to realize that that's why donors have to ask good questions about where your money is going and charities have to answer and be very forthright, just as we've all been saying here; it's an extremely important lesson.
TERENCE SMITH: Is there... I was going to ask Mr. Gregorian, if there's any coordination of all of this, or should there be more of where the money goes and how it's spent?
VARTAN GREGORIAN: Yes, I think there has been some fair and some unfair criticism of New York efforts. We have never seen such catastrophe before in our nation. Oklahoma's was as close as it came. So we have learned a lot now, I hope from Oklahoma disaster and the New York disaster. God forbid, if another tragedy happens we'll know how to coordinate at the beginning.
TERENCE SMITH: What about the public sector here, the states, the federal government? At some time they can step into the breach?
MARIO MORINO: They step into the breach but I don't think there's a part of future going forward. I think one of the big gaps in the social services area today will be it will be very difficult for federal and state money to continue at the level it's been at. I don't how we basically deal with homeland security, deal with a war against terrorism on a global basis and think and expect that we're going to maintain levels of financial support to our social sector, especially in a climate will thing like capital gains taxes will be lower, revenues will be lower, I think all of this is a very serious thing we have to look at and coupled with the issues and the changes in giving in this period really make the issue of effectiveness for non- profit organizations a very important issue going forward.
TERENCE SMITH: Stacy Palmer, a forecast for the upcoming year given all these factors?
STACY PALMER: I think it's going to be a very tough year and that's why a lot of non-profits are making preparations for that. Some of them have actually laid off staff members, they're trimming their travel budgets, they are doing all those kinds of things. It depends on how far this recession goes. It could be very difficult and that combination of people being concerned about the economy and the state and federal budget cuts that charities depend on so much of that money, it could be a very, very tough year and that means the services we count on charities to provide will be cut back.
TERENCE SMITH: Thank you all, three very much. We'll have to obviously stay tuned.