Charities that rely on corporate giving from the fashion and beauty industries have legitimate worries this year.
This story first appeared in the March 25, 2009 issue of WWD. Subscribe Today.
In a recent survey released by the Center on Philanthropy at Indiana University, almost 94 percent of nonprofit professionals reported the economy is having a “negative” or “very negative” effect on fund-raising.
Overall, U.S. charitable giving reached an estimated $306.4 billion in 2007, exceeding $300 billion for the first time, according to Giving USA, and up 3.9 percent from the previous year. While the corporate sector provides only about 5 percent of all charitable giving in the U.S., money and in-kind donations from the nation’s businesses totaled almost $15.7 billion in 2007, according to the latest figures available from Giving USA.
One area that’s been hit hard is foundations. During 2008, family, independent and public foundations experienced an average 28 percent decline in their asset values, according to a survey conducted by the Council on Foundations.
“Typically in a downturn economy, usually two years out, you will see the bump in what it means to foundations. [But] it happened in such a short amount of time. You got to October and November [2008)], and you saw unprecedented drops,” said a spokeswoman for the council, a trade group based in Alexandria, Va. Especially hard hit have been arts programs, as well as New York charities affected by Bernard Madoff’s Ponzi scheme, she said.
It may be too early to tell how 2009 will unfold, but according to a spot check of charities, there are obvious worries.
Karen Pearl, chief executive officer of God’s Love We Deliver, said she’s seeing an increase in volunteerism, but has concerns about fund-raising. “Our mission is so very fundamental. So many donors kept us on their list, even if all they could do was a reduced gift. Who knows if 2009 will be better?” she said.
She explained that since the first day when the charity began delivering home-cooked meals to people with HIV/AIDS, it has worked closely with the fashion and beauty industries.” Today, the charity delivers home-cooked meals to people with any illness. She said she gets donors three ways: donations, products and volunteers. “The volunteer efforts are growing. More companies are coming to join us, and as the economy does tighten, it’s a way for corporations to continue to give,” said Pearl. Among the companies who donate their time and/or money are MAC, Polo Ralph Lauren Corp., Calvin Klein, J. Crew Group Inc., L’Oréal, the Estée Lauder Cos. Inc. and Elie Tahari.
A spokeswoman for UJA-Federation of New York said donations are on track for their annual fashion luncheon April 1 at the Plaza Hotel, which will honor Karen Katz, president and chief executive officer of Neiman Marcus Stores, and Allen Sirkin, president and chief operating officer of Phillips-Van Heusen Corp. Last year’s event raised more than $1 million.
“With over a week to go, we have raised more than $700,000. We’re thrilled to have such high level participation and success despite the economic climate. This luncheon has shown a true reflection of the fashion industry and their commitment to philanthropy,” she said.
Janice Weinman, president of Kids in Distressed Situations Inc., said the charity gets both product and cash donations. “I would say cash donations continue to come in, and last year was similar to 2007. But the product contributions have definitely dropped.
“The retailers have cut back so significantly on the amount of products they’re ordering,” she said, citing products such as clothes, shoes, books and toys. In 2008, K.I.D.S. received $56 million in product contributions versus $62 million in 2007. Most of the decrease came in the second half. “Our cash contributions remained the same, and we diversified our funding sources to include individuals, corporations and we do more cause marketing.” Its recent K.I.D.S. fund-raiser raised $1.3 million, a record, compared with $1.1 million the prior year.
For its big charity event in December, K.I.D.S. split the net proceeds with Fashion Delivers, another charity that distributes clothing to needy adults. Allan Ellinger, chairman of Fashion Delivers, which provides clothes to victims of natural disasters, said he hopes to be able to maintain 2008 levels of donations in 2009.
“What concerns me is if manufacturers will be running on less inventory,” said Ellinger. “Last year we finished the year on plan, and 2009 is off to a reasonably good start because we’re coming off fall 2008 inventories. What we are doing new this year is talking to some of the larger liquidators, which will have product left over — this would be a very good deduction for them.”
The American Jewish Committee said the organization has its big dinner in June and will honor Leonard Marcus, president of Federated Merchandising Group. Jaime Kelstein, national director of development at the AJC, said the fashion event generally raises between $2 million and $3 million.
The event honoring John and Laura Pomerantz, which took place Jan. 19 in Palm Beach, went well, despite the financial problems hitting that area, raising in excess of $600,000.
Besides the Picower Foundation, a victim of Madoff’s Ponzi scheme, no companies or foundations have yet told Dress for Success that they will decrease or cancel gifts in 2009. In fact, some sponsors, including Bobbi Brown Cosmetics, Gap Inc., Wal-Mart Stores Inc. and the Style Network, have increased their financial and in-kind support in recent months, according to Dress for Success ceo Joi Gordon. Additionally, Dress Barn has renewed its commitment to the charity.
The organization, which helps disadvantaged women get jobs partially through giving them a suit, is on track to meet revenue projections for its annual gala on April 7 in New York, but Gordon anticipates the upcoming months will be challenging.
“We recognize that some companies might need to decrease their monetary giving this year because of the economy, and we have a conservative budget for 2009,” Gordon said.