Maximum Impact: How will the recent hurricanes affect year-end gifts?

After September 11, 2001, the nonprofit world braced for what could have been the most disastrous fourth quarter in the sector’s history. For some nonprofits, the months following the terror attacks were financially dry; others benefited either from being involved directly with relief efforts, or from generous donors whose philanthropic tendencies were roused by the insufferable tragic human loss. (Foundation Center online)

Now, four years after 9/11, U.S. nonprofits are once again faced with a precarious fourth quarter, courtesy of hurricanes Katrina and Rita, which destroyed lives and property in four states and seriously impacted the economies of dozens more—including Georgia— as victims scattered and relocated to just about every corner of the country.

While the U.S. Congressional Budget Office Director Douglas Holtz-Eakin announced in a Sept. 30 report that “the macroeconomic consequences of the hurricanes appear more modest than previously estimated after the Aug. 29 impact of Hurricane Katrina,” and that “growth in the fourth quarter of this year could even be stronger than projected because of private and government support for recovery and rebuilding,” (Forbes online: it’s too soon to tell how nonprofits will fare in the last months of 2005).

Yet many analysts, marketing executives, and nonprofit leaders have developed definite opinions on how they think Katrina will affect the sector over the next several months. 

The speculations, however varied, do follow certain trends, as a recent ongoing poll conducted by CharityChannel.com demonstrates. When asked, “What impact do you expect that the hurricane disasters in the U.S. will have on fund raising for non-hurricane-related charities over the next six months (October - April)?” the percentage of participants as of Sept. 29 who said they expected giving to increase was at a mere 1.43 percent, while 17.14 percent expected little or no change.

Roger Craver, founder of Craver, Mathews, Smith & Company, an Arlington, Va., direct-marketing consulting firm, told the Chronicle of Philanthropy on Sept. 15 that “the disaster might have an effect in delaying year-end giving, but I would be surprised if it affects the year-end total.” A disaster such as Hurricane Katrina “wakes people up for philanthropy,” Craver said. “They become aware of how vulnerable people are.”

Los Angeles-based communications consultant and author of the public-interest best-practices monthly newsletter, Free-Range Thinking, Andy Goodman agrees with Craver. The stories from Katrina, he says, “of compassion and taking care of our brothers and sisters” will likely start people “thinking about helping outside of [themselves].”

A wave of compassion, Goodman says, often “stokes the fires” of compassion and begins the process of giving.

While Goodman believes that some nonprofits, depending upon the scope of their work and their donor base, will suffer in fourth quarter, organizations should not alter their marketing plans for the remainder of the year.

In terms of postponing or delaying a fall direct mail campaign, for instance, Goodman feels that such a move is unnecessary. “I think [organizations] have to stick to their original schedules. Fourth quarter is too important not to do so.”

However, Goodman says, altering the marketing message for fourth quarter could be a shrewd move for nonprofits, if—and only if—their work is “credibly related to hurricane relief.” A mention of Katrina in an ad or letter might trigger additional gifts, or even help garner new donors. Unrelated nonprofits, such as arts organizations, will do better to stick with broad themes of humanity, compassion and caring than trying to capitalize on America’s open pocketbook.

Analysts and communications experts agree that the impact of Katrina on nonprofits depends largely upon the work that the nonprofit does. A behemoth such as the American Red Cross, which has received roughly 75–80 percent of the nearly $1 billion donated to hurricane relief since Sept. 1 will likely continue to receive donations well into 2006, while unrelated organizations may experience a sharp dip in gifts.

Because online giving has changed the pace at which nonprofits receive donations and gifts, comparing the impact of Hurricane Katrina on nonprofits to the effect of the Sept. 11 terrorist attacks is appropriate only in relative terms.

According to the Washington Post, “the pace of contributions, sped by online giving, has far outstripped the response to the Sept. 11, 2001, attacks and the Asian tsunami over the same length of time, but the total still falls far short of giving after those events. In the aftermath of the 2001 attacks, Americans gave charities $2.2 billion, according to the Chronicle of Philanthropy. After the tsunami, they donated $1.3 billion.”

"After the Sept. 11 attacks, two weeks out, the total was about $500 million, and the grand total was five times as much" by early 2002, Patrick Rooney, director of research at Indiana University's Center on Philanthropy told the Post in a Sept 14, 2005, interview. "So if you're projecting on past practice, giving to hurricane relief should continue for several months."

If the nation spends its philanthropic dollars on hurricane relief, will there be any leftover for non-related nonprofits? Goodman says it’s a legitimate question. “People often get ‘compassion fatigue’,” he says, referring to the heavy donations that occur after a disaster such as Katrina. By year’s end, some donors may “feel tapped out.”

It all depends on the donor.

Bill Bolling, the executive director and founder of the Atlanta Community Food Bank, says he knows his donors pretty well. While he’s “seen a drop off in the number of direct mail gifts” since Katrina, he’s also seen an increase in the amount of the gifts received, a sign, he says, that his “regular supporters appreciate what we’re doing.”

While the Atlanta Community Food Bank may not seem a likely source for hurricane relief, the organization actually part of a vital and under-recognized network of thousands of food banks across the country and America’s Second Harvest, the nation’s largest charitable hunger-relief organization. Together, pledges and gifts to food banks within the national network have totaled $20.2 million since Sept.1.

Bolling calls food banks “first responders,” a group of “organizations that know their neighbors better” than disaster relief groups, who often come in and leave after 30 days. The nature of the work the Atlanta Community Food Bank does is less cyclical and seasonal than most nonprofits, in part because of its everyday commitment to fighting hunger.

While Bolling says Katrina “will affect all of us in the [nonprofit sector],” he recommends that nonprofits change their expectations rather than their strategies: “If people have given in September, they’re not likely to give again before year-end.”

Bolling says that the scrutiny paid to the American Red Cross can teach all nonprofits a lesson about media relations.

“When you control the media, when your organization is the only one being featured, there’s going to be scrutiny.”

In general, Bolling says it’s a time for nonprofits to be very “careful as a sector” in terms of financial accountability. But, he says, the aftermath of a disaster such as Hurricane Katrina is the perfect time for nonprofits to work together, in deed and in message.

Now more than ever, Bolling says, “we need to develop and maintain and nurture trust in our sector.”