March 26, 2009

Cutting Back On Everything, Including The Event

By Mark Hrywna

The historic economic downturn of the past several months has altered the business decisions of individuals, corporations, and nonprofits. One question that some organizations might be asking is whether it’s worth it to put together a gala when corporate support is expected to dwindle and there’s plenty of anxiety about individual giving.

What would have been the Connecticut Audubon Society’s 10th anniversary Eagle Festival was done in by a lack of corporate support. Planning for the February event usually begins in May, but the society decided in November to cancel because of a lack of corporate sponsors.

Corporate support allowed free admission to the festival since its inception nine years ago. The two-day festival of programs, roundtable discussions and boat rides, would have cost about $150,000, according to Mara Neville, marketing communications director for the society. That figure doesn’t include in-kind services, staff time, and an army of volunteers to staff the event that draws almost 20,000 people each year to Essex, Conn.

“To put on a first-class festival, you have to start planning something like this in May,” Neville said. “Coming up on three months, we don’t have the level of corporate sponsorship commitments we feel we need and to do it in a fiscally responsible way,” she said. By November, it also became time to start laying out money for the event, renting tents, signing contracts and advertising, but the commitments were not there.

The festival had enjoyed wonderful support, with corporate sponsors picking up virtually all the costs, Neville said. But while they were interested this year, sponsors told the society they could not make the commitment right now. “We understand that completely,” she said, adding that some were on board for the event but not enough.

The society considered charging admission to the festival, as it has in years past, but people have come to expect it to be a free event, Neville said. And given the economy, it wouldn’t be a good time to charge a fee. “We plan to hold the 10th anniversary festival as soon as the economy allows us to,” she said.

Nancy Jarecki, who serves on the boards of several charities, sees donors still giving but reducing the number of gala tables purchased. “Everybody has to cut back,” she said.

Jarecki was at three charities events this past fall, just before the financial market’s collapse. At one event, a nonprofit decided to downscale the expenses, “keep it classy but low key” and not make it a big fancy New York City affair, Jarecki said. The collapse of finance giant Lehman Brothers hit Project ALS because it had a direct relationship with the investment house, which canceled three tables it purchased to the gala this past October. Jarecki said the charity soldiered on, but accepted donations as opposed to setting a ticket price, and fared reasonably well.

“It’s kind of strange, when people are almost not required or obligated to get that event invitation in the mail, that expectation that they feel like they’ve got to do it, they still write the check,” Jarecki said. “They tended to still give, but on their own. They didn’t have the pressure of buying a $1,000 ticket,” she said.

An organization like the Country Music Hall of Fame in Nashville might have a difficult time raising money at its event in New York City, when it’s up against organizations fighting poverty or disease. But Jarceki said rather than cancel the event, the nonprofit decided to have jam sessions and raise awareness, if not donations. “They did downscale the number of tables, and you started to see that caterers started to suffer. All these galas and premieres are kind of scaled down,” she said.

Another recent event was so small scale, the nonprofit apologized to attendees for having to deal with their coats because it couldn’t afford a coat check, Jarecki said.

“This year, everything’s down,” Jarecki said, estimating gala fundraising could be off by as much as 35 percent from last year’s revenues.

Though gala donations are down about 15 percent for the Avon Foundation in New York City, donations for its Walks for Breast Cancer special events are up 20 percent overall. The most walks in Los Angeles and Charlotte this past fall were up at least 15 percent, in addition to a record-breaking $11.5 million raised in early October at the New York event.
“In general, in our experience, individual donations are holding very well and have increased significantly this year,” said Carol Kurzig, executive director of the Avon Foundation.

The foundation’s annual awards gala is largely dependent on corporate donations and experienced a slight reduction in donations, Kurzig said, as would be expected in the current corporate climate. The gala raised $1.6 million last year, and almost $16 million since it began in 2001.

“Galas, like other New York City events, rely more on corporate donations, so you just have to speculate that corporations are being more cautious,” said Kurzig, adding that some companies that have been longtime supporters pledged at a certain level of support in the summer before lowering it by the fall. About the same number of guests attended last year’s gala as the previous year (approximately 600), but likely gave at a lower level since fundraising was off by about 15 percent.

The beginning of the walk season last April was the weakest, with events in Washington, D.C. and Boston, before experiencing increases in the other diverse markets. Most of the donations to the walks are in small amounts, according to Kurzig, with 25,000 walkers and some half-million individual donors. The average gift is probably about $50 or $100, she said, with $150 being a large fit for a walk.

Walk registration was up about 21 percent last year while donations were up about 19 percent, according to Kurzig. The amounts vary by city, with the largest among the nine walks being New York at more than $11 million, while Charlotte was the smallest with just less than $3 million raised.

The Capitol Chapter of the Juvenile Diabetes Research Foundation (JDRF) sponsored its first “A Night of Hope Gala” three weeks after the Sept. 11 terrorist attacks in 2001, so “we’ve had to face some challenges,” said Pamela Gatz, executive director. That first year, the gala generated about $500,000 with attendance of about 250. In 2007, the event raised $1.7 million from more than 600 attendees.

After several years, JDRF went away from featuring a big-name act for its gala, Gatz said, because its audience prefers to keep the expenses low. Attendance for the 2008 event, held in November, was expected to be down along with funds raised declining to about $1.5 million. Gatz attributed that to a combination of corporate and individual donations. “We find that people are giving but not giving at the same levels previously,” she said.

“The most important thing we can do as nonprofits is continue to steward donors, so we’re there when they’re ready to increase giving,” Gatz said. “When the economy and the stock market gets better, I know that people will be even more generous thanks to that good stewardship.”

Gateway for Cancer Research (GCR), in Chicago, which funds patient-centered clinical trials for cancer treatment, was way off its fundraising pace for its 2008 gala in October. Donors ended up getting to the party late, but they did arrive.

“The change that’s been most obvious this year is that sponsors were much slower to respond to our requests for support,” said Bonnifer Ballard, director of marketing and communications at GCR. “We didn’t get ‘no’s’ right away, which was great, but we waited much longer for ‘yes’ than was comfortable. It has took a lot more follow up, using gentle encouragement, and stronger case statements to secure the support this year.”

A number of corporations and individuals committed to sponsorship as late as a week before the event. But it wasn’t without a little extra effort. Volunteers, board members and executives with repeat corporate sponsors solicited for any kind of gifts, even if not at the same level as last year, she said. “Many people did go down (in amount given), but we ultimately received gifts from nearly all sponsors from last year,” Ballard said, reaching $1 million.

The overall trend in corporate philanthropy has been to be more strategic in giving and finding partners more aligned in the company’s mission, according to Lindsay Siegel, associate director of the Committee Encouraging Corporate Philanthropy in New York City. Beyond buying seats or tables for a gala, companies are looking to use employee volunteers in creative ways or take advantage of other unique assets they have, even in stronger economies, she said.

Siegel expects corporate philanthropy to hold steady this year at 2008 levels and corporations will stick with commitments they’ve already made to nonprofit partners.

What it comes down to is how strong a relationship a company has with a nonprofit, Siegel said. A gala is just one fundraising mechanism for the organization, she added, and if the company is involved in other programs or other ways to develop a strong partnership, the gala is just a piece of it and corporate support will continue. “The advice to nonprofits we’ve been hearing is strengthening relationships,” Siegel said. “Some of it is a matter of proving your value as a partner, but that’s always the case.”

Michael Roffino expects some of his nonprofit clients to cut back this year. His company, Denver Design Works, handles décor for all kinds of social and corporate events. He hasn’t seen a drop-off in the number of nonprofit events, but the nonprofit clients they deal with appear to he more cautious. “They’re searching for more ‘bang for their buck,’ fewer props with larger impact,” he said.

Nonprofit clients have made a concerted effort to be conscious of their budget, but as of yet have not canceled events for 2009. Nonprofits make up about a fifth of the company’s business. Roffino anticipates his average nonprofit event likely will decline. The average nonprofit event retails for $30,000 to $40,000, but he anticipates that to decline to $15,000 to $30,000.

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This article is from NPT Instant Fundraising, a publication of The NonProfit Times.

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