The humane community can handle hard times

[Guest guest]

From ANIMAL PEOPLE, October 2008:

(Actual publication date 11-5-08.)

 

 

Editorial feature:

 

The humane community can handle hard times

 

Writing only for SPCA Los Angeles,

SPCA/L.A. president Madeline Bernstein might have

spoken for the whole humane community worldwide

in an early October 2008 appeal expressing deep

concern " with the state of our economy, food

costs, gas prices, Wall Street woes and its

negative trickledown effect.

" SPCA/L.A. is struggling to feed and tend

to the ever-increasing number of homeless animals

in our care, " Bernstein said, " many a direct

result of foreclosures and financial hardship.

Worse, fewer adoptions are occurring for the

same reasons. This puts us in the untenable

position of having to bear higher costs while

donations, corporate funding and even the

bestowal of in-kind gifts is shrinking. Natural

disasters and an expensive presidential election

have also put a claim on limited resources. The

bottom line is that there is less discretionary

and disposable income for charitiesŠless funds to

give and more difficult choices to make. "

SPCA/L.A., with an annual budget of $6

million and estimated assets of $16 million,

according to IRS Form 990, is among the most

affluent 1% of all humane societies.

Yet as American SPCA executive vice

president for national programs Steve Zawistowski

recently remarked, being among the most affluent

1% of all humane societies requires only being

about as big as an average car dealership.

Humane work has rarely claimed more than

1% of all the money donated to U.S. charities.

This 1% is shared among more than 6,000

organizations, including more than 3,000 that

operate shelters or sanctuaries. Even at the

best of times, the available resources have

often seemed slim compared to the urgent needs of

animals in distress.

Recently even the relative handful of

humane societies that have accumulated

significant reserves--like SPCA/L.A.--have seen

their assets vanish like the Cheshire cat.

SPCA/L.A., for example, had $14

million in cash and investments two years ago,

but more than 80% appears to have been

potentially at risk. The risks appeared slight

relative to the rates of return, at the time,

and SPCA/L.A. was only following standard

financial advice in pursuing the investment

strategy that it did. Unfortunately, instead

of having assets to fall back on when fundraising

falls off and needs expand, most humane

societies that followed standard advice in trying

to prudently manage their assets are now finding

themselves with many investments that can only be

sold at a substantial loss. These humane

societies remain better off than the 99% who have

never managed to put anything aside, but hopes

of having longterm security and fiscal liquidity

have often proved illusory.

Humane societies that have paid off their

physical facilities are well ahead of everyone

else, yet may still be struggling to make

payroll. Humane societies that were heavily in

debt before the present financial crisis are

wondering how to survive the winter, in hopes

that spring will bring an economic turnaround.

With the best and brightest on Wall

Street uncertain about when the turnaround will

come, and how rapidly the money markets will

recover, ANIMAL PEOPLE cannot predict how long

hard times will last, how tight money will

become, or what programs and organizations will

not survive. Much will depend on the combination

of determined and persuasive leadership, donors

who continue to support humane work even with

their own situations uncertain, and just plain

luck.

We can state, however, from having

monitored the financial filings of humane

societies worldwide for 20 fiscal years now,

that humane resources are now in jeopardy in

large part for reasons very different from the

unrestrained greed and reckless risk-taking that

evidently afflicted Wall Street and other

investment markets.

For decades the humane community has

sought ways to reinvest inherited financial

portfolios to obtain high returns while avoiding

investment in animal use industries. This is no

easy task in view of the size and scope of animal

agriculture and the ubiquitousness of animal

testing in almost all branches of manufacturing.

In the years preceding the high-tech

stock crash of early 2001, pro-animal

foundations, charities, and concerned

individuals tended to become heavily invested in

high tech. Many moved into this sector at a time

of very fast growth, even before developing

their own e-mail communications and web sites,

because electronic high tech looked like the

least potentially animal-abusive place to invest,

and the growth potential of the e-commerce sector

appeared to be unlimited.

When the inevitable shakeout came, the

humane community was perhaps the hardest shaken

part of the the nonprofit sector, and was

already feeling economic whiplash long before the

terrorist attacks of September 11, 2001 brought

a further jolt.

Following the 2001 experience, humane

societies that acquired something to invest

tended to recall Scarlett O'Hara's conclusion in

Gone With The Wind that only real estate endures.

By mid-decade ANIMAL PEOPLE was noticing in IRS

Form 990 filings a tendency for humane societies

to diversify their portfolios by mixing stocks

with buildings, land, and investments in

mortgages. This was precisely what mainstream

financial advisors were telling individuals to do

with their personal assets.

Despite declining real estate values,

the investments in buildings and land will

probably pay off in the long run. Humane

societies usually prefer to avoid the risks and

stresses of becoming landlords, with good

reason, but those that have managed to rent out

inherited property until market conditions

warrant selling have historically tended to do

well.

Humane societies' mortgage investments,

unfortunately, collapsed with the rest of the

mortgage industry. Now we are seeing some

national charities losing assets faster than

gamblers in a card game, even though they had no

intention of gambling at all. We are seeing some

charities holding worthless paper now when they

believed they had secure reserves. We are seeing

foundations that generously supported animal

charities having to cut back abruptly, because

suddenly there is far less than the predicted

return on investments--or none at all.

We are seeing some former individual high

donors to humane work losing the ability to

donate. Some retirees who have lived for years

on their investments and have generously

supported animal charities are suddenly looking

for employment, with obsolete skills and at ages

when their chances of finding steady jobs with

decent benefits are slim.

Every charity feels the pinch, but

animal charities are among the most hurt.

So what do we do about it?

First of all, don't panic.

 

Chin up!

 

Because humane work consists primarily of

helping distressed and frightened animals, often

with limited resources, most people in the field

are used to working in crisis mode. The present

international economic crisis has increased the

difficulty of fundraising for animal work, but

approximately half of all the animal charities in

the world are less than 20 years old, and most

of those are still led by people who remember

starting with nothing.

Difficult as obtaining the funds needed

to keep going may be, it is not more difficult

than raising the funds to do something that has

never been done before, in a place where nothing

like the project has ever existed, and few

people understand much of anything about it.

Fundraiser Paul Seigel of Direct Mail

Systems offered some worthwhile and to some

extent comforting advice in the June 2008 edition

of ANIMAL PEOPLE.

" Raising money during crises is an area

that I have had a particular interest in since

college, " Seigel wrote. " While recessions have

a definite impact, historically charitable

giving, overall, has not declined. Different

sectors of donors and potential donors react

differently, " Seigel explained, " and different

types of charities are affected differently.

Nothing dampens giving to religious causes.

Planned gifts are largely unaffected, because

decisions to make such gifts are usually made

long before a crisis occurs. Foundation support

has actually quite dramatically increased during

poor economic times, " Seigel observed.

Though foundations are not yet giving

more during the present crisis, foundations with

conservatively managed portfolios tend to cut

back their giving during the first phase of a

crisis, then give more when their managers

believe they see better times ahead.

" Corporate giving tends to even out, "

Seigel said, " because giving is tied to

profitability, but is usually not cut back. "

Corporate giving in times of economic

crisis does tend to shift away from giving money,

toward giving unsold merchandise and allowing

charities to use vacant property. This can be

particularly beneficial to humane societies if

they happen to need new vehicles, with dealers

throughout the U.S. struggling to move late model

vans and light trucks, or need office or storage

space. By way of precedent, the 2001 economic

downturn had a catastrophic short-term effect on

cash contributions to dog and cat sterilization

programs, but helped several programs to

significantly improve their locations and

mobility, enabling them to markedly pick up the

pace of their work during the next several years.

" Small donors do hold back, " Seigel

wrote, " but can be effectively persuaded with the

argument that 'The animals need our help just as

much, perhaps even more, in difficult times.'

New small donors are more difficult to acquire

but this does not mean one should not continue

prospecting to counterbalance file attrition-it

simply means that one should be more vigilant

about costs, by mailing reduced quantities,

testing less, or simplifying packages. "

Donors at every level can also be

attracted in hard times by going back to basics

and re-emphasizing personal contact. Charities

in good times tend to drift away from activities

involving direct personal contact because it is

easier to send out mailings than to organize

public events, and easier to hire staff than

train volunteers. Yet studies of donor behavior

show time and again that the most enduring donors

and those most likely to leave bequests to

charities are those who have become personally

involved in the charities' work at some point,

if only briefly. Typically donors who attend

events and contribute labor will continue to give

money for years after their personal

participation declines. Often, if they suffer

financial misfortune, such as losing a job,

they welcome the opportunity to resume personal

involvement--if they are asked.

" The main reason people don't give, "

Seigel concluded, " is because they aren't asked

to give. "

Asking for donations by direct mail or

e-mail is relatively easy, and appears to bring

satisfactory rates of return, once a list of

responsive donors is developed; but the list

development process is notoriously inefficient.

It is worthwhile to notice that the

fastest-growing animal charity of the past 15

years has been the Best Friends Animal Society,

whose mailings and e-mailings build on a

fundraising approach which has always emphasized

donor acquisition through tabling, participating

in community events, and visiting the Best

Friends sanctuary in Kanab, Utah.

Best Friends now has a highly productive

mailing list of hundreds of thousands of names

because not so very long ago, having no money to

invest in fundraising, the founders set out to

personally make friends on behalf of their

animals. It is no accident that now almost

everyone involved in pro-animal work of any kind

knows someone at Best Friends.

Nor was what worked for Best Friends ever

any kind of secret. Salvation Army street corner

bands, Scouting groups selling cookies,

Greenpeace door-to-door solicitations, Mormon

missionaries, and countless representatives of

other charitable causes demonstrate the

advantages and importance of person-to-person

contact.

Foreign humane societies that have come

to depend on donations from the U.S. may be at a

disadvantage, but the present situation may

encourage some overseas charities to develop

donor opportunities closer to home.

Local animal charities may gain a chance

to become much more successful in fundraising

competition with national and international

groups, because they can organize dog-walks,

dog-dips, adoption days, and other

participatory events more effectively than

outsiders. People who cannot just quickly write

a check may be attracted to participatory events,

including young families looking for low-budget

outings, who will become the donor and volunteer

bases of the future.

Regardless of where a charity is located

and how it operates, this is a time to make

extra effort to express appreciation of donors,

even when their levels of contribution have

fallen off. Many donors are giving less simply

because they have less to give, and will be

happy to resume helping their favorite charities

more generously when their circumstances allow.

The more appreciated they feel in hard times,

the more they are likely to give when they again

have the means.

Worth a mention here is the often

controversial practice of charities sending small

gifts to donors. Many donors feel that their

contributions are wasted when money is spent to

buy and mail merchandise; but merchandise that

serves a purpose in helping to publicize the

services provided by the charity, and helps to

remind donors to give, can more than pay for

itself. In hard times, especially, businesses

may be willing to donate small items suitable for

use as donor gifts.

Explaining to recipients that these items

were donated will be worthwhile, and can be an

opportunity to present a " wish list " of other

in-kind items that the charity can use.

Announcing budget cuts can also be a

fundraising opportunity. Animal charities may

have to cut back or eliminate some programs that

have been attractive to donors but cannot be

sustained. Donors who may be having to readjust

their own budgets will understand the problem,

will appreciate honest explanations, and will

help--if they can--to enable their favorite

charities to avoid further cuts.

The charity making cuts must emphasize

the effort it is making to avoid reducing the

most essential services it provides, just when

animals and the community most need help.

Among the hardest questions to answer is

whether now is a good time for charities to take

on new projects, especially those involving

capital acquisition such as land and buildings.

Since donors tend to respond most

enthusiastically to new projects, there is a

theory that hard times are when charities should

announce new projects--but prudence suggests that

most animal charities will do best to limit new

projects to extensions of existing projects and

services, and to avoid doing things that look as

if they might lead to getting over-extended.

With property values low, this may be a

good time for U.S. animal charities to buy land

and buildings, if they already have the

resources to make substantial down payments and

secure mortgages at low interest rates.

Less well endowed organizations almost

certainly will not be able to borrow as readily

as in the past, if at all. This raises the risk

that small animal charities may become more

inclined than ever to lease or rent premises in

inappropriate locations. Many making this

mistake lose their investment in site

improvements when obliged to relocate or quit

operating. Some lose their donors, volunteers,

and good reputations as well when they fail to

maintain effective programs and good animal care

in ill-chosen quarters.

Traditionally, animal charities begin

with a rescue focus, and tend to try to make the

jump from home-based fostering to operating a

shelter or sanctuary as quickly as possible, to

accommodate more animals in need.

Unfortunately, animal charities that try

to establish shelters or sanctuaries before

raising or inheriting the resources to build or

buy in just the right place, on secure terms,

have an astronomical rate of failure, with

frequently catastrophic consequences. ANIMAL

PEOPLE has often pointed out in recent years that

failing shelters and sanctuaries annually burden

the rest of the animal protection community with

the equivalent of Hurricane Katrina in terms of

animals needing care and placement--and that was

before the economy took a downturn.

Now more than ever, the urge to help

must be tempered by good sense. An effective

fostering network can help far more animals than

a badly located shelter that fails to attract

visitors, volunteers, and funding; and setting

a compassionate example at the neighborhood level

is infinitely more helpful than making the

evening news as the latest " crazy cat lady " or

" dog man " found in squalor.

 

Henry Bergh's example

 

The humane community must remember and

learn from the mistakes made in past economic

downturns that it is always a mistake to

sacrifice ideals for institution-building.

Among the most notorious errors, the

Massachusetts SPCA became overextended in

building Angell Memorial Hospital just before the

U.S. entered into World War I. To avoid losing

the marble hospital, the MSPCA cut back the

Bands of Mercy and Jack London Clubs, whose 1914

tent meeting in Kansas City--a few blocks from

the childhood home of Walt Disney--attracted

10,000 teachers and ministers to learn about

humane education, and 15,000 school children to

hear the lessons.

Though there is no record of Disney

attending, he emphasized the themes of the tent

meeting throughout his life. We can only wonder

how many talented young people might have been

comparably inspired, had the MSPCA opted to

promote ideas--as founder George Angell

emphasized--over building a monument to Angell's

memory, against Angell's own advice.

Even more catastrophically, the U.S.

humane community responded to the economic

stresses of the Great Depression and the

recessions that followed World War II and the

Korean War by turning, in waves, to taking

community animal control contracts. These

contracts obliged the humane societies to kill

homeless dogs and cats en masse, by gassing and

decompression--and often required them to sell

animals to be used in biomedical research.

The moral impetus of the mainstream

humane movement atrophied, defensive insularity

and secrecy replaced effective outreach, and the

animal cause did not regain momentum until bitter

internal splits produced the animal rights

movement and the no-kill sheltering movement.

Henry Bergh founded the American SPCA,

the first U.S. humane society of note, in the

midst of the economic chaos that followed the

U.S. Civil War. Many of the other most enduring

U.S. humane societies, including the MSPCA and

SPCA/L.A., were organized within the next

decade, amid continuing economic uncertainty.

They remain with us because they responded to

urgent needs, and persuaded donors that they

were worthy of support, even when banks were

failing.

Bergh, a tall man to begin with, always

wore a top hat, even when top hats passed from

vogue. He explained that this was so that

everyone could see where he stood, so as to

stand with him. Then he would take off the top

hat and pass it. It always came back with enough

donated money inside to keep the ASPCA alive,

when the whole humane movement was still barely

more than a dream.

 

--

Merritt Clifton

Editor, ANIMAL PEOPLE

P.O. Box 960

Clinton, WA 98236

 

Telephone: 360-579-2505

Fax: 360-579-2575

E-mail: anmlpepl

Web: www.animalpeoplenews.org

 

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