Despite a down economy, San Diego nonprofits are getting a steady stream of dollars and support -- they are just working more than ever to get it.
Nonprofits from a variety of sectors, including housing, the arts and animal welfare, gathered at a recent CohnReznick-sponsored roundtable at The Daily Transcript to discuss some of the top challenges facing their donor-driven communities.
“Ticket sales have gone well, but it’s the public that’s very discerning,” said Edward Gill, CEO and executive director of the San Diego Symphony. “The quality and product must be better. It’s better than it’s ever been. San Diego demands the top game now.”
High expectations from spectators and donors means marketing and social media efforts are also up across the board.
“So everything has been turned up a notch. The result is it’s much harder to make a sale, but sales are much higher and much broader-based,” Gill said.
Ticket sales only account for about 35 percent of the symphony’s total budget; the rest comes from philanthropy. Over the past few years, donations have increased 5 to 8 percent, with each individual giving more frequently and at a higher level.
“The very, very wealthy have really stepped it up a notch in their giving. The big six-figure gifts have done better than ever,” he said.
The good news for San Diego nonprofits is there’s a plethora of local donors with deep pockets.
“There really is a lot of cash out there. The challenge for all of us is to connect those people with what they want to support,” said Christy Wilson, executive director of Rancho Santa Fe Foundation.
Corporate giving is down per dollar, however. As a result, some nonprofits are seeing philanthropy in the form of donated hours, not dollars.
“Qualcomm will send over a team of 100 people to do volunteer work on campus. More corporations have given back through work,” said Jo Dee Catlin Jacob, CEO of Girl Scouts San Diego.
The poor economy has created an unlikely type of volunteer: unemployed dads. They are finding time to be a Girl Scouts leader in between jobs, she explained.
Penny-pinching parents are also discovering that a $12-a-year Girl Scouts membership for their daughters is more appealing than pricey extracurricular activities like cheerleading or soccer.
“I think people go back to basics when the economy is tough. They’ll go back to church, they’ll go back to scouting and cook more at home,” Jacob said.
Nonprofits that serve the needy are especially in a tight spot in the current downturn.
“The economy has hit homeless nonprofits here and across the country across the board,” said Patricia Cruise, president and CEO of Father Joe’s Villages, a residential homeless services provider that houses nearly 200 military veterans.
More people are coming to their doors — some of which have never been homeless — and individual donors are giving smaller amounts.
“They can’t give a $100 check [now] but will call and say, ‘I can only give you $50.’ It does affect what we do and how we do it,” said Cruise, who admits her $33 million operation has lots of debt.
Competing with other nonprofits for the shrinking pool of federal, state and local funds is not a healthy way to do business, she adds.
“That has become so tight, you almost can’t be competing with each other. We almost have to collaborate and bring resources together,” said Kim Peck, vice president and chief financial officer of Neighborhood House Association, a social services provider that serves 4,000 meals a day.
The good news for local groups like NHA and Father Joe’s Villages is when times are tough, donors tend to give to causes in their backyard. However, that means the focus shifts from organizations with an international focus like PCI Global, a humanitarian relief organization that fights the causes of global poverty.
As a result of that trend, PCI is seeking out larger institutional investors that have shown a long-term focus and success in international areas, said Chris Lee, vice president of development.
Its donations have been growing in dollars, not volume, and it recently received its first Gates Foundation grant to help prevent disease, improve community health and promote sustainable development worldwide.
Aside from economic pressures on donors, there’s a bigger problem on the horizon. The "fiscal cliff" is threatening to slash or cap tax breaks for deductions for charitable giving.
If the tax laws change regarding contributions, nonprofits fear donations would plummet.
“It would kill us. It would just be devastating,” Gill said. “It would be huge for us.”
For example, during a silent auction, people always ask what the deductibility is and how much they are paying over the true value.
“If the tax laws change we would be in big trouble,” Cruise added.
There are lobbying groups working to protect the law. Independent Sector, a coalition of nonprofits, foundations, and corporate giving programs, is one of the loudest voices around the table, Wilson said.
“There’s a lot of resistance from this community in changing those laws,” said Craig Golding, leader of CohnReznick’s not-for-profit industry practice in San Diego.
The economy has also caused the nonprofit model to change over the past five years, including the role of financial committees, according to Golding.
“Not just looking at a budget, but looking at scenario planning, what happens if they have cuts in funding and looking at the scalability of operations,” he said.
Nonprofits are run like a for-profit business now, Wilson said.
“We just have a different bottom line,” said Wilson, whose community foundation manages $55 million in assets. “Funding sources look much different now.”
Ronald McDonald House, which provides a home away from home for families with a sick or injured child in the hospital, is coming up with creative ways to support uninsured families.
“Our families are facing greater and greater financial difficulties,” said Chuck Day, president and CEO. “We are trying to be more innovative because you have to look for other sources of funding.”
Proceeds from its popular Dream House Raffle, for example, have impacted what the charity can do. This year, the $150-a-ticket raffle gave donors a chance to win a 4,600-square-foot, $2.2-million house in Encinitas.
As nonprofits dig up more ways to generate money, they also find new ways to attract a large audience.
The Old Globe Theatre just broke all records for ticket sales through its “Allegiance” show, which depicts the internment of Japanese-Americans during World War II.
“It was a show that really spoke to people about war and what it can do to society,” said Michael Murphy, managing director of the Old Globe, which is nestled in Balboa Park.
Having “Star Trek” star George Takei in it didn’t hurt sales either, he laughed.
“How the Grinch Stole Christmas” is playing at the Old Globe through Dec. 29, and Murphy thinks he knows why it’s doing well: When the economy plummeted in 2008, he noticed that parents started to raise the bar on spending time with their children.
“People want to take care of their kids during difficult times,” he said. “In difficult times people desire to be in a room with other people sharing experiences, whether it’s music, opera, dance or theater.”
John Williams, the famed conductor behind the “Jaws,” “Star Wars,” “Jurassic Park” and other film scores, wants to give back to musicians and agreed to a pro bono stop at Copley Symphony Hall on Dec. 7 and 8.
“He won’t charge for travel or anything, but all the money has to go into the musicians’ pension fund,” Gill said.
Some of the symphony’s concerts tack on DJs and dance parties following the show, and attendees can bring their booze into the auditorium. There are also post-dinners and meet and greets with special performers.
Those perks, which help sell out shows and create buzz, are a far cry from the old days of the symphony.
“It’s a dramatic change of what used to be our business 20 years ago, where the show would start at 8 and finish at 10,” Gill said.
When the symphony brings in famed artists like American cellist Yo-Yo Ma, the return is evident and donors amp up their support.
One demographic that’s pulling back on donations, however, is the upper middle class. Gill speculates that families may be redirecting that money toward other organizations or their kids’ education.
“We’ve noticed some real challenges in that area,” Gill said. “The couple thousand up to the $10,000 mark is where you really feel the pressure.”
With a diversified donor base of 48,000, the San Diego Humane Society has survived “fairly well” during the recession, said Shelly Stuart, senior vice president and chief development officer.
“We had a lot of people we could count on, unlike some charities with small donor bases they have to keep going back to. We had a big pool of people to work with,” she said.
The 132-year-old group’s $18 million operating budget has increased conservatively, but it’s a constant challenge to raise money, she notes.
Another hurdle nonprofits face is hiring the right people.
“You can’t afford to make a mistake in hiring at this time because of the impact it will have on the donor population. You spend more time sifting through and finding individuals than you think you would,” Day said.
There are candidates out there, but finding qualified candidates is another question.
The Old Globe Theatre found a highly qualified candidate in its latest hire, Barry Edelstein of New York's Public Theater. The new artistic director starts full-time at the end of December.
“This nonprofit community is a very difficult thing to run and difficult to recruit for. It’s difficult to find people who know what’s going on,” Peck said.
Some local resources include the University of California, San Diego’s Extension's Professional Certificate in Fundraising and Development and University of San Diego’s nonprofit leadership and management master’s program.
“We are really training really good nonprofit people, but most are on the program side -- they are not on the fundraising side,” Wilson said.
The trick is to expose them to that side of the desk. They also have to be willing to clock more than eight hours a day.
“Most of my days are 12 hours. You have to find young people willing to put in that kind of time and commitment,” Wilson said.
Nonprofit hires also have to be willing to take small paychecks or pay cuts. Father Joe’s Villages instilled a salary freeze three years ago and it hasn’t yet been lifted.
Still, those cons aren’t stopping people from pursuing the industry.
PCI just listed its lowest-level entry position in its department, Lee said. In 24 hours, there were 160 applications.
“That is great, but I have to pick one that is really good out of this. I don’t think anyone had that experience or background,” Lee said.
A breeding ground for young employees with a terrific work ethic is the Peace Corps, according to Jacob.
“When they come back after two years rolling up their sleeves, getting dirty, they understand poverty and work,” she said.
When for-profit companies like CohnReznick recruit young candidates, they ask about what nonprofits the accounting firm supports.
“They are evaluating different firms based on what they do in the community. I think that is somewhat new and pretty consistent,” Golding said.
Another trend spotted among youngsters is their strong sense of social responsibility, whether it’s via texting donations or using other forms of technology to spread awareness.
Before the dawn of Facebook or Twitter, relationships with donors were crafted in the form of face-to-face meetings, handshakes or a cup of coffee.
“Social media is a new kind of relationship we have with donors. Sometimes it works, and sometimes it doesn’t,” Wilson said.
That modern method has worked for the San Diego Symphony, which happens to be the oldest orchestra in California.
“It allows us in an inexpensive way to get out to a lot of people,” Gill said. “It’s been a godsend.”
The symphony spent hundreds of dollars on 2,000 hard-copy invitations to a wine event and received back a measly 10 RSVPs. So, its young intern suggested getting the word out via Facebook and its website.
Sure enough, after blasting out the invite to 42,000 people, in five days the fete had completely sold out and had to be expanded to accommodate more wine lovers.
The symphony cast out the same online net for a recent $150-a-ticket chance to spend a Saturday afternoon on a docked Holland America cruise ship in San Diego. Not expecting to get much of a response for a luncheon on a ship that wasn’t even leaving harbor, Gill was aghast that 150 showed up — and he only knew two of them.
Peck said it’s easy to judge a nonprofit by its online presence, so the look and feel of its website and Facebook page has to be spectacular.
“If you get on their website and it doesn’t work well, it’s like, what type of organization is this?” Peck said. “If they can’t run this, what else can they not run?”
Patricia Cruise, President & CEO, Father Joe’s Villages
Charles Day, President & CEO, Ronald McDonald House
Edward Gill, CEO, San Diego Symphony
Craig Golding, Not-for-Profit Industry Group Leader, CohnReznick (sponsor)
Jo Dee Catlin Jacob, CEO, Girl Scouts San Diego
Christopher Lee, Vice President of Development, PCI Global
Michael Murphy, Managing Director, The Old Globe
Kim Peck, Vice President & CFO, Neighborhood House Association
Shelly Stuart, Senior Vice President & Chief Development Officer, San Diego Humane Society
Christy Wilson, Executive Director, Rancho Santa Fe Foundation