MAHONING VALLEY Charities feel effects of falling market
People who usually give their extra money to charity don't have it to give with the plunging stock market, one agency spokeswoman said.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
Individual investors aren't the only ones cringing at the sights and sounds of a plummeting stock market.
Falling stock prices are putting the pinch on some local charities as well, because they depend upon donations and income from invested contributions to keep their operations going.
"It's a trickle-down effect," said Patricia Syak, executive director of the Youngstown Symphony Society. "I don't think anybody feels as rich as they used to."
Like many agencies, the Symphony Society is feeling the pressure on two fronts.
Money for the society's concerts and educational programs comes from several sources, but income from its invested endowment fund is a major one.
Syak said administrators are authorized to draw down a percentage of the investment income from that fund for operating costs, but the income has dropped, and so the spending amount is proportionately smaller.
"We've definitely noticed a decline over the past year," she said. "We use a portion of those funds for operational programs, including maintenance of the symphony center, concerts and our programs in the schools, so it affects all we do."
She said investment income has declined "considerably," even though the society's investment guidelines are very conservative. "We're a nonprofit; we're the stewards of money provided to us by others, so if anything we are more conservative than individuals would usually be in investing."
The society was fortunate not to see a drop in its annual fund gifts over the past year, she said. There is some concern, though, that people may feel they can't afford to attend concerts and to make contributions if market values continue to tumble.
Stock prices have a lesser affect for Angels for Animals, a Beaver Township animal welfare organization, because the group's policy is to sell any stock donation the day it's given, said president Diane Less Baird.
It sells stock immediately to preserve the value of the gift, she said. "If we held onto a stock donation for three weeks it could go up, but it could also go down," she said. Proceeds from the stock sales and other contributions are deposited in an interest-bearing cash account that is not stock-based.
Less Baird said the Beaver Township-based agency isn't rich enough to have an endowment fund to invest. The group is constructing a $2.8 million, three-building animal center on state Route 165, set for completion sometime next year, which is about 80 percent paid for.
Still, Angels for Animals has seen large charitable giving drop, and Less Baird believes the decline may be connected to the bear market.
"The stock market has affected us because we're not getting the donations we were getting a year ago," she said. "People give us their extra money, and if they're not making extra money they don't have it to give."
Smaller contributors are helping. Less Baird said many "grass-roots people" who used to give $25 a year have upped their contributions to $50 a year.
Some put gifts on hold
Reid Schmutz, president of the Youngstown State University Foundation, agreed that potential donors "don't feel as wealthy" these days, and some have put major gifts on hold. The YSU Foundation gets its largest gifts in the form of stocks, he said, so contributors often prefer to wait until the stock price rises to "get the most bang for their buck."
Gifts less than $1,000 have remained consistent for the YSU Foundation, despite the erratic market, and a spring fund-raising mailing was very successful, he said.
The university foundation's endowment funds has dropped in value with the market, Schmutz acknowledged. However, the foundation's policy is to spend only interest and dividend income, so its revenue from the endowment is not affected by price of the stock.
The volatility of the stock market hurts everyone, said Patricia Brozik, executive director of the Community Foundation of the Mahoning Valley, but a conservative investment policy is helping the foundation minimize losses. Its funds are invested in money market accounts, certificates of deposit and other conservative alternatives, with a limited percentage put into stocks and bonds.
Contributors who give $25,000 or more can have a named account and can choose their own investment adviser, she explained, but that adviser must follow the foundation's very conservative investment guidelines. "Diversification is just as important for us as it is for an individual investor," she said.
The foundation closed its fiscal year June 30, so it's early to say how the latest round of stock price drops will affect its value, Brozik said. The foundation contributed $226,156 to charitable causes in the Valley in its last fiscal year, up from $50,000 the previous year, its first.
Weathering the storm
Ken Rudge, chief executive of the Youngstown YMCA Association, said he's confident the youth organization will weather what he called "tough scary times," but it may have to do some belt-tightening along the way.
Rudge said the Y is experiencing a decline in donations and pledges, and the value of its endowment fund has dropped "a lot over the past year, and even faster over the past three or four months."
He said he anticipated lower dividends from the Y's endowment funds this year and budgeted less.
"We have to be a little patient right now," he said. "The YMCA has been in business 120 years in this community. I feel very, very comfortable that we've done the right things and have the right counsel behind us. We're in this for the long haul."