Running Against the Elections

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HUGH HOGAN FEARED an election year might make it tougher to do fundraising, but he never thought it could get this bad. With more money being sucked up by the Bush and Kerry campaigns this year than ever before for a presidential election, Hogan’s North Star Fund, a community foundation that supports social justice projects in New York City, has been feeling the heat.

Some donors, including one longtime contributor to North Star, have said they can’t help out this year. “They basically told us they are focusing their giving on the presidential election,” says Hogan. “We were left a little bit stupefied.” North Star has decided to delay its 25th anniversary celebration until after the November election.

North Star is not alone in its concerns. Funds that rely on contributions from living donors worry that the huge bill for this year’s political campaigns–$410 million so far for the presidential race alone–is sucking up the dollars and time of many check-writers.

Of course, many factors drive charitable contributions. The economy is paramount–windfall years for business and investors helped drive up American donations by 4.5 percent in 1996 and 6.6 percent in 2000. Adjusted for inflation, Americans’ charitable giving went up 0.6 percent last year after consecutive drops in 2001 and 2002, according to the report Giving USA 2004. The size of the recovery has been extremely modest. “We couldn’t afford to have [fundraising] go back again this year, which it will do if a huge amount of dollars goes to the elections,” says Trent Stamp, executive director of Charity Navigator, which tracks philanthropic giving.

Campaign economists estimate the total cost of this year’s presidential campaign could reach more than $500 million, and that’s not counting congressional, state and city races, or the estimated $104 million in private contributions to the party conventions. It may sound like a drop in the bucket compared to the $240 billion Americans gave to charities last year, but nonprofit watchdogs argue that the impact is significant. “This is going to be by far the costliest election we’ve ever seen,” says Stamp. “The money has got to come from somewhere. Anecdotally, we see that’s coming out of charity groups.”

“That is absolutely affecting the timing of charitable contributions,” says Susan Shapiro, a fundraising consultant who works with community redevelopment organizations. Charities always get affected in an election year, she says, and all the more so in a closely contested election. “Many people are saying they cannot make a major gift to a particular nonprofit until after the election,” says Shapiro, who was told by an actress active on the charity circuit recently that she did a fundraiser in Hollywood for Kerry. “Here is someone who loves to raise money for AIDS, human rights groups and other kinds of nonprofit organizations. People like this are directing their time and money toward the presidential elections.”

Some groups seem to be weathering the season better than others. Big institutions with sophisticated fundraising operations, such as the United Way, report that they are not being affected.

Rick Cohen, executive director of the National Committee for Responsive Philanthropy, points out that charities founded by politicians themselves also soak up funds. “In an election year, the unspent campaign money the politicians have is supposed to be donated to a charity,” explains Cohen. “Increasingly, politicians discover that the easiest charities they can donate to are their own charities.” There are more than 40 such politician-backed funds, including Celebrations for Children, which is associated with House Majority Leader Tom DeLay. That group canceled a planned fundraising gala during the Republican National Convention after coming under fire for using the charity to raise money for political purposes.

Some nonprofit leaders are less worried about losing a few donations this election season than they are about being overpowered year after year by well-funded opposition. “Our biggest concern about it is not that we are going to get less money,” says Joel Berg, executive director of New York City Coalition Against Hunger, “but that the folks we represent are really locked out of the process because they cannot contribute to the campaigns.” Berg points to the minimum-wage increase under consideration in Congress. Business groups opposing the bill have made major contributions to members of Congress in both parties. “The officials would claim they don’t create policy in response to campaign contributions. But few of them deny it creates access. At least it gets them in the door,” says Berg. “What helps to get low-income people in the door?”

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