U.S. charities resisting recession, but hardships ahead

By Daniel Trotta

NEW YORK (Reuters) - Stocks are languishing, jobs are vanishing and experts predict the U.S. recession will grind on for months, but Mark Tuohey figures now would be the worst time to cut back on charitable giving.

"It just means you have to dig a little deeper," said Tuohey, a litigator at the Washington law firm Vinson & Elkins, who said he donates nearly 10 percent of his income to an array of charities.

Charitable giving by wealthy individuals and endowed foundations in the United States has proven resilient during the economic crisis, with some foundations increasing donations in response.

Experts fear a drop-off in 2010 because philanthropy is something of a lagging indicator. Many corporations donate to the arts, education and social services based on a three-year average of profits.

"I hear from (wealthy) people that they've got a tough situation this year," Tuohey said. "My reaction is, 'You can afford to lose some.' Think about the less fortunate, the people who have tough situations every year."

Since the heavy economic turbulence of September and October, nearly 50 grant-makers -- primarily endowed foundations and corporations -- have pledged more than $100 million in response to the crisis, according to the Foundation Center, which collects grant data from about 1,000 charitable foundations.

More than half of that has been dedicated to housing issues, such as preventing home foreclosures, with much of the rest going to food banks, services for the homeless and financial counseling.

MODEST REDUCTION IN 2009

U.S. charitable donations outpaced inflation in 2008 and are down modestly in 2009, said Steven Lawrence, the Foundation Center's senior director of research. A more thorough analysis of 2008 won't be available until March.

Wealthy individuals continue to give. The UJA-Federation of New York, a Jewish organization that serves 4.5 million people a year through more than 100 agencies, raised $43 million at an annual fundraiser on September 26, up $2 million from October 2007. A big Wall Street dinner on December 16 raised $18.8 million, down from $21.6 million from the same event in 2007.

"When you raise 19 million in one night, you don't say the sky is falling," said Stuart Tauber, a senior vice president at UJA.

But reductions are coming, he said, which could be especially hard on those in need as state and local governments cut back on spending.

Cuts in charitable giving would mean the most vulnerable -- the homeless, the mentally ill and the elderly poor -- can expect more misery.

"People are nervous. We see it in the stock market, consumer shopping, everywhere you turn," Tauber said.

About a quarter of corporate giving in recent years has come from foundations tied to the now-distressed banking and finance sector, "so clearly there's going to be a greater impact," said the Foundation Center's Lawrence.