State's Largest Nonprofits Start to See Recession's Effects

by Jan Cottingham  on Monday, Jun. 29, 2009 12:00 am  

 (For the list of Arkansas' 30 largest nonprofit organizations, click here for Part 1 and here for Part 2. A spreadsheet version is also available.)

The recession's toll on the assets of Arkansas' nonprofits is just beginning to become apparent.

The current economic downturn, the worst in 70 years, officially began in December 2007, according to the U.S. government. The annual Internal Revenue Service reports filed by nine of the state's 30 largest charitable organizations include figures through June 30, 2008, the latest available. Of those nine, four saw a decline in assets and four essentially tread water. One, however, saw a big gain - $19 million from the previous year.

The gainer? Heifer International. That helped push Heifer to No. 8 on this year's list compared with its No. 10 ranking last year.

Heifer's figures next year are likely to look much different. The nonprofit, which operates in more than 50 countries around the world, announced in January that it was freezing the salaries of all employees starting March 1 and implementing a 3 percent reduction in pay for top executives. At that time, a Heifer spokesman said the nonprofit had told workers in January that donations were down 11.5 percent for the current fiscal year, which ends June 30.

This month, Heifer announced a 20 percent work force reduction. Sixty-one of its 338 employees in the United States were laid off, with 28 of those from the organization's Little Rock headquarters. Heifer, which employs 1,119 outside the country, said it planned to eliminate 230 of those jobs.

"The global economic situation has created a shortfall in donations of around 22 percent from this time last year," Jo Luck, Heifer's president and CEO, said in a June 12 news release. "We did our best to avoid layoffs but have had to make some extremely difficult decisions to ensure Heifer's sustainable community development work for years to come."

The layoffs came at an inopportune time for the high-profile nonprofit, which opened its $17.5 million environmentally friendly headquarters next to the Clinton Presidential Library in March 2006. On June 5, one week before the official announcement of the layoffs, Heifer dedicated its $13.5 million Heifer Village on its headquarters campus. The village comprises an education center, a commons area and a restored wetlands area.

This year's list is different in other ways. It includes 30 organizations compared with the 25 listed the last several years. And for the first time the Murphy Foundation, based in El Dorado, makes an appearance. The low-key but high-dollar foundation - $92.6 million in assets in 2007, a $25 million increase over 2006 - had managed to stay off Arkansas Business' radar. No longer. It ranks No. 11 on this year's list.

The Murphy Foundation, headed by R. Madison Murphy of the Murphy Oil family, gives grants and scholarships to college students in south Arkansas.

In addition, we worked to improve our count of the number of nonprofit employees earning more than $50,000 annually. That made the biggest difference with organizations that work worldwide, such as Heifer, the William J. Clinton Foundation and the Winrock International Institute. The Clinton Foundation, which operates in more than 40 countries, counts the most of those relatively high earners: 121.

The top seven nonprofits maintained their rankings from last year, with, not surprisingly, the Walton Family Foundation Inc. - $1.6 billion in assets - continuing to lead the pack.

However, the latest figures gleaned from the organizations' IRS reports can be more than 18 months old. That's the case with the Harvey & Bernice Jones Center for Families, whose 2006 fiscal year ended Nov. 30, 2007. And that makes trends a little hard to discern.

The most recent numbers for the Walton Family Foundation, for example, come from its 2007 IRS Form 990, which contains the figures for that calendar year. It saw a $200 million increase in assets compared with 2006. The assets of 19 of the nonprofits rose, 10 fell and one, the El Dorado Promise Inc., is a newbie, filing its first 990 in 2007.

Nevertheless, charities statewide have reported anecdotal evidence of declining donations - and increasing demand. In addition, the plunging stock market has battered the portfolios of many foundations. All this means that next year's list will likely look gloomier.

Nationwide, charitable donations in the United States fell 2 percent in 2008, according to the Giving USA Foundation. The decline was the first since 1987 and only the second since the foundation began conducting its survey in 1956.

Despite that, charitable giving last year was about $307.65 billion. Donations in 2007 reached a record $314.07 billion, the foundation reported.

 

 

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