One of the hidden costs of a poor economy is its effect on charitable contributions. As people lose their jobs, as businesses large and small either close their doors or just experience a decline in profits, charitable giving decreases.

At the same time, for many charities, particularly those that work with the poor and unemployed, the need increases.

Charitable giving by individuals and corporations did decline by 2 percent in 2008 throughout the United States. However, that was after a record high in giving experienced in 2007, when donations totaled $314 billion, according to statistics from the National Philanthropic Association. And while 2 percent might seem small, it translates to a total of $6 billion fewer dollars, and a significant drop in income for many struggling non-profits.

Altogether, two thirds of U.S. charities saw a drop in their charitable donations last year. The exceptions were organizations that work in the areas of religion, public benefit, and international affairs, according to the NPA.

Final tallies are not yet in for 2009, but “the overall decrease may not be as severe as in past recessions,” according to a report from The Chronicle of Philanthropy. But where money flow has ebbed, volunteerism is making up some of the gap.

Local outlook mixed. “The nonprofit sector has faced significant challenges, but in general, successful organizations have remained successful,” says Nancy Kieling, executive director of the Princeton Area Community Foundation. The foundation promotes philanthropy across greater Mercer County and central New Jersey. It manages more than 200 charitable funds, including 20 agency endowments created by the Foundation and members of the community.

The foundation is in the unique position of both accepting donations and distributing grants, and Kieling has found that overall her foundation has been able to continue to give at the same level. “Our own grants are tracking comparably to last year,” she says. She attributes the foundation’s ability to continue to give to the generosity of local people and businesses.

One corporation’s plan. Tyco, headquartered at 9 Roszel Road, is an international corporation that provides products in three areas: electronic security and alarm monitoring, fire-fighting equipment, and water purification and flow-control solutions.

In past years the company has focused its charitable giving in the areas of life safety, education and mentoring, and environment and water, according to Paul Fitzhenry, the company’s vice president of corporate communications. However, this year it has focused its contribution more on “organizations that assist people with basic needs,” he says. “We have given a larger percent of our charitable contributions to support groups that help the homeless, feed the community, or assist with transitional housing.”

When Tyco moved to Mercer County in 2004 it made a commitment to the Mercer Alliance to End Homelessness. So far the corporation has given yearly grants to the Alliance and at a recent event held by the Alliance to announce its progress toward its ten-year goals, Tyco reiterated its continuing support for the program.

In addition to charitable giving at the corporate level the company also sponsors a matching gift program in which contributions from employees to any qualified non-profit are matched by the company. This is one area where Fitzhenry has seen a drop in donations.

“The discretionary donations are down about 20 percent this year,” he says. However, this is negated slightly by an increase in donations from employees to the corporation’s annual United Way drive. Contributions there were up about 6 percent.

Volunteer opportunities. Donating money is not the only way companies and their employees can give to charitable causes. Tyco also sponsors employee “caring days” where groups of employees sign up to spend several hours volunteering for a nonprofit. Activities include cleaning, painting or other maintenance projects, assisting staff at a summer camp, or almost any other project that fills a need for the charity.

The company has seen an increase in volunteers for these programs this year, says Fitzhenry. “Many departments will sign up for this type of activity together as part of a team building exercise,” he explains. “Working to help people in need is a great way to increase team spirit.”

Part of the credit for the increased participation belongs to the nonprofits themselves, he adds. “They have become more creative in identifying opportunities for small groups of volunteers.” On the corporate side, Tyco has also attempted to make volunteering easier for its employees. “We encourage people at the department level to just pick up the phone, call the organization, and arrange things themselves.”

Habitat for Humanity of Trenton is one nonprofit that has seen an increase in volunteerism while seeing a decrease in monetary giving. But Stephen Brame, executive director for the program, sees a link between service and giving that he believes will eventually lead to a return to giving for his group.

Monetary donations are down 45 percent this year at Habitat. “There is a direct connection between the economy and the capacity of people to give a donation,” he says. The organization receives the largest percentage of its donations from individuals with the remainder coming from foundations, planned giving, businesses, and religious organizations. In addition to monetary donations, Habitat also receives donations of building materials that are used in building houses for low-income families. These donations are also “a bit off for this time of year,” he says.

But the increase in service days by individuals and groups from churches and businesses has helped take up the slack in monetary and product donations.

“Any time we have a volunteer do something on a house that we are building means that we don’t have to pay a professional for that service,” says Brame. In addition, he has found that volunteering is often a first step toward making a regular monetary donation. “The person, or the business, starts to feel a connection with us after they have volunteered their time. That means they are more likely to make donations to us in the future.”

Small business gives too. Laura Occhipinti, founder of New Jersey Young Professionals, started her business in 2004 and now boasts about 2,000 dues-paying members. Members get together for a variety of events throughout the year, both paid and free. Happy hours, held throughout the year, are free events except during the month of December, when Occhipinti charges a $5 fee that goes entirely to charity.

Last year the events brought in about $1,000 that Occhipinti split between three charities. This year, while she has planned the same number of events, attendance was down at each, and she received only $750, which she plans to donate to, a program that mentors college seniors and young professionals.

“The members like the idea, I’ve never had any complaints about charging a fee, but right now there are so many people who are unemployed I’m getting fewer people at many events,” she says.

Occhipinti and Kieling both that, even when feeling the effects of the economy personally, most people want to continue to give to those less fortunate. “When people really care about a cause they are stepping up and giving more because they know it is necessary right now. Generous people remain generous,” says Kieling.

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