Wall Street's woes worry charities, arts groups

Financial services firms and their well-paid executives have historically been generous givers to museums, colleges, hospitals and social service organizations, both in New York and around the globe.

Now, nonprofit administrators are watching the crisis on Wall Street with queasy stomachs as reliable donors like Lehman Brothers, American International Group, Merrill Lynch and Bear Stearns change hands or go belly up.

For now, the firms that have taken over struggling companies aren't saying what they'll do, and it may be months before charities learn whether pledges are being honored.

"We've got a big question mark hanging over our heads," said Marsha Stein, executive director of Citymeals-on-Wheels, a group that relies heavily on private donations to deliver food to 18,000 homebound New Yorkers.

Bear Stearns employees, alone, she said, were good for about $500,000 in donations to Citymeals each year — generosity due partly to the firm's requirement that its 1,000 senior directors contribute 4% of their annual compensation to charity.

That support came into question overnight when the firm disintegrated in March and was purchased by JPMorgan Chase.

The crisis is likely to hit nonprofits on several fronts, said Gordon J. Campbell, president and chief executive of the United Way of New York City.

Troubled firms may slash corporate giving while they focus on their own problems. Wealthy individuals may scale back as well as their stock portfolios lose value and their pay bonuses vanish.

And with tens of thousands of layoffs expected, local income tax revenues are expected to slide, meaning that there will be less government money for social service organizations, even as the number of needy people rises.

"We could see an exponential increase in need and potentially fewer dollars coming in the door," Campbell said.

Even now, some past beneficiaries of Wall Street largesse are trying to determine whether major pledges made by struggling firms will be paid.

At this time last fall, Lehman Brothers was pledging $10 million to Spelman College in Atlanta to help establish a center for global finance that bears the company's name. Now, with Lehman Brothers Holdings Inc. in bankruptcy, it's not immediately clear what will happen to that support.

A Spelman spokeswoman said officials at the college were sympathetic to the company's plight and are aware that "the situation is continuing to evolve."

Inquiries about other recent Lehman Brothers pledges produced similar responses. Last year, the investment bank gave away $39 million in the U.S., Europe and Asia.

Administrators at the Robin Hood Foundation and the Harlem Children's Zone, each of which was in the process of receiving $3 million from Lehman through 2009, declined to comment on whether they expected that support to continue. The Apollo Theater, which was one of the 87 cultural institutions supported by Lehman, also said it couldn't comment on the remainder of the $1 million it had been slated to receive over four years.

Some of the philanthropy of the vanishing Bear Stearns and Lehman Brothers is expected to be taken over by the firms acquiring parts or all of those companies, JPMorgan Chase and Barclays.

Both firms declined to comment on their plans, but stressed that they, too, have a record of strong giving. JPMorgan Chase said it gave $114 million to charitable causes last year.

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