Wall Street's woes worry charities, arts groups
NEW YORK -- 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.
