Causecast

The pipeline from corporate America to the nation’s charities is starting to dry up, as losses in the stock market mount and the U.S. recession deepens. With many large organizations depending on corporate largesse, their futures are suddenly uncertain.

Billionaires and large banks are pulling back on commitments or scaling back pledges. Some generous givers, such as Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co., have folded or been bought. The pain is spreading to other big institutional donors and trickling down to New York’s famously lavish charity-gala scene, which is suffering lower turnouts and fund-raising hauls.

On Monday, the Bill & Melinda Gates Foundation said it would slow the pace of grants next year — a sign that even the titans of philanthropy are rattled by current economic conditions.

Large donors signaling tighter times include David Koch, an executive vice president of Koch Industries Inc., an energy and manufacturing company and the largest private corporation in the U.S.; Sheldon Adelson, the Las Vegas casino mogul; and Maurice “Hank” Greenberg, the former chief executive of American International Group Inc., the large insurer.

The chilled giving atmosphere arrives just ahead of the holiday season, when charities tend to reap the most donations. Lower donation totals threaten a range of organizations, from antipoverty groups to community-based meal providers and major cultural institutions.

In the past, giving has tended to withstand economic turmoil, usually falling just 1%, adjusted for inflation, during recessionary months, said Patrick Rooney, interim director at the Center on Philanthropy at Indiana University. But this time, big market drops are happening at the same time that people typically start planning their end-of-year gifts, Mr. Rooney says.

Mr. Koch, the executive vice president at Koch Industries, of Wichita, Kan., just pledged $100 million to renovate the New York State Theater, which houses opera and ballet performances at Lincoln Center.

But Mr. Koch is turning away solicitations for new gifts. That’s because he expects earnings at his company to sink 50% this year amid falling oil prices. “I’m not making any new commitments,” says Mr. Koch, who uses dividends from company stock to make donations.

Mr. Greenberg, the former chief executive of AIG, which nearly collapsed before receiving government assistance, has watched assets in his two foundations plunge in recent months.

Anyone with a foundation whose endowment is heavily invested in AIG stock “is taking a bath,” says Mr. Greenberg, adding that he intends to fulfill current commitments but that gifts would inevitably be fewer and smaller in the months ahead. “You can’t give what you haven’t got.”

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