Bankruptcy Taking Bite From Charities' Budgets : Donations: The United Way and its clients fear that the ripple effects of county crisis may yet turn into a tsunami.

By MICHAEL GRANBERRY

April 9, 1995 12 AM PT

TIMES STAFF WRITER

The Girl Scouts anticipate having to sell more cookies.

The Boy Scouts won’t have as much food to feed the hungry.

The people at Children’s Hospital of Orange County see it in even darker terms, as yet another health-care crunch.

All stand to suffer from the county bond crisis, whose tentacles are choking charitable contributions. The United Way of Orange County expects to impose a 10% funding cut to some of the largest social service agencies in the region, its directors warned in a series of meetings last week.

That means the aforementioned agencies, as well as the Salvation Army, the American Cancer Society, the American Heart Assn., the Red Cross, Catholic Charities, the United Cerebral Palsy Assn., the Rehabilitation Institute of Southern California and the YMCA.

Last fall, county employees pledged to United Way a record $875,000. But December brought the bankruptcy, and since then--with more than 1,000 county employees facing possible layoffs--pledges from those people have looked as certain as future paychecks.

“When the county catches a cold, we sneeze too,” United Way spokesman Jeff Rocke said.

The news hit the local chapter of the Boy Scouts of America on two fronts. Should a 10% cut be imposed, the chapter would see a $40,000 drop in revenue, from last year’s $400,000 allotment, officials say. The Boy Scouts also expect to lose a $10,000 grant from the county itself.

“First, we called it ripples,” Devon Dougherty, spokesman for the Orange County Council of Boy Scouts, said of the bond crisis and its ongoing impact. “Now, it’s undulating waves crashing over everybody.”

A smaller stipend from the United Way will undoubtedly affect what Dougherty calls “the largest single food drive in the county--ours.” Largely with money from United Way, he said, the Boy Scouts provide food for 150,000 people for three or four months.

“We also serve 18,000 at-risk boys and girls in the inner-city areas of Santa Ana in our extensive outreach program. They need more, rather than fewer, dollars all the time,” he added.

The $10,000 in county money was set aside for dock improvements at the Newport Beach Aquatic Sea Base, which Dougherty says serves 20,000 people a year. But that money vanished--as fast as a county derivative gone bad.

“Losing money is definitely not good news for anybody,” Dougherty said. “But remember, in Orange County we’ve come through a recession, fires, floods and earthquakes, and we’ve continued to grow. And now we’re doing our best to ford this rapid stream.”

The Girl Scouts Council of Orange County expects to receive about $25,000 less from United Way, which Executive Director Mona Ware sees as having an impact “on girls we serve in the inner city.” She remains hopeful, however, of accomplishing just as much as before, albeit with fewer dollars.

“We’ll just have to try to make it up somehow,” she said. “Cutting our ($4.5-million annual) budget, selling more cookies. . . . We’ll try to do it somehow. We’ve been belt-tightening for the last three to four years. We’ll just have to cinch it in some more.”

Bill Wenke of the Salvation Army has watched the funding picture for social service agencies go from unbridled optimism to one of gloom--in almost no time--and in a county he thought would never know the meaning of the word bankrupt.

“The county employees association was given an award at a United Way breakfast a while back,” Wenke said. “It was after their record (pledge) year had been announced. Now, a lot of those employees have been terminated, and a lot of others are very concerned. It’s a natural conclusion that those pledges will go. It’s a sad fact--but a fact.”

At Children’s Hospital of Orange County, the impact is being felt not only in the expectation of fewer dollars from United Way, but also in more and needier patients--an almost-certain reality resulting from county health-care cuts.

“It’s a difficult time in many ways,” said Ken Mutter, director of special gifts for the hospital’s foundation, which received $349,000 from United Way last year and now expects 10% less. “We’ll just have to make up the funds somewhere else.”

Rocke, the agency’s spokesman, said United Way funding is under a cloud for several reasons, not the least of which is the bankruptcy. In the wake of a scandal involving its national director, the agency’s funding in Orange County alone plummeted from $20.2 million in 1991 to $18.4 million in 1992.

On another front, United Way is experiencing a less-than-welcome trend in donors designating money to specific agencies, thus depleting its general fund, on which dozens of agencies depend.

“About five years ago,” Rocke said, “106 (county) organizations received 99% of all of the money donated. Since that time, the donor-choice program and other flexibilities have caused the general fund to grow smaller and smaller. So, if our annual campaign doesn’t grow in a proportionate fashion, we end up with big problems.”

But at a time when the general fund seemed to be mounting a comeback, the county went bankrupt. The figures show the pattern:

United Way of Orange County experienced its all-time best year in 1990, with $21.4 million in contributions. After lesser years in 1991, followed by the scandal of ‘92, the agency rebounded in ‘93, with $19.3 million in contributions, followed by $19.5 million in 1994.

Now faced with a county-induced shortfall, the board of United Way of Orange County ratified its funding decisions on Thursday. It voted to reduce its operating budget by 5%, or $122,000, and to lower the amount of money paid to its 10 largest affiliated agencies.

Rocke said the organization hopes to limit the cuts to smaller agencies, “which would have a much harder time of making up a shortfall.” Larger agencies, he said, have the greatest ability of absorbing a 10% cut.

“Rather than ask the South County Community Center to take a 10% cut, we feel the Salvation Army, for instance, is better equipped to handle it,” Rocke said.

But keeping contributions stable--no matter who gets them--is the modern-day challenge of fund-raising, the county crisis notwithstanding. Rocke said the agency might have to double its efforts in the community and aggressively seek help from the business community.

“It’s not as if our fund-raising challenges have grown out of the bankruptcy exclusively, as people tend to believe,” Rocke said. “But the bankruptcy is compounding those challenges and multiplying the issues we have to contend with. We’re an extension of the region we serve.

“Any time adversity strikes, whether it’s a recession, natural disasters or the bond crisis, it has implications for us,” Rocke said. “It’s the reality of fund-raising--and, unfortunately, beyond our control.”