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The impact of September 11, 2001 is of such magnitude that our generation will forever remember where we were at that instant on Tuesday morning. The implications and the perspectives we have as they relate to the impact on our nation are profound. The implications for philanthropy and the future of health care philanthropy will be key to our successful future and our ability to provide meaningful services to our communities. Putting the elements of this tragedy in perspective takes two forms: the first, that of the impact on our nation, and the second, how it relates to our philanthropic efforts. Additionally, to grasp this tragedy, four key aspects come into play: the economic cost, the industrial impact, the relief effort, and the human cost. Economic Impact Consider that the total monetary damages from the attacks on September 11th equal more than $70 billion. Damages in the most costly one-day disaster prior were $100 billion in the Kobe, Japan, earthquake of 1995. Insurance liability resulting from the attacks are estimated anywhere from $15 billion to $70 billion. Damages of the previous most costly U.S. disaster were $44 billion in the North Ridge, California, earthquake of 1994. The stock market value lost during the week ending September 21st is $1.38 trillion. The percentage return of the Dow Jones Industrial Average that same week was -14.3 percent, compared to the percentage return during the worst week in the Dow Jones' history, —15.5 percent the week of July 21, 1933. Finally, the drop in consumer confidence from August to September 2001 was 16.4 points; compared with the one month drop in consumer confidence September to October 1990 was 23 points after the Iraqi invasion of Kuwait in August 1990. Industrial Impact The industrial impact is severe. For the airlines, the actual estimated net income will drop severely, from $6 billion in 2000, to an estimated $4 billion in 2001, and to an estimated $2 billion in 2002. More immediately, airline layoffs announced during the week ending September 21st reached 73,000. Hotels and the travel industry are feeling the pinch as well. Before September 11th, the projected change in hotel net income for the year 2002 was +7.6 percent, while the estimate after September 11th was -60 percent—a tremendous loss to the hotel element of the travel industry. In the aerospace industry, the actual change in net income during the past two years was -50 percent; the estimated net for the next two years is now +30 percent, assuming a prolonged war in this engagement on terrorism. In the property and casualty insurance arena, the industrial impact relates to estimated net income, which was $9 billion in 2000. It is expected to drop to $6 billion in 2001, and rebound in 2002 to $9 billion. The Relief Effort The number of Red Cross and Salvation Army volunteers reached more than 13,000 in Washington, New York and Pennsylvania, from September 11-21. As of September 17th, total pledged funds had reached $325 million. That amount has since grown to well over $1 billion. The largest single pledge came from the Eli Lilly Company Foundation at $30 million, while the total of the next 10 largest corporate donors reached $105 million as of the end of September. As it stands today, corporations have committed more than $230 million to disaster relief funds in New York and Washington, D.C. Our private foundations have given more than $75 million for relief and recovery efforts. There are numerous corporations in the $15 million, $10 million and $5 million donation categories. Even more have donated $1 million in response to this tragedy. Significant for philanthropy is the fact that in the early days of this effort (by mid October), approximately $455 million had been donated to the Red Cross, $66 million of which had been donated using the Internet. The Human Cost The human cost factor is the most devastating and will affect us all. The total loss in all September 11th attacks at their highest estimates reached 6,867, including those missing and presumed dead. The previous U.S. high one-day wartime death toll was 4,808 at the Battle of Antietem in September 1862. The death toll at Pearl Harbor on December 7, 1941—which catapulted us into World War II—was 2,390. Previously, the highest U.S. one-day peacetime death toll was slightly more than 6,000 in the Galveston, Texas, hurricane and flood in 1900. It is horrifying that the age of the youngest identified victim on one of the hijacked planes was two-year-old Christine Hanson of Groton, Massachusetts. The number of firefighters killed or missing at the World Trade Center reached more than 350. The highest previous U.S. one-day death toll among firefighters was 78 in the San Jose Valley, Idaho, wild fires in 1910. Twenty-three percent of Americans tried to reach a relative or friend on September 11th to determine whether that person was safe. There are 15,000 children who lost one of their parents on September 11th, while 1,200 children were orphaned that day. Truly, the numbers we face are catastrophic. Meanwhile, the response from our citizens and from around the world has brought us together and united us as a nation and in our philanthropy. The Future for Philanthropy Predicting the future for philanthropy in the longer term is difficult to call since the effects of these attacks are in most ways unprecedented. However, we do have data from previous major crises to tell us something about what we are likely to face. The article and chart published in the November AHP Connect outlined some of the trends highlighted here. Historically, we know that giving is closely correlated with the economy, and there does seem to be consistent trends in giving and in the economy in the years surrounding major catastrophic events. Typically, as one might expect, the stock market has dropped immediately following most major crises in the United States' history. There are exceptions—for instance, following the World Trade Center bombing in 1993 and the Oklahoma City bombing, the stock market did not drop significantly, perhaps because these events were seen as more localized than the far-reaching World Trade Center, Pentagon and Pennsylvania events. We know, too, that within one year of the date of a catastrophic event, the market had recovered in all but a few cases. As history relates to giving, the total amount of giving in the United States has increased every year for the past 40 years but one—1987, due in part to the loss of the exemption of gifts of appreciated property. This increase has been sustained through wars, recessions and other crises. While the rate of growth has varied from year to year, people in the United States consistently have given more than the previous year. We know, too, that in the calendar year after a crisis event, giving grew at a greater rate than it did during the year of the event. This was true in almost all instances, but not after the 1993 World Trade Center bombing. In regard to acts of terrorism, mainly the 1993 World Trade Center bombing and the Oklahoma City bombing, the rate of growth and giving slowed in the year after these two events. Because the events of September 11th and their aftermath are unlike anything that has previously occurred, their effects on peoples' behavior, including their giving, is difficult to predict. We know the economy was already teetering on the brink of a recession prior to September 11th, and the condition of the economy does have a direct influence over people's giving and their levels of confidence. There have been questions raised about a possible shift in the distribution of funds—that is, who will be receiving them. However, while there may be a small change in distribution, many sub-sectors, such as religion, are likely to remain unaffected. Some organizations (and we're seeing this already) have experienced a decline in giving (short-lived we hope), while others directly helping or assisting those affected by the attacks are seeing a significant increase as individuals, corporations and foundations shift some of their giving to the relief efforts. Additionally, while corporate giving has hovered around 1 percent of corporate pre-tax profits in most years, some corporations are reallocating their giving within their usual levels to assist those affected by the events of September 11th. The fact that many citizens perceive this terrorism as a personal attack on American business, they may react with a substantial increase in their giving, at least on a one-time basis. Donor Perception With all that is surrounding us now, we are finding that donors, researchers and even the talk shows are asking direct questions about the giving effort and the creation of so many new funds to support those affected by the disaster. The formation of the Twin Towers Fund, which is out of the New York City Mayor's office; the Heroes Fund for the New York City Police Foundation; the New York State World Trade Center Relief Fund; the World Trade Center Police Disaster Relief Fund; the September 11th Fund, established by the United Way of New York City; along with many others, is creating some confusion in donors' minds. Donors are asking questions such as "Where is it going?" "Who is going to get it?" and "When will that take place?" particularly since some agencies managing these funds have distributed less than 10 percent of the dollars received and others have yet to distribute any funds. Remember, too, that the amount donated in the first two weeks following this disaster was equal to slightly more than 25 percent of all the dollars raised by relief agencies in the prior year. Additionally, the initial donations have been concentrated in a handful of a few organizations—in particular, the American Red Cross and the Salvation Army. Seven out of ten individuals have contributed to relief funds, with 75 percent of those monies going to either the Red Cross or United Way September 11th Fund in New York City. What does all this mean for the future of health care philanthropy and our donors? One of the first things to remember is that donors' attitudes about giving have shifted because their attitude and confidence in business and the economy have given them reason for pause. Donors need to have a positive attitude about the future, and a level of comfort about their situation and their future business and economic relationships. Consequently, you may see donors who are delaying, at least for a short time, their commitments to traditional giving, with the exception of the disaster relief effort. Therefore, we should be reluctant to use the crisis to connect with donors, particularly if we are not providing direct services to those caught up in the disaster. Clearly, it is advisable for us as health care providers to avoid references to the attack unless we are providing services directly related. It is in our best interest and those of our communities and donors to promote and to provide our services based on what we do best, focusing on the respective niches we serve in health care. This means championing those special programs we offer in our community that provide direct services; the leadership, stability and programs and services we provide that serve our communities; the philanthropic success we have had in the past and building upon it; the fact that our long-range planning for our organizations makes them valuable and gives them staying power in the communities; and capital improvement and other specific program activities that we have under way, specifically related to communities. Clearly, the environment in which we find ourselves is all about acknowledging what has happened and the difficult times we are facing. Demonstrating the community support we are providing as it relates to these tragic disasters, such as employment in our communities; future growth and economic health; issues surrounding childrens' fears about this experience; and other services to survivors and extended survivors will assist us in leading philanthropy locally. Our country and our citizens have been hurt by these terrorists' actions, and this terrorism influences philanthropy. Our appeal to meeting family needs and the community directly will carry the day for us. For those of us personally involved in these tragic events, we know that the human factor is the key issue we must address. In New York, for example, if you take the community rail through Long Island, you will find that for weeks following this disaster, there were 50, 75 and 100 cars left abandoned and unclaimed at various railroad stops. Fifteen thousand children lost a parent and 1,200 lost both parents. For those of us personally affected, we have a lot on our minds about the future, about our families, about our health, about our country. We are concerned that the lessons learned may be lost if we do not push ahead; we are concerned that loved ones will be forgotten unless the rest of the nation heeds these lessons. Our appeal for philanthropy helps us as professionals address these concerns for those directly and personally effected. Philanthropy and health care will continue to grow and become more influential, enhancing lives through health care, and this must be achieved on the local basis. Our members are particularly well positioned as they educate their donors and their communities about the importance of the essential services that we offer in our effort to connect people and enhance lives.
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AHP Resource Information Center (RIC)