Oct. 30 (Bloomberg) -- Last spring, the Chamber Music Society of Lincoln Center sent Wall Street firms its annual pitch for a major donor to underwrite the group's fall gala and quickly began receiving rejections.

By April, a few weeks after the collapse and fire sale of Bear Stearns Cos., ``it was clear that we were not getting the kind of responses we needed,'' said Norma Hurlburt, executive director. The gala was canceled and now she is poring over the society's $6 million budget ``to see what we can do for less.''

U.S. nonprofit organizations are slashing budgets, freezing salaries and postponing programs as a turbulent economy forces donors to rethink their giving. The worst credit crisis in seven decades, which began with the collapse of the subprime-mortgage market in early 2007, has cost the global banking industry $680.5 billion in writedowns and losses.

Even nonprofits with loyal and generous supporters feel the financial squeeze. New York's Museum of Modern Art, a leading fundraiser among U.S. museums, cut its department budgets by 10 percent this month, though visitor traffic and retail-store sales are strong. Those cuts will be reviewed at the end of the year, MoMA spokeswoman Kim Mitchell said in an e-mail.

The Ronald McDonald House of New York Inc., which provides housing for children with cancer while they receive treatment, is looking for new donors to compensate for an estimated 25 percent drop in corporate donations.

Three Big Donors

Longtime funder American International Group Inc. said it will reduce its contributions and involvement in the charity significantly, according to the nonprofit's president, William T. Sullivan. Ronald McDonald also lost Bear Stearns and Lehman Brothers Holdings Inc., which were supporters of the charity for more than a decade.

``We're buttoning down for a really tough year,'' Sullivan said.

``The thinking among managers is, `OK, let's begin to plan, so what programs can we cut?''' said Thomas H. Pollak, program director at the Washington-based National Center for Charitable Statistics, which researches nonprofit trends. ``I expect that contributions are going down. You might not actually see it in 2008, but you may in 2009.''

Figuring out what to cut is as tough as the cutting itself. ``You can't just start eliminating stuff,'' said Houston Ballet Managing Director Cecil C. Conner Jr. ``You can't cut half the number of dancers unless you want to become a different kind of company. And if you reduce the marketing budget, you reduce the income, which puts you deeper in the hole.''

Wachovia Layoffs

United Way of Central Carolinas Inc., based in Charlotte, North Carolina, has raised $17.1 million halfway through its annual campaign, down from $30.1 million at the same time last year. The charity, which provides money to 91 nonprofit groups, relies heavily on donations from Bank of America Corp. and Wachovia Corp., both also based in Charlotte. The banks' employees provided 37 percent of the United Way's annual donations in 2007.

``Donors are feeling financially pinched and it's not just the banks,'' said Diane Wright, United Way's senior vice president for resource development and regional operations. Tony Plath, a professor of finance at the University of North Carolina at Charlotte, predicts that at least 1,000 of the area's 20,000 Wachovia jobs will be eliminated after it's acquired by Wells Fargo & Co.

Black-tie galas, often the biggest single-night fundraisers for nonprofits, are being canceled or scaled back because donors aren't eager to spend $500 or $2,500 for filet mignon and a tax write-off.

Not the Plaza

The Los Angeles-based Afghanistan World Foundation, which sends aid to that nation's health-care and school systems, canceled its Nov. 19 gala at New York's Plaza Hotel when pledges to buy tickets and tables fell through. Instead, it received a donation from Geneva-based watchmaker Vacheron Constantin's North American office at the launch of its new $60,000 Quai de l'Ile luxury watch.

The Manhattan event, which honored the foundation's supporters -- including author Salman Rushdie and architect Richard Meier -- was held at the Frank Gehry-designed Manhattan headquarters of IAC/InteractiveCorp., the Internet company controlled by Barry Diller.

``The honoree was the U.S. ambassador to the United Nations, and everything had been planned for the gala,'' said Dr. Nur Amersi, the foundation's executive director, who says she and her colleagues now pay their own travel expenses to keep the organization on a tight budget. ``We were very, very disappointed.''

Hurlburt said the retreat of Wall Street donations has ushered in an era of conservative spending by New York nonprofits.

``I don't think I'm alone in feeling that the world we are living in, where people are making hundreds of millions a year and tens of millions in bonuses that were doubling and tripling, seemed a little unreal,'' she said. ``Maybe there's some reality creeping in here now. And I should do my best to react to it.''

To contact the writer on this story: Patrick Cole in New York at pcole3@Bloomberg.net.

Last Updated: October 30, 2008 00:01 EDT