Wednesday, January 7, 2009

Foundation Giving: Recession Resistant if Not Recession Proof?

The Economist reports on the recent public comments of Vartan Gregorian, president of the Carnegie Corporation of New York, and Paul Brest, president of the William and Flora Hewlett Foundation, about endowments, grantmaking, and other effects on the non-profit sector areas from the economic downturn.  While they both acknowledged serious declines in their foundations' endowments - to levels last seen four or more years ago - they also stated that the foundations will stick to planned levels of giving in 2009.  The foundations have, however, begun cutting management and administrative expenses, and, if asset values do not recover soon, their grantmaking will decline in 2010.  Even so, the foundations do not expect to shift grantmaking away from funding long-term solutions for the larger problems that they already focus on.  Mr. Brest also saw at least one possible silver lining in the current economic crisis - increasing pressure for non-profits to collaborate, share resources, and even merge, thereby reducing what he sees as excessive redundancy in the field.  Both he and Mr. Gregorian were not completely confident that even this pressure would be enough to overcome the institutional inertia that prevents such steps, however.

LHM

http://lawprofessors.typepad.com/nonprofit/2009/01/foundation-givi.html

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Comments

I don't know what the statement "stick to planned levels of giving in 2009" means. According to the Hewlett website (http://www.hewlett.org/AboutUs/News/A_Note_on_the_Economy.htm), Hewlett plans to cut its grantmaking in 2009 compared to its 2008 grantmaking. "Planned levels" may simply mean the formula by which the foundation makes its grants in relationship to the assets. But the Hewlett announcement says cuts in 2009, not 2010. Both the Hewlett statement and the brief end-of-the-year letter from Gregorian re Carnegie (http://www.carnegie.org/sub/news/year_end_message.html) affirm that they will honor existing grant commitments, presumably meaning that grants awarded to be paid in 2009 will be paid (a similar announcement came from the Knight Foundation, with no indication about the overall grantmaking anticipated in 2009). My reading of a number of funder surveys suggests that maybe around 20% of surveyed funders (members of regional grantmaker associations) in general, when surveyed in late 2008, planned (or hoped) to maintain or increase their grantmaking in 2009 compared to 2008 grant budgets. But those are hopes and intentions, it remains to be seen whether they will do so. Among major national foundations, the few that have announced plans to increase their grantmaking in 2009 due to the nation's dire economic conditions (MacArthur, Irvine, and Ford have made notable public statements) stand out in contrast against the majority of foundations that apparently will reject a countercyclical grantmaking level.

Posted by: Rick Cohen | Jan 10, 2009 3:52:43 PM

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