Foundation investment managers are struggling to figure out what advice to follow, speakers at a session conceded.

“Listening to gurus about what the future holds is really a challenging task for all of us,” said Arun Sardana, senior vice president of investments for UBS Financial Services, referring to how predictions for the past year and months far exceeded actual market results.

But Mr. Sardana said foundation investment managers do have several indicators to help guide them. He urged foundation investors to pay close attention to the effect inflation would have on their investments. While inflation is unlikely to be an immediate concern, he said, inflation is likely to rise once companies stop shedding jobs.

“Chances are that inflation will really be a problem starting in 2011,” he said. In anticipation of that, he said, foundations should have investments in their portfolios that are likely to rise in value with inflation.

For example, he said, foundation should look to industries that will grow based on demographic changes, including those that focus on water, agriculture, infrastructure, energy, and “hard assets.” He advised foundations to look for exchange traded funds, or ETFs, in those areas, so long as those funds do not rely on any one or two companies for too heavy a percentage of the fund.

Mr. Sardana also said one little-used but effective indicator foundation investment officers should pay attention to is the Baltic Dry Index, or BDI, which reflects the price to ship raw materials around the world. When the index improve, he says, that is an early sign that international trade is improving.

Mr. Sardana and other speakers urged foundation officials to review their investment decisions frequently, and to document the process they followed to come to their decisions. They also said that in making predictions about risk, officials are likely to make better decisions if they look at the dollar amounts involved, rather than looking at percentages.

Speakers at the session also talked about ways they were adjusting their approaches to giving based on the steep declines their foundations have already seen in the values of their investments.

Andrea M. Dobson, chief financial and operations officer at the Winthrop Rockefeller Foundation, in Arkansas, said the foundation’s assets have been hit hard by the recession, so it is making very few multiple-year grants. Its prior commitments for 2009, for example, are $4.7-million, while it will award just $2-million in new grants.

And she says new grants are almost exclusively for general operating support.

John Hoover Sr., chief financial officer of the Andrea and Charles Bronfman Philanthropies, in New York, says his fund has started to work with other foundations to offer “standby letters of credit” that grant recipients can use as collateral to secure lines of credit from banks. The move is especially attractive because it doesn’t require selling assets at a time when they may have lost substantial value.

The letters help charities get approval for loans to meet short-term cash-flow problems. For example, Birthright Israel, which organizes educational trips for young adults, must make financial commitments for services a year in advance, he said, but many of its donors have asked for extra time to pay their pledges.

By offering standby letters of credit, foundations can help groups like Birthright Israel secure loans to cover that short-term shortfall, he said.

“Essentially it’s a letter saying I promise to pay X in the event that a bank calls for it,” Mr. Hoover said. The amount, he said, is backed by future grant allocations to the grant recipient.