July 01, 2009
Can Foundations "Borrow Their Way Out of the Recession"?
John Copps of New Philanthropy Capital, a British charity that advises philanthropists on how to give more effectively, asks on the organization’s blog whether foundations could borrow money to maintain their levels of giving during the recession.
It’s a shame that, given the increase in demand for services, many grant makers have been forced to cut their budgets, Mr. Copps says. He wonders: “Could grant makers borrow to maintain their activity over the next few years, until their sources of income recover?”
Perhaps they could borrow against future sources of income — the profits of a company or an endowment — to keep giving during the downturn, he says.
Mr. Copps notes that many foundations have decades, or even centuries, of good credit histories. “Surely they are a good bet for lending?” he says.
He acknowledges that there are practical problems, such as the culture among trustees. “But could this be a potential solution to the forthcoming drop in grant-making and a way for innovative foundations to find value?”
What do you think?
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