November 04, 2009
Foundation Giving Faces Steeper Decline Than Expected
By Ian Wilhelm
A new report suggests that grant makers will cut back their giving this year more than previously expected.
In January the Foundation Center estimated that foundations would reduce their grant making 8 to 13 percent, but a new survey from the New York research group indicates that “the decline will be on the steeper end of that range.”
While the stock market has trended upward in recent months, foundation investment gains will not make up for the financial loss in 2008, when philanthropic assets fell an estimated 22 percent, says the center.
In 2010 the giving picture doesn’t look any rosier. Based on a September survey of 583 grant makers, 50 percent said they plan to keep their giving steady at 2009’s reduced levels, 26 percent expect to decrease it, and 17 percent will increase it. Seven percent said they did not know how their grant-making budgets will fare.
The center notes that institutions that award more than $10-million a year are more likely to trim their giving.
As the economy has hampered foundation giving, it also has taken a toll on employees. Twenty percent of 407 respondents said they have reduced the size of their staffs through layoffs, eliminating unfilled positions, or buyouts. Community funds were more than twice as likely as other grant makers to have made such cost-cutting moves.
Despite the gloomy situation for philanthropy, most foundations — 67 percent of 568 surveyed — said they expect that charities that survive the economic downturn will be stronger than they were before.
The report, “Foundations’ Year-End Outlook for Giving and the Sector,” is available on the center’s Web site.
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These data echo what we’re learning at Grantmakers for Education, as we prepare Benchmarking 2009: Trends in Education Philanthropy. Our survey finds 60% of education funders making cuts in 2009, 26% reporting no change and 14% increasing grant making.
More profound than these numbers, however, is what we’re learning about how funders are managing these reductions. Three-quarters of responding organizations have taken administrative cuts, including personnel and budgets, to maintain their commitment to keeping resources flowing to communities. One half of those cutting funding have kept their grant size constant while making fewer grants overall; rather than “thinning the soup,” these organizations are bringing more focus to their work. At the same time, grantmakers are providing more general operating support, understanding that grantees need to cover core costs during the economic downturn. Funders are also honing grantmaking strategies by recognizing the power of partnership: 91% of those we surveyed are collaborating with other funders, and many are helping grantees collaborate as well. One critical factor in education philanthropy is that the downturn coincides with unprecedented opportunities, because of increased federal funding and policy reforms in education. In a field where philanthropic dollars are dwarfed by public dollars, two thirds of those we surveyed are prioritizing engagement with public policy, through support for research, advocacy and implementation, as well as through funders’ direct efforts to work with public officials. While any decrease in overall philanthropic funding is certainly a hardship, it’s important to understand how these current retrenchments are actually strengthen the field, as funders bring more focus, better alignment, and more powerful partnerships to their work.
Lois Leveen
Director of Communications
Grantmakers for Education
— Lois Leveen Nov 5, 03:12 PM #