Tuesday, February 17, 2009

Economic Impact on and Trends in Grantmaking Foundations

Nonprofits are struggling to cope with the new economic reality – not just a temporary downturn – but with a long term, if not permanent change. My most visited blog posts are those that I wrote in the Fall about nonprofits and coping with the economy and I recommend them too you – I have gotten great feedback about them. A major resource for nonprofits, npgoodpractice.org has picked up this post for its database:
How Can We Possibly Stay Afloat in These Tumultuous Times?

Today I am writing about the economy and the other side.... grantmaking foundations.
Most foundations have been seriously hurt by the economy. Some, like those invested with Bernie Madoff or associated with out of business companies, have had to close their doors. The Council on Foundations reported in its survey results last week that foundations had a 28% decrease in assets in 2008. The Foundation Center has set up a special page on its website “Focus on the Economic Crisis” with statistics and articles about its impact on the nonprofit sector.
Focus on the Economic Crisis - Foundation Center Site

Here are some trends happening with foundations:

Many have had staff cuts and are taking other measures to reduce their costs. This may mean less access to a program officer or other benefits such as workshops being offered.

Most major foundations have stated that they will meet all of their outstanding commitments and some have committed to increased funding in critical need areas in the social sector to deal with crisis issues such as homelessness and hunger. The GE Foundation announced that it would redirect $20 Million in grants to basic needs. Foundations are increasing their percentage giving to make this happen but they are also making plans for long term adjustments if needed.

Foundations are taking a harder look at what organizations they support and making sure that those organizations are clearly in line with the foundation’s mission. They will be weeding out support for organizations that don’t fit in 100%.

Foundations, more so than ever, are examining outcomes and results. They will be eliminating or greatly reducing support for the weakest links. Nonprofits need more than ever to be focused on achieving results.

Foundations are taking a look at how they do business and they are streamlining and modernizing their operations to become more user friendly, have less paperwork – but not less accountability, making multiple year grants – but contingent on results, and shortening their internal processes so that there is significantly less time between application, grants awarded and grant money released. All of this is part of a philosophical change as foundations are embracing that the are partners with nonprofits not just funders.

It’s a good idea these days for nonprofits to stay in tune with your major funders. Have an understanding of their economic situation and what is their stated policy to deal with it. Keep in touch and keep them informed about your programs, events, awards and results – don’t wait for a grant ending report. Invite them for a site visit.

This is what Paul Best, president of the William and Flora Hewlett Foundation had to say to Philanthropy News Digest, “This is a moment when individuals and foundations need to be very focused and intentional in what they do. If ever there were a time when strategy and clarity about goals was important, this is the time.
It starts with goals, because if you don't know where you're going, there is little possibility of focusing your resources. Given the limited resources that any foundation has, we make the argument that doing too many things will strain those resources. In other words, you're probably better off doing a few things well than spreading yourself too thin. But regardless of how many goals you have, each one needs to be clearly articulated. If they are not, then it's hard to know where the money is going or whether you've succeeded in achieving the change you want. Clarity of definition is the starting point, and strategy follows from that.”
Maybe its a good time to take a serious look at strategic planning...it isn’t a discretionary activity...its core to what you should be doing right now.

Please leave your comments about your own experience with changes and foundations. I know everyone who visits this blog would be interested.

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