Monday, May 18, 2009

Council on Foundations – New Report on Foundations and the Economy and a Quick Annual Conference ReCap

The Council on Foundations has released a 24 page report on how Foundations are coping with the economic downturn. Some of the data we have heard anecdotally before but this report provides the results of a survey with 430 foundations of all sizes participating. Here are some key highlights:

Asset and Grantmaking Statistics
73% had assets decline by more than 25% in 2008
67% had an additional 10% or more loss in assets in Jan-Feb 2009

62% will reduce their total grantmaking in 2009
25% will reduce their 2009 grantmaking by more than 25%
92% are making grants in 2009 to aid low income families
60% are cutting their 2009 operating budget

The Silver Lining Is Funding Operating Expense
83% reported funding operating expense for nonprofits
8% said funding operating expenses was a new area for them
20% plan to increase operating funding in 2009

How Foundations Will Reduce their Grantmaking
The most common responses were smaller grants (63%) and not making multi year grants (46%). It will be much harder this year to be a new grantee at many foundations.

Innovation by Grantmakers
The economic downturn is also inspiring innovation and developing new approaches by grantmakers. 72% of funders say they are collaborating with other funders. Collaboration has long been a favorite idea of funders for nonprofits and now they are stepping up by setting the example themselves. 62% of funders are convening meetings - sometimes with other funders and MSOs – to develop strategies for dealing with the economy. I personally participated in one such conference last month as a speaker on “Social Networking and Fundraising.” 30% of foundations are helping nonprofits to merge operations.

Foundations Approach to Cutting Their Own Expenses
Foundations are also taking steps to reduce their own expenses. Over 60% say they are limiting attendance at conferences and reducing travel budgets. This was evident by the smaller crowd at the Council on Foundations conference this year. 45% have implemented salary freezes and 5% have actually reduced salaries. 27% have a hiring freeze and 15% have eliminated positions. 11 percent have reduced staff hours. Other steps being taken to reduce expenses include reducing professional development and paid professional memberships expense and reducing staff benefits. Only 13% report not taking any of these actions.

60% report making non-staff related expense reduction including institutional memberships, significantly reducing use of consultants (Editorial comment - Ouch!), using email to send Board materials and reducing investment management expense.

Interestingly, larger foundations have been even more aggressive in taking these steps than smaller ones. Foundations seem to be paralleling steps by corporations in reducing expenses across a broad spectrum.
Council on Foundations Report

Council on Foundations Annual Conference Featuring Bill Clinton
The Council of Foundations held their annual conference in Atlanta in early May. You can read excellent articles about the conference at Sean Stannard-Stockton’s blog, Tactical Philanthropy. 12 guest bloggers provided reports on international organizations, foundation storytelling, next generation grantmakers
dealing with the economic crisis, communications and more. Attendance at the conference was way down this year because of budget cuts, but that did not dampen the excitement of the big event - closing keynote by President Bill Clinton.
Tactical Philanthropy Annual Conference Guest Blogger Posts

Council of Foundations website - See Bill Clinton's Address

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