SD Grantmakers In-Depth: Philanthropy & the Economy
In This Issue
The Economy's Impact on Philanthropy
In April, SDG held a program called "'It's the Economy, Stupid': Lessons for Philanthropy" about the wide-ranging impact of the economic downturn on the nonprofit sector and philanthropy. How do state budget cuts, the real estate and credit crises, and other fiscal issues impact our grantmaking? Many people in our sector have been asking these questions over the past several months. Uncertainty during economic downturns can add financial stress to grantees, just as demand for their services rises and stock market losses shrink grantmaker endowments. In this newsletter, we share with you updates and resources relating to this timely and important issue.
Below, find materials related to the program, which featured guest speakers Donald Cohen, President & Executive Director, Center on Policy Initiatives; Mark Paul, Senior Scholar, New America Foundation and former Deputy Treasurer and Policy Director in the California State Treasurer's Office; and Michael Carr, Executive Director, SAY San Diego.
- "Nonprofits Aim to Stay Afloat in Tough Economy," Finance and Commerce article (pdf)
- "Struggling with the Mortgage Crisis," Chronicle of Philanthropy article (pdf)
- "The Working Uninsured," Center on Policy Initiatives
- "Earnings, Poverty, and Income Inequality in San Diego County," Center on Policy Initiatives
- "Lies Sacramento Tells Itself," Mark Paul, LA Times
- "The ‘Something for Nothing’ State," Mark Paul, LA Times
- "Two Steps Back: Should California Cut its Way to a Balanced Budget?" California Budget Project Power Point presentation
COF Report on Foundation Support for Families Hit by Economic Downturn
According to a Council on Foundations survey of more than 300 foundations and corporate giving programs conducted during April, the philanthropic sector is providing broad support for families hit by the current economic downturn. In the first of a series of research studies on the relationship between philanthropy and the economy, the survey shows that the vast majority of foundations (86 percent) support grantmaking that aids families, provides human services, assists lower income populations, and/or supports economic development. Click here (pdf) to read the full report.
However, the National Committee for Responsive Philanthropy says this report "raises more questions than insights" because it is based on self-reports, had a low response rate, and community foundations were overrepresented in the respondents. This last fact is troubling to NCRP because community foundations are more likely than family foundations to do this sort of grantmaking, and because the COF report found that 51% of community foundations would decrease grantmaking in the coming year. Thus, the report might suggest "a reduction in foundation giving aimed at benefiting the economically disadvantaged." Click here to read NCRP's full posting.
The COF report also garnered media coverage: click here for an article in the Chicago Tribune, and click here for a Philanthropy News Digest article.
Strategies for Funders and Advice to Grantees
Courtesy of Donors Forum:
Strategies for Funders
- Be transparent about your grantmaking priorities and levels so that nonprofits can plan accordingly. Give grantees ample notice if a grant will be an exit grant, or the last one the grantee can expect.
- Fund operating expenses, and support the efforts of nonprofits to establish an operating reserve. In this economic climate, grantmakers should shore up their investments in current grantees with less restrictive and more multi-year grants. Grantees don't have a lot of time or money these days to apply for funding, so try to offer a faster turnaround, less formal process, and operating support.
- Consider a long-term strategy of awarding grants based on the previous 12 trading quarters (a "trailing average") to create a buffer against a changing economy.
- Support capacity-building efforts so that nonprofits can develop healthy infrastructure. Offer tools and information on developing a planned giving program. Funders can also give grants that can be used to generate matching funds, whether from a new or existing pool of individual donors.
- Consider giving priority to organizations that primarily serve low-income communities and to organizations that are meeting unique or very basic needs, and which, without grant support, would close their doors.
- Grantors are also encouraging and facilitating mergers and partnerships that help grantees reduce expenses. The Chicago Community Trust, along with The United Way of Metropolitan Chicago, recently committed to funding a partnership of nine large human service agencies that will consolidate back-office operations.
- Continue to support and conduct advocacy.
Advice for Your Grantees
- Have a development plan, and make sure it includes contingency plans for lean times. Avoid large investment in fixed assets and infrastructure, such as a building purchase, new hires, or expansion of services. If growth or retrenchment is likely, nonprofits need to work with funders and board to build a cushion to allow flexibility and course corrections.
- Develop a diverse revenue stream and explore new revenue possibilities. If a period of inflation ensues, the best nonprofit strategy will be to push toward earned income, which is a much more reliable source - and a potentially richer source - than foundations or corporations.
- Try not to cut development budget or activities.
- Stay in touch with donors: remind them of the organizational mission, and why it's important to keep funding in uncertain economic times. For instance, social service organizations can experience cuts in government funding and a longer reimbursement period; they also typically experience a greater demand for services during economic downturns.
- Two simple steps nonprofits can take to lessen the likelihood of reduced giving by current individual donors are sending out pledge reminder cards or emails, and offering to renegotiate a longer pledge payout period. It's also important to remind individual donors to check with their employers about a matching gifts program.
- Remain diligent in practicing good governance and adhering to best practices.
- Cut expenses: take advantage of work-study employees from local universities to assist with clerical and technology work, ask staff to carefully watch expenses and cut out unnecessary spending, or look into sharing office space, resources, or back-office functions with other organizations.
- Ask current board members for additional contributions during difficult times, and reach out to new board or committee members who can bring in resources.
Related Headlines: National and Local
A Mixed Effect on Giving: Many Charities Have Not Felt the Economic Crunch - Yet
Philadelphia Inquirer, 5/26/08
Bank of America, Countrywide Announce $35 Million Package to Aid Distressed Homeowners, Communities
Philanthropy News Digest, 5/5/08
Americans Worried About Economy, Survey Finds
Philanthropy News Digest, 4/18/08
Rate of Foreclosures to Soar Over Next Two Years, Study Finds
Philanthropy News Digest, 4/17/08
Charities Seek Donors to Replace Wall Street
New York Times, 4/12/08
Donations to Charities Slow, New Study Finds
Chronicle of Philanthropy, 3/30/08 (and click here for the AFP press release)
Weakness in Economy Isn’t Hurting Charities
New York Times, 3/14/08
Foundations Diversify Investments to Weather Rocky Economy
Philanthropy News Digest, 3/5/08
Bracing for Tough Times
Chronicle of Philanthropy Special Report, 2/7/08
In Local News:
Stop Subsidizing Economic Doom
Murtaza Baxamusa, CPI Research and Policy Director, Voice of San Diego, 3/10/08
Region's High-Paying Jobs Sink With Housing Market
Voice of San Diego, 3/6/08
Jobless Data Raise Fears of Recession in California
San Diego Union-Tribune, 3/1/08
Prices Soar on Inflation Worries
San Diego Union-Tribune, 3/4/08
Making Ends Meet
Voice of San Diego, 2/29/08
Recession May Be What Government Needs
Logan Jenkins opinion, San Diego Union-Tribune, 2/18/08
Additional Resources
Upcoming
SDG Programs
Click here for a complete listing of SDG Programs.
Thursdays with SDG: Managing Reputation: Corporate Giving in the Face of Adversity
June 19, 2008, 8:30 – 10:30 a.m. (Light breakfast served)
Location: Casey Family Programs, 3878 Old Town Ave., San Diego, CA 92110
Self-Sufficiency in San Diego County for Families and Seniors
June 26, 2008, 9:00 - 11:00 am (Light breakfast served)
Location: Alliance Healthcare Foundation, 9325 Sky Park Court, Suite 350, San Diego, CA 92123
Thursdays with SDG: Pass or Fail? San Diego County Report Card on Children and Families
July 17, 2008, 8:30 – 10:30 a.m. (Light breakfast served)
Location: Casey Family Programs, 3878 Old Town Ave., San Diego, CA 92110
Thursdays with SDG: A National View: Current Trends in Corporate Philanthropy
August 28, 2008, 8:30-10:30 a.m. (Light breakfast served)
Location: AMN Healthcare, 12400 High Bluff Drive, San Diego, 92130
SAVE THE DATE!
San Diego Grantmakers 2008 Annual Conference
MAPPING THE IMPACT OF SAN DIEGO PHILANTHROPY
October 23, 2008
Working Group Meetings
Workforce Funders: July 9
Homelessness Working Group: July 14
Child Welfare Funders: July 22 (Strategic Planning, Half-Day Session)
San Diego Neighborhood Funders: September 5
Family Foundation Exchange: September 9
Click here for more information about all of these SDG programs. All programs are free for SDG members except where indicated.
To RSVP, please call (619) 744-2180 or email programs@sdgrantmakers.org.
Today, the role of philanthropy is expanding and so are its
responsibilities. This newsletter is published
by San Diego Grantmakers to help SDG members meet the challenge. Our mission is to connect, educate, develop, and inspire a diverse
group of foundations and corporations to stimulate effective
philanthropy in the San Diego region. For more information,
visit www.SDGrantmakers.org. Copies
of past editions are archived here. Contact Nancy Jamison, 619/744.2180 or nancy@SDGrantmakers.org to suggest article ideas or submit news items, or if you no longer wish to receive these emails.
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