Advice to Funders in Tough Economic Times

It's the question on almost everyone's mind: How will funders respond to volatile markets and declining endowment values over the next twelve to twenty-four months?

In an e-mail last week, Kathleen Enright, executive director of Grantmakers for Effective Organizations, urged GEO members "to show the steady leadership that our communities need most" and offered the following advice:

Hold steady. No one knows where the current crisis will lead, so funders should consider holding their 2009 grants budgets steady at 2008 levels.

Consider no-cost changes that give grantees added latitude to weather the storm -- for example, releasing restrictions on current grants so that grantees can better react to a changing environment.

Consider providing more flexible dollars or access to credit. Operating support may make a great deal of sense in a rapidly changing landscape, while cash-flow loans and access to credit could be just what some nonprofits need as funding streams run dry.

Stick to what works. Now is not the time to abandon the kinds of investments -- higher dollar commitments over multiple years, support for leadership development, efforts to focus on learning and improved performance -- that grantmakers committed to organizational effectiveness value most.

Engage your grantees. And after you do, ask them how you can help.

"At times of crisis," Enright notes in closing, "there is no better asset than the relationships and reservoirs of trust inherent to communities like GEO."

Wise words and good advice.

-- Mitch Nauffts