August 24, 2015
You can't time markets but you can time grant requests. So when newspapers scream: "Massive sell-off on Wall Street as investors fear China slowdown" (New York Post), you should think twice before asking a foundation for money.
In good times, foundations can drive grantseeking nonprofits crazy with their demands for effectiveness and metrics to support those claims. At regional and national gatherings, foundation professionals speak passionately about effectiveness in sessions with titles like "Unlocking Impact...", "What Works...", and "The Cost of Achieving Outcomes..." What's more, every year it seems more and more foundations turn to online application and reporting forms that require nonprofits to produce copious amounts of detailed information about their logic models, theories of change, inputs, outputs, and outcomes.
But when stock markets head south, especially in the dramatic way they have over the past few days, there are only three indicators that matter: the S&P 500, the Dow Jones Industrial Average, and the NASDAQ Composite. If you are ever fortunate enough to make it into a foundation president's office, apart from the usual large desk you will be greeted by a television or monitor tuned to CNBC with its endless chatter about share prices and market moves. Remember, the vast majority of the 87,000 foundations in the U.S. are endowed, meaning the income that underwrites their grant budgets comes exclusively from the performance of their investments. Foundation presidents and the trustees to whom they report know that the ability to advance a foundation's mission depends on that performance, and they also know that they are being watched by state and federal regulators tasked with ensuring they are responsible fiduciaries and "prudent investors" of foundation assets.