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Two-Thirds of Foundations to Reduce Grantmaking in 2009

April 20, 2009

Econ_crisis Close to two-thirds of foundations responding to a new Foundation Center survey expect to reduce the number and/or the size of grants they award in 2009. According to Foundations Address the Impact of the Economic Crisis, organizations seeking new sources of support and recently established entities will be especially challenged in securing foundation funding. The report is based on survey responses from more than 1,200 U.S. foundations.

The new survey finds that over half of respondents are reacting to the economic crisis by engaging in more non-grantmaking activities. Fully two-thirds of these funders plan to seek out more collaborations and partnerships in 2009, while roughly one-third indicate that they will be initiating more convenings. At least one out of five respondents expects to engage in more foundation staff-led activities, provide more technical assistance, offer more bridge/emergency financing, or engage in more advocacy.

"Foundations are not rolling over in the face of adversity," said Steven Lawrence, the center's senior director of research and author of the advisory. "The new survey shows foundations being creative, strategic, and willing to dig deep to ensure that their agendas move forward while this crisis persists."

Other key findings from the advisory:

  • Foundations will draw on various resources to fund 2009 giving in 2009 — close to two out of five respondents expect to draw at least in part on their endowments to fund grants.
  • About 14 percent of respondents either have made or plan to make exceptional grants or launch special initiatives in response to the economic crisis, largely by reallocating their existing grants budgets.
  • Nearly one-third of respondents made operational changes (e.g., changes in investment strategies, reducing operating expenses) as a result of the 2000-02 economic downturn that they believe better prepared them to face the current downturn.

"Foundations can do so much more than simply make grants," said Foundation Center president Bradford K. Smith. "The important thing is for them to remain true to their values and causes and to stand by their nonprofit partners."

Foundations Address the Impact of the Economic Crisis is the latest in a series of research advisories that explores the impact of the economic downturn on the nonprofit sector. The advisories and a variety of other resources designed to help nonprofits and foundations deal with the challenges of the unstable economy are available at the Focus on the Economic Crisis area of the center's site.

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Not to underplay the extent of the problems the sector is facing, but it is heartening to read that foundations are developing new strategies and getting creative, especially when it comes to non-grantmaking activities. One would suspect that what is developed now will also be of value when asset bases start to recover- may even be of more value actually

Thanks for the comment, DJ. I agree that many NPOs can benefit from help with their HR systems, planning and evaluation processes, and other forms of technical assistance. But are those kinds of things really a substitute for funding? In my experience, most NPOs are very well run and, in terms of carrying out their mission, lack one and one thing only: sufficient funding. Because of their tax exemption (subsidy, as some would have it), foundations have a special obligation to support NPOs that provide real social benefit -- especially in tough times. Personally, I'm disappointed that more foundations do not subscribe to that view.

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