Nonprofit Literature Blog

What Can Foundations Do About Risk?

Helmut Anheier, Director of the Center for Civil Society at UCLA's School of Public Affairs, recently wrote an essay on the economic downturn and role of foundations in addressing risk in a global community. He noted that, “Foundations can create arenas where risks are enunciated, exaggerated, discounted, debunked, assessed and debated. They can build arenas that encompass information, expert knowledge and reasoned deduction as well as fears and prejudice, but above all, they can help provide forums for expressing and communicating differential knowledge about risk, be it in the field of finance, health care, the environment, communication or housing.” He also points out that since foundations are independent from election politics and market forces, they are in a unique position to advance this dialogue.

Indeed, an ongoing discussion on risk management can help local and global communities anticipate outcomes and understand systemic risk in various sectors.

What are your thoughts on this topic? Who is the risk manager at your organization?

The full essay can be found in the 2009 edition of The Europa International Foundation Directory (published by Routledge) and is also available on several web sites. (Google Search)

Arts Groups and Media Projects

Many observers are concerned about the future of arts groups during these difficult times. If this is an area you would like to explore, take a look at the Spring 2009 issue of the Grantmakers in the Arts (GIA) Reader and turn to the article, “Puget Sound Funders Act Together: The Impact of the Economic Recession on Cultural Organizations.” The article by Holly Sidford and Helicon Collaborative describes research based on interviews with representatives from 28 cultural groups. Among the findings are suggestions for grantmakers when funding is limited:

“None of those interviewed expect increased funding from foundations and public agencies, at least in the short-term. But all suggested that funders could help in other ways: by reducing application paperwork or extending current grants an additional year; encouraging program collaborations, joint marketing and resource-sharing; offering loan guarantees or lines of credit; hosting workshops on effective ways to manage the recession; and encouraging arts groups to find solutions in concert with nonprofits outside the arts.”

The rest of the article can be accessed at the Grantmakers in the Arts web site. In the issue, the editors of GIA Reader also note the new blog, Economic Turmoil and Change, which will allow GIA to provide information and updates more effectively.

For example, a June 1st entry mentions the launch of Grantmakers in Film + Electronic Media’s database of media projects in progress. Grantseekers that meet eligibility requirements can submit profiles of their projects. The database will help grantmakers target media projects that match their mission and interests. Click here to access the database.

New Fundraising Book Discusses Scenario Planning and Strategies

What is the outlook for our economy? Will the graph of recovery indicators look like the letter V, U, or L? Nonprofits may use scenario planning to help decide on an appropriate strategy for the future. In his new book, Fundraising When Money is Tight, Mal Warwick explains the disadvantages of aggressive or defensive strategies, and explains why he favors a more selective approach that is suitable for any scenario.

Warwick also nine specific steps nonprofits can take to help them survive for the short and long term. Chapters from the book cover a number of topics, including: resource allocation, cost reductions, direct mail, donor segmentation, donor relations, questionnaires, online fundraising, and other areas.

Find out more:

-Look for the book at our library/learning centers: Fundraising When Money is Tight: A Strategic Guide to Surviving the Tough Times and Thriving in the Future.  A limited preview is also available at Google Book Search.

-Listen to the podcast with Mal Warwick, where he explains how to plan for leaner times, avoid common mistakes, strengthen your case for giving, and step up your efforts

-Or join us for the webinar with Warwick on Tuesday, July 14, 2009.

Foundations, Volunteers, and Philanthropists: Three Reports

Let’s take a quick look at research findings that were released during the past week:

1) Yesterday, the Foundation Center issued a new Research Advisory that analyzed how foundations have been responding to the economic crisis. Two-thirds of surveyed foundations anticipate reductions in grants in 2009, and over half of respondents expect to engage in non-grantmaking activities (such as partnerships, convenings, and technical assistance). The findings are based on survey responses from more than 1,200 U.S. foundations. Learn more…

2) As noted in Philanthropy News Digest, findings from the 2009 Deloitte Volunteer IMPACT Survey indicate that nonprofits and corporations should explore pro-bono or skilled volunteerism, especially at a time when cash grants are limited. The executive summary includes next steps for corporations and nonprofits; full survey results are available in a separate file. Learn more…

3) The Center on Philanthropy at Indiana University analyzed individual giving in 2002 and 2006 (representing recent recessionary and growth periods) to estimate contributions for 2009. The data suggests that total giving for households earning between $100,000 to $200,000 will be in the range of $4,500 nationally. Households earning between $200,000 to $500,000 will contribute in the range of $20,000 to $25,000. Regional Differences in Giving, 2002 and 2006 can be found in the new issue of Giving USA Spotlight. Published by the Giving USA Foundation, the issue is available for review at the Foundation Center library/learning centers.

Grantmaking in 2009: What Can We Expect?

Nonprofits uncertain about their financial outlook may find planning and budgeting especially challenging during the current economic downturn. Charities will estimate with varying levels of success how much they will be able to raise with their next campaign.

To help ease the level of uncertainty faced by charities, some foundations and corporate funders have issued statements regarding their grantmaking.

"These grantmakers deserve credit for letting their grantees know what to expect over the coming year, so they can prepare,” said Steven Lawrence, senior director of research at the Foundation Center.

You can track statements from grantmakers at the Foundation Center’s Focus on the Economic Crisis web site.

For an analysis of these announcements and plans, read the new research advisory Grantmakers Describe the Impact of the Economic Crisis on Their Giving, co-authored by Steven Lawrence and Lawrence T. McGill, senior vice president for research.

Foundation Center Research

The Foundation Center has recently released two reports:

A First Look at the Foundation and Corporate Response to the Economic Crisis (free PDF)
Steven Lawrence, Senior Director of Research, describes the range of support provided by institutional funders, based on preliminary data from nearly 50 grantmakers. While some funders are helping to prevent foreclosures, others are providing emergency assistance. Foundations are also interested in supporting research and education to develop a better understanding of the financial crisis.

Key Facts on Family Foundations (free PDF)
The Foundation Center’s annual update indicates that family foundations provided $18.5 billion in grants in 2007. Larger family foundations in the grants sample favored education programs and prioritized giving for the economically disadvantaged.

Visit the Foundation Center’s web site for more Research Advisories and reports.

Grantmakers and the Economic Crisis

Foundations that are developing strategies to support nonprofits and families through the current downturn can take a look at the Winter 2008/09 issue of Responsive Philanthropy.

In one article, Emmett Carson, president and CEO of the Silicon Valley Community Foundation, describes a comprehensive plan for tackling the region’s economic challenges. The foundation’s strategy, which includes measures to integrate immigrants and promote financial literacy, was based on feedback from a series of community discussions among nonprofits, donors, grantees, and government representatives.

In another piece, Tim Delaney, president and CEO of the National Council of Nonprofits, takes a look at the difficulties that nonprofits are facing and suggests ways that foundations can help. For example, grantmakers can support meetings that promote collaboration and the exchange of ideas. Delaney also explains how foundations can leverage their funds by supporting and teaming up with infrastructure organizations.

Responsive Philanthropy is publication of the National Committee of Responsive Philanthropy and is available for reference at the Foundation Center library/learning centers.

Individual Giving Forecast (Schervish and Havens)

Charities are anticipating declines in giving this year as a result of the weakening economy. Will the declines be severe?  An article in the January 2009 issue of Trusts & Estates puts our current conditions in perspective with an analysis of historical data. Researchers John J. Havens and Paul G. Schervish look at one scenario: What if the stock market stayed at 30% below the levels seen at the beginning of 2008?

Based on their examination of previous recessions, Schervish and Havens forecast a 3-4% decline in individual giving in 2008 and a drop by the same amount in 2009. One key point in the article is that wealth does not decline at the same rate as the stock market, especially when households are have diversified portfolios.

Read more about their analysis in their article “Giving in Today’s Economy: What Can We Expect?”

Reminder: Visit our Focus on the Economic Crisis web site regularly for related resources on this topic.