Foundation Giving and the Economic Crisis: Projections for 2011

The Foundation Center just released a new research advisory on the impact of the economic crisis on foundations in the US, based on a survey of 719 foundations conducted in September 2010. I find their research to be tremendously helpful and timely, so I thought I would share highlights from the survey with you.

First, the good news: Foundations are likely to “begin to increase their giving modestly in 2011.” OK, I’m not going to start jumping up and down with joy over that prediction, but hey its a start and at least it’s heading in the right direction!

A few other highlights:

  • 21% of foundations expect to increase giving in 2011, with 15% anticipating a decrease, and 59% expecting no change. Corporate funders are the ones most likely to anticipate increasing giving.
  • It will likely be several years before foundation giving again reaches its peak level recorded in 2008.
  • 40% of foundations surveyed had made some type of changes to their grantmaking priorities in response to the crisis, although less than 8% expect these changes to continue long-term.
  • Some foundations responded to the economic crisis by providing more grants but in smaller amounts, while others chose the opposite strategy: fewer, larger grants to strengthen specific organizations.
  • The majority of foundations (and a whopping 88% of community foundations) made operational changes, such as reducing expenses. Expense reductions expected to continue for awhile include making fewer site visits, attending fewer conferences, reducing print publications such as annual reports, and using technology (such as electronic grant applications) to improve efficiency.
  • Fewer foundations cut staff in 2010 (6-7%) as compared to 2009, when there were 20% staff reductions among foundations surveyed. About 5% of foundations expect to hire new staff in 2011. (If you hope to be part of that 5%, check out my earlier blog post “Looking for a Philanthropy Job? 20 Resources to Help You“).
  • The economic crisis did not appear to encourage foundations to “spend down” their assets.
  • 41% of foundations provided support specifically to address problems related to the economic crisis.
  • Interestingly, only half of foundations surveyed felt the response of US foundations to the economic crisis was “good” or “excellent” and 20% rated the response as “fair” or “poor,” and almost one-third had no opinion!

My thoughts? Overall, this is good news.  Foundations and foundation giving appear to be stabilizing. The economic crisis was a great opportunity to cut costs in areas that were having less impact (e.g., glossy annual reports that few people read), and identify ways to increase efficiencies and hopefully make it easier for nonprofits to seek funding (e.g., online grants applications).  Additionally, it does not appear that foundations made radical or lasting changes to their grantmaking priorities, which are often developed based on assessments of community need. Most importantly, we might see small increases in giving in 2011.

However, it is disturbing to me that less than half of foundations surveyed made grants or other support specifically to address problems related to the economic crisis. Perhaps that is why so few believe that foundation response to the most severe economic downturn since the Great Depression was “excellent.”

You can read the full advisory here (hey, it’s only 4 pages – you have time!). While you are at it, check out the Foundation Center’s informative site “Focus on the Economic Crisis.” And I want to give a special shout out to our friends at The Wallace Foundation for helping fund this research!

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Posted by Kris Putnam-Walkerly © Kris Putnam-Walkerly and Philanthropy411, 2010.

One thought on “Foundation Giving and the Economic Crisis: Projections for 2011”

  1. I am not sure I would characterize this as good news. The operative sentence here is “It will likely be several years before foundation giving again reaches its peak level recorded in 2008.”

    The flip side of these statistics are the nonprofit statistics — e.g. that with 1.5 million charitable organizations already existing, new ones are coming online at a rate of about 43 THOUSAND per year. Moreover the level of modest rises in giving in 2011 from decreased levels over the last 2 years may hardly make up for the fact that many nonprofit service organizations are seeing increase strains on there services from a wider population even while they contend with government support on all level decreasing… This latter trend is also sure to continue after the recent elections.

    Please see my blog post Article on Philantherapy:
    Relying of Fund Raising? The Numbers Don’t Add Up

    http://www.internautconsulting.com/wordpress/?p=37

    Where I argue for the need to focus more on alternative related income streams from the traditional grant model.

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