2010 Foundation Growth and Giving Estimates

The Foundation Center has been one of the most important nonprofit resources for years.  Along with providing training for grant seekers, they also conduct amazing research to help nonprofits navigate giving trends.  This year is no exception as they publish their 2010 report "Foundation Growth and Giving Estimates."  While their findings may seem a bit depressing regarding the reductions in grants and giving, it is important for nonprofit boards and staff to understand the trends in order to adjust their behaviors accordingly.  Below I have excerpted a few key points, but I urge you to go to the Foundation Center and download the entire report.

On a personal note...while the current state of the economy can certainly be stressful for all who work in nonprofits, I'd like to encourage you.  The beauty of adding a few years to your life is that it gives you perspective.  In the late 1970's and early 1980's there was a terrible recession that matched what it is we are experiencing today.  I remember record unemployment, businesses going under, nonprofits struggling.  It won't always be this way, things do go through cycles.  Your challenge is to retain optimism and to do the best you can with what you have.  I hope the articles we provide here give you good information and tools to meet the challenges before you!  Bunnie

2010 Foundation Growth and Giving Estimates
A Report of the Foundation Center by

Steven Lawrence, Director of Research and Reina Mukai, Research Associate

Overview, Page 1

"The worst economic crisis since the Great Depression resulted in the biggest reduction in U.S. foundation giving on record. In 2009, the nation’s more than 75,000 grantmaking foundations cut their giving by an estimated 8.4 percent, or $3.9 billion, to $42.9 billion. Since the Foundation Center began tracking foundation giving in 1975, current-dollar giving had declined in only three
years—1983, 2002, and 2003—and in each year by less than 1 percent.

Despite its unprecedented severity, the reduction in 2009 foundation giving could have been worse. According to a 2009 Foundation Center survey, roughly four out of five foundations indicated that they determine their grants budgets based primarily on their assets, with half of these funders basing their calculations on their prior year’s assets (see Foundations Address the Impact of the Economic Crisis at foundationcenter.org). Given the 17.2 percent drop in foundation assets recorded in 2008—a $117.3 billion loss—a larger reduction in giving would not have been surprising.

Several factors helped to moderate the overall decline in foundation giving. Among foundations that base their grants budgets on their asset values, more than one-quarter do so using an average of their asset values over the prior two-to-five years. During less volatile economic periods, this practice allows grantmakers to maintain more stable levels of giving. In the current period, it enabled foundations to average in the asset growth in years prior to 2008, which lessened the amount by which they had to reduce their giving in 2009."

Community Foundations, Page 7

"Historically, community foundations have tended to fare relatively better in both more and less prosperous times from having a broad pool of individual donors. Decreased giving by some donors would tend to be balanced out by increased contributions from others. Community foundations also experienced a more modest reduction in their assets in 2008 (-12.5 percent) relative to independent foundations (-19.2 percent). Nonetheless, as institutions that must raise funds, community foundations may have been particularly hard hit by the economic panic that led individuals to pull back drastically on their personal consumption and charitable contributions."

Community foundations may also face restrictions on giving through their donor-advised funds, specifically with funds stipulating that their current value cannot drop below the value of the donors’ original contributions. Especially for donor funds established in recent years, their values may not return to the level of the donors’ original contributions until the market regains all of its 2008 losses, which could take a number of years.

Despite reductions in giving, community foundations have been leaders in responding to needs generated by the economic crisis. According to a Foundation Center survey conducted at the height of the crisis in early 2009, 35 percent of community foundation respondents were engaging in special initiatives to help their communities cope with repercussions from the economic downturn, such as rising unemployment and homelessness. By comparison, about 14 percent of overall foundation respondents reported providing exceptional support related to the crisis (see Foundations Address the Impact of the Economic Crisis at foundationcenter.org). To date the Foundation Center has tracked nearly $60 million in grants and program-related investments from community foundations that specifically addressed the economic crisis (see foundationcenter.org/focus/economy)."


Read the full report at 2010 Foundation Growth and Giving Estimates (The Foundation Center)

The ENA Experience

There it was in an email this morning, the announcement of a staff layoff at a national association. There is no doubt that layoff was an incredibly painful experience but the budget demanded it. The Emergency Nurses Association (ENA) has instituted pro-active measures to weather economic setbacks. I really like the "monthly budget performance memos." Rather than waiting for a quarter to go by (or heaven forbid an entire year), the ENA, headed by David Westman, aggressively tracks their financial health on a monthly basis. And has developed a several tiered system for contingency. What is your organization doing? Write and let me know. Bunnie

The ENA Experience

by David A. Westman, CPA, MBA
Executive Director, Emergency Nurses Association and ENA Foundation
Chief Executive Officer, Board of Certification for Emergency Nursing

Compared to many non-profit organizations, the Emergency Nurses Association (ENA) has fared relatively well. We have diversified revenue streams, and several of those streams have continued to perform admirably during the economic downturn – most notably revenue from our train-the-trainer model trauma and pediatric care courses, which are delivered to more than 50,000 nurses each year domestically and internationally. Our membership levels and associated revenue are also (amazingly) still increasing this year. As a result, we haven’t had to take the drastic actions some of our colleague not-for-profits have been forced to into like staff layoffs, salary freezes, etc.

However, we certainly have been negatively impacted by the recession in some key areas. Attendance at our national conferences is down and we have also received diminished support from the corporate world (i.e., sponsorships, conference exhibit sales, publication advertising, mailing list rentals, etc.). This has caused us to tighten our belts in many regards and unleashed creativity in how we approach current corporate sponsors and serve our members.

In terms of cost control, very early in the year we put a freeze on most employee training/development expense and expenses associated with employee celebrations. We also took a hard look at every expense line item and developed our “X, Y, and Z” plans. Each of these plans includes specific expense reductions that may be triggered sequentially after analyzing each month’s financial statements.

The Executive Director and Finance staff, based on this analysis, has developed monthly budget performance memos. This includes recommendations for action that are reviewed by the Board’s Finance Committee. The Committee then makes recommendations to the Board as a whole. Year-to-date, all of their recommendations have been approved.

For example, given results through March, 2009 (we’re on a calendar year) a decision was made to exercise the “X” plan. We’ve now implemented most of our “Y” plan. The good news is that the financial picture seems to be stabilizing, which may mean that the “Z” plan (the most painful of all) will be avoided. Several of the expense line items included in the “X” and “Y” plans may eventually be reinstated towards the end of the year if the revenue picture continues to improve.

In terms of creativity, we’ve taken a number of steps to minimize the negative impacts on employees and our members. Employee training and development continue, with more sessions offered in-house and using low-cost programs. We’ve found creative ways to have fun in terms of employee relationship building and recognition (e.g., brown bag lunches in the office instead of eating out at restaurants).

Relative to our sponsors, we’ve been working with an outside consulting firm to develop lower cost/lower value sponsorship offerings pertaining to both our national conferences and year-round sponsorships. So far, corporate reaction appears to be favorable.

We’re also unleashing additional creativity within the staff organization by creating a new Pipeline Work Team, with the charge of identifying new revenue generation opportunities to supplement or replace the stagnation we have experienced in corporate support.

Overall, our goal from the very start has been to avoid decreasing value perceptions on the part of our 37,000 members. Hopefully they have seen minimal to no impact on such value. Perhaps the closest to a negative impact involves converting hard copy materials (e.g., national conference programs) to electronic formats. However, we’ve been able to position this, truthfully, as an opportunity “Go Green”.

In conclusion, this has certainly been a painful period of time but ENA remains strong. We have taken a number of steps to help us “get by” which will hopefully pay dividends going forward in making us stronger.

Contact David A. Westman at DWestman at ena dot org

An Unconventional Nonprofit Stays Afloat

"Meat and potatoes" kinds of nonprofits don't have a lot of trouble finding foundational or conventional support. But what do you do with a nonprofit that isn't so conventional? You diversify, diversify, diversify. Amy Sananman tells us how the nonprofit she runs, the Groundswell Community Mural Project, manages to not just stay-afloat, but survive. Even though what they do is unconventional, it is important to the health and well-being of the community. Bunnie

An Unconventional Non-Profit Stays Afloat
by Amy Sananman, MPP, Executive Director

Groundswell Community Mural Project

I started Groundswell Community Mural Project at 26 with no major connections or seed foundation money.

I wanted to bring professional artists, grassroots organizations, and youth together to create public art in under-represented neighborhoods. But while I saw the cross pollinating of these communities as a strength, from a fundraising perspective, it posed a major challenge that to some extent still exists today.

Groundswell Community Mural Project’s mission doesn’t sit squarely in established foundation program areas. This was particularly true over a decade ago. Arts funders didn’t see our work as “art” because of the community involvement. And the idea that art could play a part in youth or community development was not popular among funders who supported youth development and community organizing.

We had to be strategic about how we grew and managed our budget. With no seed money and a mission that fell outside of traditional foundation guidelines, we devised a number of creative fundraising strategies--strategies that have now left us in good standing and positioned us to hopefully withstand the current economic crisis.

We currently have a $650,000 budget. While we are not planning any major expansion in the next few years, we are not furloughing or laying off any staff (in fact, our staff is expanding). Here are some factors that we can attribute to our position today:

Diverse Funding Stream: Groundswell didn’t start with seed money or any major foundation connections; we patched together a lot of smaller grants. As the grants from these funders grew, we developed a very diverse funding stream (33 government and foundation sources comprise 50% of our income). Individual donations (via campaigns, mailings and events) brings in 15% of our budget for unrestricted purposes.

Integrated Earned Income: Groundswell partners with community groups to create murals with a social mission. Having youth create work that actually serves a real-life need for the community partner is inherent to our mission. We have integrated our program and business models. All community partners pay for a component of the budget. Certain projects we can only do if the funding is there. Having an earned income stream gives us another tool to confront the economic crisis. If and when we are in need of additional funds, we can always do more projects. Earned income comprises 30% of our budget.

Program Profitability: Groundswell’s budgets are fairly detailed and broken down by program. We project and track income and expenses by program . This helps us understand of the finances of each major program and determine which programs are operating at a profit or loss. That information provides us with a clear framework for strategically prioritizing programs and enlisting board and other key employees to improve finances. This is an emerging tool now called the Program Profitability Model (for more info: /www.nonprofitfinancefund.org/details.php?autoID=189#profitability)

Investing in Program: aka Staying Frugal with Operating Expenses. Groundswell began just by doing projects with very little to overhead. We didn’t have an office, a full-time staff, or insurance for many years. We are accustomed to doing a lot with a little and this has become part of the culture of the organization. Groundswell also utilizes the Americorps program to to expand our staff (we currently have one full-time and two part-time employees paid by AmeriCorp). The economic downturn has been terrible for young people entering the job market, but for non-profits hiring through Americorps, it can be a gold mine.

Living within Our Means and the Reserve Fund: Each year Groundswell projects its income and expenses so that each year’s budget balances without carrying any of the prior year fund balance over. We set aside our cumulative fund balance in a reserve fund.

While these strategies have put us in a good position, we never stop thinking about what could happen. Plan A, Bs and C contingencies are part of our on going conversation among senior staff and board. Like fundraising and development, organizational stability is a daily practice.

You can contact Amy at www.groundswellmural.org

A Little Planning, Vision and Passion Goes a Long Way

So you're able to get the gifts in the door, now what? Managing your donor program requires savvy systems these days. Kirk Sadler tells us about a campaign by the Communities Foundation of Texas to raise $4 million for Dallas charities. But let's say your organization is a lot smaller than that. Blackbaud actually offer free software to organizations with less than 500 records! It's worth looking into. Bunnie

A Little Planning, Vision and Passion Goes a Long Way

by Kirk Sadler, Product Line Manager, Blackbaud, Inc.

Well I just got back from Dallas, Texas and what a ride it was. Yes, it did take two plane flights on US Airways through Charlotte, NC to return to Charleston, SC. However, I am not talking about that type of ride. I am talking about a well-executed campaign by the team at the Communities Foundation of Texas (CFT). CFT is a one of the largest community foundations in the nation. The Foundation recently embarked on a campaign to launch DonorBridge, a portal that provides both its donors (Donor Advised Fund holders) and the greater community of Dallas a resource with which they could make informed decisions on whom to volunteer with, support, donate to or simply learn more about. CFT has always been a leading community foundation, but in my eyes, this groundbreaking initiative has propelled them into the “visionary” category. They are taking a leading role in fostering philanthropy in their community, at a time when it needs it most.

DonorBridge was launched on May 20, 2009 with the first ever Dallas Giving Day. To encourage donations, Communities Foundation of Texas, with support from The Dallas Foundation, designated a total of $300,000 in matching funds for contributions made through DonorBridge to participating nonprofit organizations on that day.

All in all, Dallas Giving Day raised over $4 million dollars for Dallas based charities. Yes, I did say $4 million dollars for 353 Dallas based charities. Wow!

So one might ask, how did they accomplish this feat? First, they formed a very talented and dedicated team. Then, they worked 24 hours a day, getting technology in place, and networking with everyone they knew in the Dallas community. Finally, they sprinkled on a little pixie dust, said some magic words (hocus pocus always works for my three kids) and success occurred.

Seriously, CFT executed a well thought-out campaign starting with making sure they had the end in mind first. For instance, they knew that the Dallas Giving Day concept would only work if they could truly mobilize the community in ways they could not do themselves. So they built a plan that included the selection of technology (in this case Blackbaud Nonprofit Central and Fusion Labs), partners to cultivate (ex: Center for Nonprofit Management, The Dallas Foundation, The Richards Group and the Urban Policy Research) and a marketing outreach plan. By doing so, it gave CFT a roadmap for success that the team could iterate on for the preceding months leading up to launch day.

Selecting technology was key, as they wanted to make sure the vendor would be able to help them both embark upon this new journey and that the portal would be robust, easy to use and elegant in the eyes of the donors and the community. However, just as important was making sure they knew how to use that technology. So, CFT assigned a resource (part time) on their team to make sure that person knew how to use the system to its fullest potential; getting data in, getting nonprofits access to the system, making nonprofit profiles available on the portal and leveraging social networking technologies like Twitter to allow it spread virally. It was amazing to read the hundreds of tweets that day, and all of the news coverage—all adding to the excitement of the launch.

The partners were also crucial as CFT staffers knew they would not be able to get the message out as far and wide as they hoped without the help of their peers in the Dallas Community. These partners acted as additional mouthpieces to spread the word about Dallas Giving Day, but also participated in many nonprofit focus groups. For example, CFT brought in 50 to 100 nonprofits from Dallas and shared with them the vision of the matched gifts (up to $300,000) program on Dallas Giving Day and allowed them to reach out to their donors. Follow-up with these organizations, and in any campaign, is key to keeping momentum. It was amazing how far and wide this spread. Over 8,000 donations occurred that day! Yes, 8,000!

That said, I wish everyone GREAT success and fun planning and executing their next campaign!

Layoffs Should be Last Resort for Nonprofits

I hate sounding like a broken record but we are in tough economic times. Which makes me curious about human resources issues. When should you layoff employees? Can you do other things to avoid laying off employees? How do layoffs affect nonprofits? Larry Ladd of Grant Thornton offers some sage advice to nonprofits regarding layoffs. Bunnie


Layoffs Should Be Last Resort for Nonprofits

By Larry Ladd, Grant Thornton LLP

While layoffs seem to be the preferred solution to control costs in the traditional business sector, layoffs in the nonprofit sector tend to have a deep and long-term impact on the viability of the organization and the services it provides to members and constituents. At its basic core, nonprofits are dependent on a cadre of good people interacting with other people to meet their needs. Laying off people sends a negative message that people are not important in the equation, and could result in a ripple effect that further reduces income sources.

We are counseling nonprofits to use layoffs as a last resort and instead, completely reconsider any non-salary expenditure decisions. Start by instituting incentives for cost savings and cash conservation. For example, cut back on travel expenses and operational expenditures. This seems to have been embraced by many organizations. Just consider industry data that shows that attendance at trade show meetings is off by 1/3 over previous years.

If more cuts are required, institute salary freezes, leave vacant positions unfilled, make benefit cuts, or perhaps use furloughs so that the head count can be maintained. People would rather be working and drawing a salary, even a reduced one, than be unemployed. Tough decisions are better understood within your organization in a time of financial difficulty. Use objective criteria focusing on the best interests of the mission.

The one initiative we counsel against is across-the-board employee cuts, which will likely reduce the quality of every program or service. Particularly in tough times, your organization needs to maintain or enhance the quality of its most mission-critical or strategically critical programs. Keep in mind that across-the-board cuts are politically the most palatable, but strategically, the most damaging.

When they are made, most cost reductions have a tendency to bounce back when the budget starts growing again. The real challenge is to make permanent cuts, i.e., ones that reduce work tasks so that existing staff can handle the newly defined workload. For example, if five people handle a department’s work load and one person is let go, don’t ask the remaining four to do the same tasks the same way. Re-engineer the tasks to create efficiencies, or automate some tasks to reduce labor-intensive activities. In my experience, permanent cost reductions actually improve morale and allow for funding new programs or services when the economy gets better.

It may seem counter intuitive to suggest that eliminating an employee can improve morale, but in many cases, the first people to be let go aren’t terminated just to save money, but there are deeper issues involved. Usually, the first cuts are directed against employees who have demonstrated an ongoing lack of productivity or contributions to a team. When that person leaves, those left behind suddenly find that they are getting more done more quickly and efficiently.

While most nonprofits are feeling the pain of a down economy, nonprofits currently hit the hardest are those that are endowment dependent (museums, universities, etc.) and human services organizations (foundations, government programs, etc,). Capital giving, especially large donations by big givers, is significantly down.

I wish I could predict when nonprofits will see their financials improve, but funding and the economy are interdependent. When the stock market goes up, endowments go up. When GDP improves, the government can restore some funding.

No matter what happens with the economy, nonprofits need to remember that people make the difference.

Larry Ladd serves as a business advisor to Grant Thornton LLPs’ not-for-profit clients and provides his professional expertise to the firm’s not-for-profit practice. Before joining Grant Thornton, Mr. Ladd had served in academic administration for a number of leading colleges and universities. You can reach Mr. Ladd at: larry.ladd@gt.com

Building the Infrastructure that Sustains Nonprofits: Latest Research Findings

Nonprofits are a core sector of the economy. Often, where business or government leaves off, it is nonprofits that fill in the gap; delivering critical services that neither business nor government can deliver. Yet frequently, the nonprofit sector is dismissed as incidental. Think about it, how often do you hear a robust discussion regarding the health and well-being of the nonprofit sector on the nightly news or read about it in the "A" section of your newspaper? Rick Cohen of Nonprofit Quarterly provides us with a glimpse of the latest research findings regarding the critical issue of nonprofit infrastructure. Food for thought. (And by the way...I am thrilled to have a contribution from Nonprofit Quarterly, a fabulous and informative publication that I have relied on for years). Bunnie

Building the Infrastructure that Sustains Nonprofits: Latest Research Findings

by Rick Cohen, National Correspondent, Nonprofit Quarterly

(Editor of the Cohen Report)

In December 2008, the Nonprofit Quarterly completed a study (http://www.nonprofitquarterly.org/images/infrastudy.pdf) and published a special winter 2008 issue of the magazine (http://www.nonprofitquarterly.org/images/infraissue.pdf) on the condition, funding, and functions of national infrastructure organizations—trade associations such as the Council on Foundations and Independent Sector, capacity-building resources such as BoardSource, Bridgespan, and the Center for Effective Philanthropy, research and database providers including the Urban Institute, Guidestar, and the Foundation Center, groups that promote advocacy and civic engagement such as OMBWatch, the Alliance for Justice, and the Center for Lobbying in the Public Interest, and watchdogs like the National Committee for Responsive Philanthropy, Charity Navigator, and BBB Wise Giving Alliance--that support nonprofit and philanthropic activity in the United States.

Why bother about the nonprofit and philanthropic infrastructure, especially now while many nonprofits and foundations writhe in financial freefall due to the plunging economy? That’s exactly why infrastructure matters. When the infrastructure functions, it strengthens the sector, bolsters its advocacy, increases its accountability, and expands its reach and support of nonprofits across the country.

The core finding of this study, funded by the C.S. Mott Foundation, concerns the question of reach. The current system of financing the infrastructure—including foundation funding—tends to favor organizations that support and represent the larger nonprofits of the sector. The infrastructure groups that serve the thousands of smaller and mid-sized nonprofits that constitute the overwhelming bulk of the sector (remember, 85.7% of nonprofits filing 990s and 93.6% of all nonprofits have annual revenues of less than $1,000,000) have been consistently underfunded.

In crises like this one, as in the responses of New York nonprofits after 9/11 and Gulf Coast nonprofits after Hurricanes Katrina and Rita, nonprofits that were well networked were able to identify and distribute resources faster on behalf of their constituents than those that were unconnected. They were also able to find many effective points of collaboration with other organizations to ensure that clients were served on the most holistic and effective basis possible.

Components of a solid national infrastructure already exist to aid local nonprofits in this historic pinch but infrastructure funding is unbalanced and has not been approached systematically. The result is that the national infrastructure does not have the consistent reach that it should to the many corners of the sector (rural areas, the south, marginalized communities) even while some infrastructure organizations representing the elite of the sector build significant reserves.

Specific findings from the study include these:

Funding has been heavily concentrated in a limited number of individual institutions rather than in a comprehensive distributed system of infrastructure. Over the past five years, 104 national infrastructure organizations received foundation grants adding up to more than $1 million. The top ten of these received more than half of the total, although some portion of the funding of the top ten includes pass-through technical assistance and regranting funding they administer on behalf of selected foundations.

A very small number of foundations account for more than half of all infrastructure funding. Although 1,300 foundations were identified as having made grants to infrastructure over the past five years, more than 55% of the funding to infrastructure organizations comes from only 10 foundations and a mere five foundations account for 40% of infrastructure funding (excluding grants to university-based centers).

There has been a relative lack of attention to building an appropriate overall financing system for the infrastructure. As a result, there is little government money in the system and some organizations have been driven towards business models in which they serve only the elite of the sector, that is, the larger nonprofit institutions that can afford to “pay” for functions and services that the bulk of smaller nonprofits cannot.

There has been a relative lack of foundation support to the national networks serving and representing small to mid-sized nonprofits in the U.S. on the state and local levels. This severely limits the reach and potential for learning and innovation in the sector.

Relationships and personal politics are perceived by many infrastructure groups as a better indicator of who receives funding than mission, reach or work product.

Because of leadership changes among some of the major foundation grantmakers to the national infrastructure, there is the unfortunate prospect of future reductions in foundation support for the infrastructure. Several years ago, it was the post-2001 cutbacks in infrastructure support by two leading foundations (Atlantic Philanthropies and the Packard Foundation) that led to a series of meetings (and eventually a special 2004 issue of Nonprofit Quarterly makes the case for funding the nonprofit infrastructure).

There appears to be an increasing separation of the philanthropic infrastructure from the rest of the nonprofit infrastructure. Nonprofit infrastructure organizations frequently think serving a broad definition of the sector, but the philanthropic infrastructure organizations tend to limit their focus to the foundation world. This may be a contributing factor to the insufficient attention of the national infrastructure to other than larger, better endowed institutions

Intense competition and lack of cooperation among some infrastructure groups is cited as having retarded progress in a few key areas; although there are signs of promising collaborative efforts that merit attention and support.

Foundations can and should rethink their funding priorities to make a difference in rebalancing the national infrastructure to better serve a broader array of nonprofit organizations. The NPQ infrastructure report offered the following recommendations for foundation action, which will occur only if the nonprofit sector advocates for a different foundation approach to the infrastructure.

Invest in the national networks of state associations and nonprofit capacity builders whose members are widespread, serving nonprofits of all types and sizes on a state and local basis. As the excellent work of the National Council of Nonprofits demonstrates, these networks are critically important now, perhaps more than ever, as watchdogs of state and federal policies and programs and guiding nonprofits to carry out nonprofit roles in the national economic recovery.

Invest in advocating for federal government support of the large nonprofit databases to feed a future of good research. There is general agreement that the development of these databases such as Guidestar and the Urban Institute’s National Center for Charitable Statistics has been one of the most valuable accomplishments of the infrastructure, but they cost a great deal to establish and maintain and there are concerns about their accessibility as some move toward charging fees. Government generates and makes available huge amounts of data for other industries and sectors; it is time to make government funding of this component of the national infrastructure a national nonprofit advocacy priority.

Invest in a pooled bank of patient capital (removed from the foundation/grantee relational melee). The focus should be to help necessary but as yet undercapitalized components of infrastructure in immediately extending their reach and impact, and in building their fee producing markets.

Invest in a national agenda of research that has practical use to nonprofits. While all research need not be completely utilitarian, there is an acute need for a venue that dedicates itself to the promotion, “translation” and broad dissemination of research that responds directly to practitioner concerns.

There are many “missing in action” foundations on the national infrastructure scene, and local state associations, management support organizations, loan funds and other elements of infrastructure desperately need local philanthropic subsidy to serve the full range of local nonprofits. Considering the marked concentration of current infrastructure funding among a relatively few foundations, major funders of the national infrastructure would be wise to champion a “good citizenship” code of ethics among philanthropy that urges support of these necessary connectors and resource banks.

Contact Rick at rick@npqmag.org

The Challenges Grantmakers Face in This Economy

While nonprofits worldwide are experiencing declining revenues, very few consider that grantmakers are also facing tough times. Many foundations manage endowments that are often invested in the same stocks, bonds and mutual funds the rest of us are invested in. If you've seen your own personal portfolio take a significant decrease, so too have many grantmakers. Kristen Putnam-Walkerly takes us through the challenges faced by foundations and gives us a glimpse of what grantmakers are looking for and what you need to consider when approaching grantmakers for funds. Bunnie

The Challenges Grantmakers Face in This Economy

by Kris Putnam-Walkerly, President, Putnam Community Investment Consulting

No one is immune to the challenges of doing more with less in this economy. From my vantage point as a philanthropy consultant, I hope this blog post helps nonprofits understand how the economy is impacting foundations, and provides suggestions for what grantmakers are looking for from nonprofits.

Six challenges grantmakers face this economy

1. Significant cuts in foundation assets and grantmaking budgets – Foundations lost approximately 28% of their assets in 2008, a reduction in assets generally means fewer dollars available for grantmaking. Some, such as the Gates and MacArthur foundations, are making efforts to increase funding in 2009. However, 67% of foundations surveyed recently plan to decrease funding in 2009. The Foundation Center is tracking how the top 100 foundations are responding to the economy.

2. Reductions in staffing and spending - Most foundations we work with are carefully examining their budgets and cutting where they can. Travel to conferences and professional development spending has taken a big hit. Fewer are funding anything perceived as “new.” Some have laid off staff, such as the Silicon Valley Community Foundation and the Jewish Community Federation of Cleveland.

3. Decisions about how to allocate reduced resources in a changing environment –Resources are fewer and the needs are greater, so many foundations are grappling with whether to shift their grantmaking priorities toward meeting basic needs versus continue funding their priority areas, such as healthcare advocacy or workforce development. On one hand, basic health and human services are desperately needed. One the other hand, now is the time to leverage policy advocacy opportunities and stimulus funds to put people back to work.

4. Concerns about 2010 and 2011 – Some foundations calculate their 5% payout based upon a rolling average of the past 24 to 60 quarters (two to five years). As a result, these foundations anticipate their grantmaking budgets might actually take greater hits in 2010 and 2011 (as more “bad” economic quarters are averaged into earlier “good” quarters).

5. Lack of information & analysis – The economy is changing quickly and drastically, and it’s difficult to for funders to track the growing impact on the communities and issues they care about. This is especially true for smaller foundations with few or no staff. For example, it’s challenging for any of us – including foundations – to understand what stimulus dollars are coming into our communities and how we can leverage them.

6. Stress – It’s important to acknowledge that everyone is experiencing stress during this economy. As a recent New York Times article pointed out, even those of us who still have our jobs and homes can be feeling tremendous anxiety. Being in a position of “power,” as many grantmakers are, doesn’t make anyone immune to the fear of job loss, loss of savings, inability to pay for a child’s college education or a parent’s health care, and generalized fear about the future.

What Are Grantmakers Looking For?

Focus on results – Nonprofits must be able to demonstrate effectiveness through evaluation. With limited resources, funders want to know their dollars are making an impact. It’s no coincidence that three foundations have contacted my firm in the past week asking for assistance with evaluation.

Take steps to address the downturn – Nonprofits that are making adjustments in this new economic reality will be viewed more favorably by funders. One of our clients recently received several requests from grantees desperate for emergency funding to keep their doors open. While she wanted to help, she was disappointed that none were making any changes within their organization to address their funding shortfalls. They had no plans to reduce budgets or staff, re-organize, streamline services, or partner with others to increase efficiencies.

Communicate with your funders – Now is the time to step up communication with your donors. They can’t help you unless they understand what you need. Educate them about community priorities and how they can help you leverage stimulus dollars. A nonprofit recently requested a foundation grant to purchase solar panels, which would save them $80,000 a year on their electricity bill. It was an unusual request, and this foundation funded it anyway since it was an investment in this nonprofit’s sustainability.

Copyright © 2009 by Kristen Putnam-Walkerly. All rights reserved.

Contact Kristen at http://www.putnamcic.com/press.html

How Does a Corporate Philanthropy Program Bring Its Stakeholders Together Instead of Driving Them Apart?

Many nonprofits are scrambling to find revenue and many corporate foundations are being swamped with requests. Corporate foundations have to weigh not only the "worthiness" of the request but also the public relations ramifications of their response to the request. Janet Nava Bandera tells how her corporate client changed the way they consider causes. Interesting (and perhaps more democratic) way to decide which worthwhile cause receives both money and attention. Bunnie

How Does a Corporate Philanthropy Program Bring Its Stakeholders Together Instead of Driving Them Apart?

by Janet Nava Bandera

Founder and President, Foundation Mentors

In the early years of the decade the economy was booming and people were generous in their charitable giving. Companies also started showing that they could be good citizens and give back to the communities that helped them thrive by starting a corporate philanthropy program. The programs took the form of foundations, giving programs and employee volunteer programs.
In addition to making executives feel good, it was good business.

A 1999 Cone/Roper Cause Trends Report found that:

76% of consumers indicate they would switch brands or retailers to one associated with a good cause, when price and quality are equal; and

87% of employees at companies with philanthropic programs feel a stronger sense of loyalty to their employer.

What companies did not realize was that along with such programs came the competing interests of their stakeholders. Suddenly, executives that funded the programs (directly or indirectly) wanted a say in how funds were distributed, employees wanted to know if programs sponsored by executives got preferential treatment and customers started asking how to request funds for their favorite charities.

Couple that with declining revenues and suddenly, for some companies, what started out as a way to do good turned into a PR quagmire.

When faced with this situation recently a corporate foundation client of mine decided to change the nature of its program. Ten years ago company executives founded a foundation and supported it through payroll deduction. As revenue increased so did gifts to the foundation. The foundation grew quickly, but so did the number of requests for funds from community organizations, employees and clients. The result, more grants denied than approved. With each turn down came the inevitable question: Why? It is touchy to explain to a good client that his favorite charity did not live up to the administrative to program expense ratio formula that the foundation required.

The solution: No longer accept grant requests. Sounds like overkill, but the internal result has been profound. Instead of accepting outside requests, the company now has a completely bottom up employee volunteer program (executives still count as employees). The program encourages and rewards employees through supporting gifts and matching funds from the foundation. Within weeks of adopting the change there were 4 “projects” in the works.

How does it work? An employee captain puts together a team of volunteers and the team then solicits support from the foundation. The board still uses the same criteria to evaluate the recipient charity, but in addition, the request is evaluated based upon how many employees have signed up to participate and how the project fits with the corporate culture.

For this financial services firm: The first project--- “JA in a Day”. For the upcoming event, twenty-five employees have signed up to teach for a day at a local elementary school. Other projects with pending requests include a team of 30 signed up for a walk supporting a local cancer support group and a group of 20 outfitted in jeans and hammers for the day.

Although still funded by executives, the foundation serves to bring together the stakeholders. Employees from every department and at every level work together to support a common cause. This team effort gives new meaning to the term “employee happy hour”.

Contact Janet at http://www.foundationmentors.com/ or 314-691-4386.

Keeping in Touch With Donors

Let's face it, you've got heavy competition out there for donor money. There are so many great causes and the donor pool is shrinking due to the times we live in. One of the most important things you can do is keep in touch with your donors. Let them know how much you appreciate their gift, let them know how their gift is being spent. Not an easy task, but Ephy Torenberg (pictured) and William Hewitt of DonorFirst, offer valuable advice on managing donor relations. Bunnie

Keeping in Touch With Donors

by Ephy Torenberg, CEO and William H. Hewitt, CMO
DonorFirst™

With nonprofit organizations struggling to maintain support levels in the wake of the financial collapse, we were reminded this week of the critical importance of donor retention by the release of the 2008 Study of High High-Worth Philanthropy sponsored by Bank of America. This analysis of attitudes and behavior among donors highlights that nearly 60% of households who stopped supporting a charitable organization attributed their decision to a lack of ‘connection’ with the charities.

The good news is that due to recent and dramatic shifts in the technology supporting charitable instruments such as donor advised funds (DAFs), organizations finally have tools available that support these critical engagement and retention needs. These changes are finally enabling charities to support the type of grantee engagement, family collaboration, and use-of-funds transparency that donors have been seeking for decades.

DAFs are playing a central role in helping to manage and direct the flow of billions of dollars of social capital from philanthropic families, and at even modest adoption rates these programs stand to capture and distribute funding totaling trillions of dollars over the next decade. Encouraging this growing flow of donors and charitable capital are an exciting array of features beginning to appear in DAF programs:

Collaboration

The donor’s ability to collaborate with family, foundation staff, advisors and grantee organizations, all within the environment of their personal DAF account, has been missing for generations. New technology enables donors to create an unlimited number of these mini-communities, with each focusing on a particular interest-area, grant program, or need, and ranging in size from two users to every user on a system. This powerful feature enables families to collaborate on grant initiatives, foundations to mobilize donors around cause centered events, and advisors to collaborate with multiple generations of family members.

Transparency

Traditional DAF programs have failed to support feedback on use of funds, appreciation for gifts, and ongoing development efforts of the grantee. The latest DAF technology uses the grant process as an opportunity to build relationships between donors and grantees, and for the first time, supports the ability for grantees to respond back directly to the donor. Donors can focus on multi-year projects, condition future gifts to certain deliverables, participate actively with their charities, and establish new levels of engagement and collaboration with their grantees.

Multimedia Support

Charitable organizations are increasingly recognizing that it is possible to leverage photos, audio and video to help engage donors on a more personal, emotional level. In every context where a sponsoring foundation or grantee can communicate using text, the latest DAF technology supports communication using full multimedia (video and photo) formats. Grantees upload content, highlighting their efforts and populating the site with timely, relevant information.

Holistic

The latest DAF programs present all of the information and functionality donors need in the form of a personalized user Dashboard. Users see which grantee groups they are subscribed to, news that is of interest to them, conversations, grant status, and account balance – across multiple charitable instruments. Each donor may be working with a development officer or advisor and the dashboard includes a prominent personal photo of key contacts making it easy for the donor to initiate contact. The dashboard puts everything a donor needs right at their fingertips.

Thanks to features like these which are helping foundations and nonprofits deliver higher levels of service than ever before, these organizations will finally be able to increase the engagement and affinity levels of their constituency, dramatically improve donor retention, and better mobilize their donor’s contributions for the right strategic causes.

The DonorFirst™ platform is a service of Crown Philanthropic Solutions, LLC

Contact Ephy or William at http://www.donorfirst.org/ or 800-293-4061 x345