Past sheds light on foundation giving

If history is any guide, the current economic downturn likely will not have a significantly negative effect on foundation giving this year, says a report from the Foundation Center.

After reviewing data from the past 32 years, the center says inflation-adjusted giving has not dropped during any of the four recessionary periods, but rose slightly.

And while giving fell for 4.4 percent over the two years following the 2001 recession, that was a far milder decline than the 16 percent drop in foundation assets over the same period, the report says.

The relatively good performance following the latest recession was due to the creation of new foundations and continued large gifts and bequests by donors to existing foundations.

Another boost came from foundations’ budgeting strategies, many of which base grantmaking on a two-to-five-year rolling average of total assets.

Some foundations also have been willing to draw down the principal of their endowments when necessary to meet rising needs in the community, the report says.

In May, the Foundation Center predicted giving in 2008 would outpace inflation because assets have grown faster than inflation over the past three years.

The outlook for 2009 is a bit murkier.

If the stock market rebounds some by the end of 2008, the center says foundation giving could hold steady next year.

But continued stock-market declines could lead to a drop in assets that might force foundations to cut their grantmaking.

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