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Funders urged to lead in tough economy: Part 3

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[Editor’s note: This is the last of three articles on foundations’ role in addressing the current economic crisis. See Part 1; See Part 2.]

Ret Boney

Foundation dollars are a critical source of fuel for the nonprofit engine in the U.S., accounting for almost 13 percent of all charitable giving.

And as nonprofits strive to meet increasing demand driven by job loss and foreclosures, and plug the fundraising gap left by wary donors, foundation funding will become even more important.

Yet, while U.S. foundations pumped an estimated $43 billion into nonprofits last year, according to the Foundation Center, their money alone isn’t enough to be the sector’s salvation.

But organized philanthropy has more to offer than just cash, say foundation leaders and experts.

Foundations have respect and the leadership potential it conveys.

“Foundations need to recognize that philanthropy has a unique ability to serve as a community convener,” says Steven Gunderson, president of the Council on Foundations in Washington, D.C. “Some of our skills go beyond simply writing checks.”

For now, the Council, an association of more than 2,000 foundations, is working to develop an online toolkit that will contain ideas from funders about how they are approaching the crisis.

And the Foundation Center, a research group in New York City serving the foundation and nonprofit sectors, has created an internal task force to pull together and make available to nonprofits any of the center’s resources that might help navigate the economic stress.

The Center’s new “Focus on the Economic Crisis” includes a web-based interactive map of U.S. community foundations, including details on their assets and giving, as well as a roundup of economy-related news and links to training sessions to help nonprofits improve their fundraising skills.

But for many foundations, embracing that role as a community convener may require a shift in standard operating procedures, says Andrew Swinney, president of the Philadelphia Foundation.

“We sit in our ivory towers and nonprofits come to us and ask for our largesse and we bless them or we don’t,” he says. “There needs to be a much greater coming together of those nonprofits and we who fund them. What can we do together to address the needs of the people they serve?”

Jonathan Fanton of the Chicago-based John D. and Catherine T. MacArthur Foundation agrees foundations can be the catalyst for bringing community groups together.

For example, he scheduled a meeting of arts and culture organizations to discuss how they can work together to achieve some efficiencies.

And Bradford Smith, president of the Foundation Center, believes funders’ heft could go a long way toward making foundations an integral part of change beyond the short-term salve for wounds inflicted by the economy.

“In the medium-term, we’ll probably see some foundations collaborating on sector issues like housing and economic development,” he says. “The scale of these problems requires collaboration.”

And in looking toward the long-term, it is possible the current economic crisis will spur the cooperation and innovation that will be needed to address entrenched societal problems.

“Endowed private institutions have a precious commodity,” says Smith. “They have flexible funding that is independent and they can take a long view to advance critical issues.”

But there’s an important role foundations can play that goes beyond money, says Fanton.

The sector can use its money and its leadership to provide a sense of hope, he says.

“I’m pleased at the reaction to our foreclosure initiative,” he says of his foundation’s $68 million investment to prevent foreclosures in Chicago. “It’s a symbol of what an institution can do in a difficult and anxious time to give people confidence that there are institutions in our society who will be there for them.”

See Part 1: U.S. funders face the downturn

See Part 2: Foundations respond to crisis

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