WINSTON-SALEM, N.C. – Although the market downturn has pummeled the assets of the Mary Reynolds Babcock Foundation, the funder is clinging to its “mission responsibility,” the group’s president says.
And that mission, to help move people out of poverty, has only increased in importance as the recession has spawned home foreclosures and job layoffs.
At the end of January, the foundation’s assets stood at about $126 million, down about 30 percent from a high of $189 million at the end of 2007.
And while Babcock determines its grantmaking budget based on a 12-quarter rolling average of its assets, the board has elected to suspend that rule in order to keep grantmaking up, says Gayle Williams, president of the Winston-Salem-based foundation.
Unless there’s another “precipitous drop” in assets, the funder will keep grantmaking this year at the 2008 level of about $7 million, with the goal of maintaining that in 2010 and 2011 as well.
“It was a very thoughtful and careful decision,” says Williams. “The board takes the trusteeship of the foundation’s resources very seriously and feels the assets are to be used for the public good.”
That has always been the case, she says, with Babcock often paying out more than the 5 percent of its assets it is mandated to pay out each year.
The larger question is balancing the need to spend now with the preservation of capital for the long term.
“Their view was that eventually the markets would recover and eventually our corpus would recover,” she says. “The board has the fiduciary responsibility to be prudent with the assets. They balanced that with the mission responsibility.”
While the foundation has looked for cost savings on the operations side, to date, the only significant changes are a cap on administrative expenses and a small cut to staff benefits, says Williams.
“We didn’t want to cut too much because we wanted to keep good people,” she says. “If we’re going to keep grantmaking at $7 million, then we need the staff we’ve got. It’s all mission-driven.”
While she hasn’t noticed a dramatic increase in the number of inquiries about grants, Williams says, foundation staff are staying in constant conversation with grantees about the effects of the recession.
Some nonprofits are positioned to receive federal stimulus money and are considering new opportunities, says Williams.
Others, however, have missions that are not aligned with the stimulus package and those groups are struggling.
While some nonprofits may not make it, she says, she believes the strongest will survive the economic storm, and some new activity could evolve, including work around the environment, green jobs and issues of equity.
“The sector, like the country, is very resilient,” says Williams. “There increasingly will be a call for effectiveness and hopefully more attention to sustainability of nonprofits.”
And the suffering that is highlighted and exacerbated by the recession could shine a spotlight on some critical issues, she says.
“As more and more people are affected by job loss and the downturn, there’s the opportunity for nonprofits and foundations concerned about equity to build a broader constituent base for economic development, job creation and those things that build income and assets,” says Williams.
And the internal conversations foundation boards and staff are having about balancing assets and grantmaking are important, she says.
“Our conversations are ones that reflect how we’re going to operate in good times and not-so-good times,” she says. “It’s an opportunity for us to get clear about our values and mission commitments.”