Foundation giving likely to fall

In the face of serious asset erosion, a majority of U.S. foundations expect to cut their grantmaking this year, says a new report from the Foundation Center.

Almost two-thirds of foundations surveyed in early 2009 say they will reduce either the number or size, or both, of their grants this year.

At the same time, more than half of foundations are looking for other non-financial ways to further their missions and support their grantees.

Almost half of foundations say they will support fewer grantees in 2009 and a similar number plan to fund fewer new grantseekers.

Longer-term grants also will take a hit, with over four in 10 funders saying they will take on fewer multi-year commitments.

Almost four in 10 foundations say they will need to tap their endowments to make grants this year, with independent foundations most likely to do so and community foundations least likely.

About 14 percent of foundations are funding initiatives that directly address the economic downturn, either by providing loans or program-related investments, or are awarding exceptional grants.

Community foundations are more likely to address recession-related needs, with over a third implementing special initiatives.

Of the foundations starting special initiatives, more than six in 10 are diverting funds from existing grant budgets to cover the cost, while 17 percent say they will tap their endowments to find the money and one in 10 will dip into reserve accounts.

As money becomes scarce, foundations are looking for other ways to fulfill their missions, with more than half engaging in non-grantmaking activities to address the economic crisis.

Two in three will seek out more opportunities to collaborate and about a third plan to convene meetings.

Some funders also plan to provide emergency financing when possible, engage in more advocacy activities and share the expertise of their staffs by providing more technical assistance.

Grantmaking by foundations, many of which base their grant spending on a rolling average of their assets, likely will erode further beyond 2009, the report says.

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