CHARLOTTE, N.C. – With its endowment down by almost $1 billion, The Duke Endowment will cut its grantmaking by about $42 million this year.
The funder’s assets now stand at about $2.3 billion, down from a high of $3.2 billion in late 2007, says Gene Cochrane, president of the endowment.
“A number of us aren’t overly optimistic about the year we’re in, but we’re hopeful that 2010 will be better,” he says.
The organization spends about 5.5 percent of the value of its assets over the previous 12 months on grants and related expenses, says Cochrane, and while that percentage won’t change, the amount paid out will.
“There are trustees that are concerned that is too high and others want to keep it high,” he says. “That’s a good healthy tension.”
He expects 2009 grantmaking to come in at around $120 million, down from $162 million last year.
While the endowment will honor all existing commitments, including multi-year obligations, its education and child-care divisions will hold no grant cycles this year.
Its health-care and rural-churches divisions did have some money for new funding, says Cochrane, and did accept grant applications.
As the market volatility roils on, the organization is reexamining its policy of basing spending on a 12-month average of assets, says Cochrane.
“You could make the argument that if the market returns, then you’re back in the grantmaking business faster,” he says of the 12-month average. “For those on a 36-month average, you’re more predictable for your recipients because you’re not changing as quickly.”
However, when the markets do recover, it may take longer for those funders to get their grantmaking levels back up, he says.
While the endowment’s grantmaking will take a hit this year, the organization has decided to forge ahead with its work as a convener.
“We’re continuing to sponsor a lot of those efforts, even though we can’t make the grants we’d like to,” says Cochrane.
In the meantime, the endowment has trimmed its operating budget, in part by leaving unfilled several vacant positions.
To date, there have been no layoffs or salary freezes, he says.
But the climate in the nonprofit sector in general is gloomy, particularly for organizations that depend on funding from United Ways, says Cochrane.
Almost all United Way fundraising campaigns in North Carolina were down last year, meaning there will be less money for nonprofits when distributions begin in July.
“In general, I’m concerned for the not-for-profits,” he says. “I wonder if we won’t see more stress by the end of the year than we’re seeing right now.”
But there’s also some duplication in the sector, says Cochrane, and the current economic situation may encourage some to consider partnerships.
At the same time, nonprofits are coming under greater scrutiny, and sometimes greater criticism, which Cochrane says could siphon off much-needed support for the sector.
“In Charlotte, there’s been a lot of examination of what nonprofit executives have been making,” he says. “I’d rather see society rally around nonprofits because of what they can do in a downturn rather than criticize them.”