ASHEVILLE, N.C. — While declining assets are forcing the Community Foundation of Western North Carolina to cut its grantmaking, the funder aims to lessen the blow by raising $1 million to fund basic needs in mountain communities.
The foundation’s assets have sunk to about $115 million from a high of $175 million in December 2007, says Pat Smith, president of the Asheville-based foundation.
At the same time, gifts to the foundation fell by more than a third in 2008, a trend she says is continuing this year.
That drop in assets, exacerbated by the loss of income from fundraising and fees generated by the more than 800 funds under management, means total grantmaking will drop by about 20 percent this fiscal year, which ends June 30.
At the same time, more than half the foundation’s 828 funds have fallen below their original purchase values as the markets have imploded.
While a recent change in state law now allows community foundations to tap into the principal of such “underwater” funds, Smith says the board is still weighing its options.
“We take this idea of prudence very seriously for those funds that are underwater,” she says. “On the one hand, the community has never needed the funds more than they do today. And yet we have a fiduciary responsibility to make sure they’re protected for future needs of the community.”
The board already has lowered the percentage of fund assets to be awarded in grants to four percent from five percent, Smith says, and the share will be lower than that for underwater funds.
“Our grantmaking resources have been reduced, and the needs in our community have changed,” says Smith.
To help plug that funding gap, and address the new recession-related needs in the foundation’s 18-county region, the foundation created the Recession Response Fund and launched the “Give from the Heart” campaign to raise $1 million.
Since the launch February 9, the foundation has raised almost $600,000 and plans to award 100 percent of the money in grants, foregoing administrative fees.
“Our message is, ‘Please support your favorite nonprofits first, and if you have additional resources, then contribute to the Recession Response Fund,’” says Smith.
To date, the foundation has awarded 51 grants totaling $350,000 to support basic needs like food, shelter, utilities, health care and job training.
Two larger grants support foreclosure counseling and free income-tax preparation for low-income people, and the foundation has awarded $10,000 challenge grants to its nine affiliate foundations to spur local giving.
The community foundation also has begun providing operating support for nonprofits.
For the foreseeable future, all discretionary grantmaking will focus on recession-related needs, a decision Smith says will be revisited in the fall. Funds with designated purposes will continue to award grants according to their original intent.
In addition to the new fundraising campaign, the foundation aims to boost its financial standing by cutting internal costs.
To date, cost-cutting measures include one layoff, an across-the-board salary cut of five percent for the foundation’s 19 employees, and elimination of the match to employees’ retirement funds.
The organization also has instituted a hiring freeze and has cut back on professional development, travel, and printing and publication expenses.
“All those efficiencies we’re having to put in place now will be good tools and will mean more money to carry out our mission instead of funding administration,” she says.
At the same time, the recession is forcing organizations to look for new and innovative ways to have an impact without writing checks, like making better use of volunteers and board members.
And for organizations it can’t fund right now, the foundation is providing capacity-building assistance.
“We’ve got to look at every possible resource available, including things other than financial resources,” says Smith.
A new effort launched through WNC Nonprofit Pathways, a partnership with other mountain-area funders, aims to help struggling nonprofits shore up their financial standing by helping with contingency planning.
For nonprofits “on the brink,” the effort provides private consulting from a certified public accountant and an organizational-development specialist.
Those experts will help organizations create a new budget and gain an understanding of various income and expense scenarios.
Pathways also hosted contingency-planning workshop May 5.
Prior to the recession, Smith had announced her retirement this summer, which will mark 25 years at the foundation.
But she’s confident the organization will overcome the current challenges.
“It’s such a vital organization to this region,” she says. “It makes me proud to see how the staff has risen to the occasion and is doing everything they can to do what our mission says – to address the changing needs of the community.”