WINSTON-SALEM, N.C. – While its assets have yet to rebound to pre-recession levels, grantmaking by the Mary Reynolds Babcock Foundation is on track to recover fully this year.
The Winston-Salem-based funder will award about $7 million in grants in 2011, says Gayle Williams, the foundation’s president, equaling the amount awarded in pre-downturn 2008, and exceeding last year’s $6 million.
When the recession hit, the foundation’s board voted to keep grantmaking for 2009, 2010 and 2011 as close as possible to 2008 levels.
And with assets back up to about $160 million from $126 million at the end of 2008, the board recently decided to increase the foundation’s spending level.
Babcock, which bases its grantmaking on a 12-quarter rolling average of its assets, will raise to 6 percent from 5.5 percent the percentage of its assets awarded for each of the next three years.
“It took them about a year of looking at different investment scenarios and thinking deeply about the tradeoff between impact now and in the future and coming to some wise discernment,” says Williams.
That decision was made easier by board veterans, some of whom have several decades of tenure, who provided the long-term perspective, reminding fellow members that endowments go up and down over time.
And the income the organization gained during flush economic times can help the funder’s grantmaking survive the droughts, says Williams.
“Not too many foundations, us included, increased our giving to double digits when we were earning double digits,” she says. “It kind of evens out over time.”
Finding the balance between protecting the foundation’s assets and supporting the community it serves is critical.
In an effort to maximize both, the foundation in 2009 trimmed benefits, and in 2010 froze salaries, only this year reinstituting “modest” increases for staff.
“We’re at the point where we have to consider the long-term impact of the endowment,” says Williams. “We don’t want to erode the endowment.”
That said, there’s been no change to the foundation’s mission of helping people and places in the Southeast move out of poverty, and now is a critical time to keep grantmaking strong.
Many of Babcock’s grantees benefited early in the recession from the influx of federal investment, including funds from the American Recovery and Reinvestment Act of 2009, but those dollars soon could dry up.
Both the serious attention to the national debt and the political swings of the past year have left the sector on edge.
“A question we have now is what’s coming given the state and federal fiscal crises,” says Williams. “Everyone is holding their breath to see what will actually happen.”
One positive development over the past few difficult years, says Williams, is that the sector appears more ready and willing to work together.
Rather than “collaboration for collaboration’s sake,” nonprofits are becoming proactive about partnerships, realizing they can’t accomplish everything on their own.
“Some of that is born out of the needs they seen in their communities,” says Williams. “And some is born out of necessity and the evolution we’re in right now. It’s a time of really seeing the value of working together.”