Indiana Grantmakers Response to the Economic Crisis

Transcription

1 Indiana Grantmakers Response to the Economic Crisis Who Responded In October 2008, Indiana Grantmakers Alliance (IGA) invited its 136 members to complete an economic impact and outlook survey. 71 of the state s community, corporate, family, independent, private and public funders complied, giving the instrument an impressive 52.2% response rate. Here is a snapshot of the organizations participating:

2 Indiana Grantmakers Response to the Economic Crisis 2 Foundation Finances In order to fully understand the impact of this year s market volatility on giving, IGA asked how assets and grants budgets changed in the previous fiscal year. Results show that most organizations suffered a 1-20% decrease in their asset base in Caused primarily by diminished returns on investments, these losses did not significantly impact giving. Foundation grants budgets tended to remain the same (26.8%) or increase (36.7%) in Foundation Asset Change, Foundation Grants Budget Change, % or greater 41-50% 31-40% Increase 21-30% 11-20% 1-10% No Change 1-10% 11-20% Foundation Asset Change 21-30% 31-40% Decrease 41-50% 51% or greater Cause for Asset Change, Change in investment strategy 0 46% or greater Increase 16-45% 5-15% No Change 5-15% 16-45% 46% or greater Decrease Cause for Change Major gift Grant payout Return on investments Foundation Grants Budget Change Other

3 Indiana Grantmakers Response to the Economic Crisis 3 Foundation Finances , contd. Contrast this to the current situation. 69.5% of participating foundations are now projecting that their grants budgets will decrease in Thankfully, nearly half of those organizations are expecting only a slight (5-15%) adjustment. Again, the clear cause for this change is the depreciation of assets. While able to combat the losses of 2007, respondents are beginning to feel the effects of an extended downward trend. So how will these changes affect foundations activities? The answer entails a mixture of additional in-kind services, revised funding priorities, updated development initiatives and altered grantmaking strategies.

4 Indiana Grantmakers Response to the Economic Crisis 4 Combating Declines Additional In-Kind Services Today, grantmakers rely on a variety of support mechanisms to propel social change. Among the most common are project/program support, scholarship funding, challenge and matching grant opportunities and general support. To help meet the increasingly important sustainability and capacity-building needs of nonprofits, foundations also provide staff and board leadership development, capacity-building programs, strategic planning assistance and one-on-one consulting for their grantees. As budgets shrink, it is safe to say grantmakers will boost their vital in-kind services and draw on their community connectivity to meet growing needs. Several survey respondents have already begun convening meetings to find noncash solutions to emerging issues. One strategy on the table: the creation of a coordinated need-fulfillment network. The idea is to join foundations, government agencies and nonprofit organizations in an effort to reduce redundancy and competition among service providers and simplify assistance for those in need.

5 Indiana Grantmakers Response to the Economic Crisis 5 Combating Declines, contd. Revised Funding Priorities In addition to reviewing their services rendered, more than half of respondents also anticipate refocusing their funding priorities in While this practice was in the cards for some before the economic crisis (for example, as part of their strategic planning process), many are being encouraged to rethink their areas of giving by financial constraints. Plans to Refocus No 48.6% Yes 51.4% Foundations anticipate being more strategic and selective in the granting process, with an eye toward choosing projects that will produce the greatest impact. A significant number of respondents also plan to look beyond their traditional service areas to consider proposals reflecting immediate need (i.e. requests for food and shelter).

6 Indiana Grantmakers Response to the Economic Crisis 6 Combating Declines, contd. Revised Funding Priorities, contd. Both of these shifts are driven by the number and kinds of requests foundations are receiving. Over the past year, 55% of respondents have experienced a moderate or drastic increase in their volume of grant requests. A majority (62.2%) of those proposals came from human service providers. Current Volume of Requests Areas of Increased Request Comparative Volumes of Request Same as last year Moderate increase over last year Dramatic increase over last year Decrease from last year Funding Areas Arts Education Environment Health Human Services Public/society benefit Other Updated Development Initiatives For the public foundations that both raise and distribute funds, a shift in fundraising techniques is also likely. These grantmakers, including community foundations, plan to increase their donor interaction and education, place more emphasis on planned giving, and provide additional matching fund and challenge grant opportunities next year. Some hope the recent re-instatement of the IRA rollover, which allows individuals age 70½ and older to donate up to $100,000 from their IRAs to public charities tax free, will spur new giving.

7 Indiana Grantmakers Response to the Economic Crisis 7 Combating Declines, contd. Altered Grantmaking Strategies In light of all this change, it is logical to assume grantmaking practices will also evolve. Indeed, 50.7% of respondents anticipate making fewer grants in Thankfully, 46.5% also intend to make larger gifts. The upside is extended when considering that 39.4% of survey participants anticipate maintaining their grant volume despite the tough times. The area most likely to enjoy increased foundation attention is general operating support. Change in Number of Grants, Types of New or Increased Support in 2009 General support Remain steady Project/program support Number of Grants Give fewer grants Give more grants Will not consider requests until further notice Types of Support Loans and/or PRIs Technical assistance Challenge and/or matching grants Multi-year support Capital support Scholarships Advocacy Other Conclusion While these results reveal a shared vulnerability between foundations and individual investors, they also point to philanthropists determination to overcome financial obstacles. Their primary objective is to find ways to meet growing needs despite shrinking budgets. That is why foundations now are searching their arsenals for the weapons best suited for the fight against recession. By examining their services, funding priorities, development initiatives and grantmaking strategies, Indiana s foundations will create a winning combination of support tactics to improve the health and vitality of citizens and communities regardless of the economic outlook.

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