Word from the Council on Foundations re: economy

1. FOUNDATION
FUNDRAISING
2009
A Little News, a Little History
and a Little Advice
www.aagpnorcal.org

3. WORD HAS IT…
2008 Keynote Speaker
10th Annual National Conference
American Association of Grant Professionals
October 23, 2008
Throughout his career, Steve Gunderson has
served three terms in the Wisconsin State
Legislature and 16 years in the U.S. Congress.
Gunderson’s distinguished career included
leadership roles on AIDS policy, modernization
of our nation’s employment policy, lifelong
Steve Gunderson
learning, community learning centers, and job
President and CEO of the
training policies for a global hi-tech economy.
Council on Foundations.

4. KEYNOTE EXCERPTS:
“Of course, for three years I’ve shared with
anyone who would listen that despite my flaws,
I would preside over the greatest growth of
philanthropy in world history!
Never did I realize that I’d also preside over its
greatest evaporation of resources in the
Economic Crisis of 2008.”
- Steve Gunderson
President & CEO
Council on Foundations

5. KEYNOTE EXCERPTS (CONT’D):
On Friday, October 10th, our investment advisor

told us that most foundations had lost between
14% and 30% of their value.
The last couple of weeks have added an additional

15% loss.
Today, most foundations have witnessed a 30-45%

loss in value!
- Steve Gunderson
President & CEO
Council on Foundations
10/23/08

6. KEYNOTE EXCERPTS (CONT’D):
To give you some sense of this, if foundation assets

were $670 billion at the market’s peak in October
of 2007, we have probably witnessed the loss of
$280 billion over the past year!
If we believe, as most do, that philanthropy’s

investment returns are better than the average, we
could project a 30% loss which represents a decline
of $200 billion over the past year.
- Steve Gunderson
President & CEO
Council on Foundations

7. KEYNOTE EXCERPTS (CONT’D):
“Virtually every foundation endowment stands at
considerably less value today than it did only a few
weeks ago, and assuming our institutions meet the
commitments they have previously made, which
most will, there will be dramatically less new
money to give out in the next few years, at least.”
- Gara LaMarche
President & CEO
Atlantic Philanthropies

8. KEYNOTE EXCERPTS (CONT’D):
“Corporate philanthropy will be dramatically
reduced, and among those in the financial services
industries who have kept their jobs – or, indeed,
their firms – most will be much less generous in
their personal giving.”
“Government revenues and social spending will
continue to shrink – the Center on Budget and
Policy Priorities just looked at the budget gaps of
fifteen states, from California to Rhode Island,
reeling from the credit crunch, and found six whose
deficits are ten percent or more of the total budget.”
- Gara LaMarche

9. KEYNOTE EXCERPTS (CONT’D):
“All this will have a sharp effect on the funding and
programs of non-profit organizations, and in what kind
of social climate?
One in which human need – foreclosure, unemployment,
greater health problems even less covered by insurance,
hunger, homelessness, crime and violence -- grows ever
more acute.
What we are facing, then, is a kind of perfect storm.”
-- Gara LaMarche

10. HISTORICAL PERSPECTIVE
On average, recessions occur every 5-10 years

During each of the past four recessionary periods,

inflation-adjusted foundation giving increased
slightly and unadjusted declined less than 3%
Giving by 72,000 foundations rose by 10% in 2007

to a record $42.9 billion
Assets nationally grew by an estimated 9% in 2007

and 11.6% in 2006… in California, assets rose 16%
Nationally: 1400 new foundations…in California: 451


11. 2007 CHARITABLE GIVING
TOTAL = $306.39 BILLION ($ IN BILLIONS)
Corporations
$15.69
Foundations
5.1%
$38.52
12.6%
Individuals
$229.03
74.8%
Bequests
$23.15
7.6%
Source: Giving USA 2008
NorCal Chapter

12. MITIGATING FACTORS
Grant Appropriation process

According to the Foundation Center’s “Foundation Giving Forecast”:
1/2 of all foundations base grant appropriations on

value of prior year’s endowment
1/3 average their endowment value over two years

How will the stock market behave through 2009?

How will Foundation Boards behave in response?

How will your nonprofit behave in response?


13. HOW SHOULD PHILANTHROPY RESPOND?
“I want to start this conversation at its very core.
Those of us in philanthropy believe deeply – that in
good or bad economic times – we must articulate the
distinction between charity and philanthropy.
Charity is a wonderful value. In many ways it defines

Americans across all faith and ideological boundaries.
But, charity is a gift of the heart – a gift of the moment.

Philanthropy is a very different form of giving. It

represents a strategic investment over a significant
length of time.”
- Steve Gunderson

14. HOW SHOULD PHILANTHROPY RESPOND?
“My board chair, Ralph Smith of the Annie E. Casey
Foundation, and I recognize this economic crisis as
a leadership moment for philanthropy. As a result,
we issued an Open Letter to the Field encouraging
each philanthropic organization to carefully reflect
how it could best play a constructive role in this
economic crisis.”
- Steve Gunderson

15. HOW SHOULD PHILANTHROPY RESPOND?
“Specifically, our letter suggested 3 recommendations:
Let’s reach-out to the nonprofit sector, especially those
1.
we currently support – recognizing that the nonprofit
sector will bear the brunt of shrinking resources and
growing need.
Let’s play an active and visible role in helping
2.
communities and regions identify the scope and extent
of the challenges they face – and in finding solutions
that make sense.
Let’s pay special attention to those situations where
3.
the loss of philanthropic resources could be the
unintended consequence of mergers, consolidations, or
government intervention resulting from this economic
crisis.”
- Steve Gunderson

16. HOW SHOULD PHILANTHROPY RESPOND?
Inspired by this challenge of our time, Dr. Bob Ross of the
California Endowment submitted the following…
Board-CEO Principles for Managing thru the Crisis:
1. Re-affirm and stick to our values.
2. Balance “responsiveness” (to communities in need) with
“responsibility” (to prudently steward the assets).
3. Guard against reacting to panic with panic. Take the long
view, and wherever possible, make time our friend rather than
our enemy.
4. Philanthropy is recognized as a voice and advocate for the
underserved; let’s remain cognizant of how our actions may
influence the behavior of others in our field.

17. HOW SHOULD PHILANTHROPY RESPOND?
Board-CEO Principles for Managing thru the Crisis (cont’d):
5. In the months ahead we will face some tough decisions. It’s a
good time to reaffirm the treatment of community, grantee, and
staff with dignity, respect, compassion, and transparency.
6. Recognize that the severity and depth of the economic crisis
represents an entirely new and unanticipated set of realities for
us, and we must be willing to re-examine old assumptions,
suggest and weigh new ideas, and out-of-box thinking is
welcome.
7. Keep in mind: the Chinese translation for crisis includes
the notion of opportunity.

18. REACT NOW

19. TIGHTEN YOUR BELT
Revisit your 2009 budget

Communicate with staff

Conduct cost/benefit analysis

Collaborate

Consider putting new programs on hold

Concentrate on programs serving critical needs


20. DO YOU HAVE AN
INTEGRATED DEVELOPMENT PROGRAM?
Individual Giving > Major Gifts

80/20 rule: 80% of contributions from 20% of donors

Research > Targeting > Communications > Stewardship

Gift Reporting > Segmentation

Board > Strategic Plan > Development Plan > Work Plan

Budget > Sustainability > Cash Flow

Organizational & Development Audits


21. KNOCK ON MORE DOORS
• Turn to your donor database
• Find new prospects by asking old friends
• Use foundation research tools
• Follow philanthropic news sites & blogs
• Build online giving
• Brainstorm with your team

22. COMMUNICATE
• Keep donors informed
• Share your cost-cutting strategies
• Communicate the need
• Talk with your funders about how you can
support their efforts to meet critical needs in
your community

23. “We all need to break down the silos
and address the common, underlying
challenge – which is poverty. For then,
and only then, are we truly engaged in
philanthropy’s best definition.”
Gara LaMarche
President & CEO
Atlantic Philanthropies

24. “We must soon recognize that
philanthropy cannot do this alone. We
need public and private sector partners.
And this is why advocacy is essential for
those organizations committed to
serving the common good!”
- Melinda Gates

25. “The real test is not whether you
avoid this failure, because you won't.
It's whether you let it harden or
shame you into inaction, or whether
you learn from it; whether you choose
to persevere”.
- Barack Obama

26. Thanks for who you are
and all that you do.
-Steve Gunderson
President & CEO
Council on Foundations
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