Foundations Announce Expectations for Future Giving in Light of Economic Conditions

A new Foundation Center research advisory, “Grantmakers Describe the Impact of the Economic Crisis on Their Giving,” examines how foundations expect their 2009 giving to be affected by the economic downturn. The advisory looks at public statements made by more than one-third of the 100 largest U.S. foundations by giving and 35 other foundation and corporate funders that have described their plans, ranging from raising payout rates to reducing administrative costs to cutting programs altogether.

The advisory, by Lawrence T. McGill, senior vice president for research, and Steven Lawrence, senior director of research, is based on information available to date in the Center’s new online compilation of news and announcements about foundations’ response to the economic downturn, “In Their Own Words: 2009 Foundation Giving Forecast.”

“These grantmakers deserve credit for letting their grantees know what to expect over the coming year, so they can prepare,” said Lawrence. “A number of these funders are also belt-tightening to boost their giving, which clearly shows that we are all in this together.”

Of the 100 largest foundations ranked by total giving, the Center has tracked only two so far that have announced intentions to increase funding in 2009. The Bill & Melinda Gates Foundation has said that it will increase giving in 2009 by raising its payout rate, while the John D. and Catherine T. MacArthur Foundation expects to “maintain or increase” giving.

To keep giving stable in the face of shrinking endowments and assets, 10 large foundations are planning to increase their payout rates or establish cost-cutting measures such as freezing salaries, leaving staff vacancies unfilled, or reducing staff benefits. The Hewlett, Packard, and McKnight foundations have stated that they will reduce giving but will increase their payout rates to limit the amount of the reductions.

“In many ways, the current economic uncertainty highlights an important tension in philanthropy. In times of need, philanthropy is often asked to help those who are most affected, and rightly so. Yet, our long-term impact will always be greatest if we set ambitious goals and stick to them, including maintaining long-term partnerships with our grantees. This is a tension that has no easy solution and that requires ongoing attention,” said James Canales, president and CEO of the James Irvine Foundation.

This Foundation Center research advisory is the latest in a series that explores the impact of the economic downturn on the nonprofit sector. The advisories and the online chart, “In Their Own Words: 2009 Foundation Giving Forecast,” are available at the Center’s “Focus on the Economic Crisis” web page, which offers a variety of resources to help nonprofits and foundations deal with the challenges of the unstable economy.