Foundations Expect to Reduce Grants in 2009

Funders Will Rely More on Non-grantmaking Activities to Achieve Goals

New York, NY – April 20, 2009. Close to two-thirds of foundations responding to a new Foundation Center survey expect to reduce the number and/or the size of grants they award in 2009. According to Foundations Address the Impact of the Economic Crisis, organizations seeking new sources of support and recently established entities will be especially challenged in securing foundation funding. The report is based on 2009 survey responses of more than 1,200 U.S. foundations.

In addition, the new survey finds that over half of respondents are reacting to the economic crisis by engaging in more non-grantmaking activities. Fully two-thirds of these funders plan to seek out more collaborations and partnerships in 2009, while roughly one-third indicate that they will be initiating more convenings. At least one out of five respondents expects to engage in more foundation staff-led activities, provide more technical assistance, offer more bridge/emergency financing, or engage in more advocacy.

“Foundations can do so much more than simply make grants,” said Bradford K. Smith, president of the Foundation Center. “The important thing is for them to remain true to their values and causes and to stand by their nonprofit partners.”

Other key findings from the new advisory include:

  • Foundations will draw upon various resources to fund their 2009 giving — close to two out of five respondents expect to draw at least in part on their endowments to fund grants.
  • About 14 percent of respondents either have made or plan to make exceptional grants or launch special initiatives in response to the economic crisis, largely by reallocating existing grants budgets.
  • Nearly one-third of respondents made operational changes as a result of the 2000-02 economic downturn that they believe better prepared them to face the current downturn, such as changes in investment strategies or reducing operating expenses.

“Foundations are not rolling over in the face of adversity,” said Steven Lawrence, the Center’s senior director of research and author of the advisory. “The new survey shows foundations being creative, strategic, and willing to dig deep to ensure that their agendas move forward while this crisis persists.”

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. Also available is the Center’s interactive map that displays the most recent data available on U.S. foundation support for the crisis, totaling more than $175 million to date.