I love the days immediately before the New Year begins. For me, they are filled with reflections of the joys and challenges of the prior 11.9 months and anticipation for what is to come. Anticipation is a good word as we stand on the verge of 2015, since we are ending a year in which foundation philanthropy seems to be solidifying a long-awaited comeback.
The conventional wisdom is that foundation giving will always remain strong as we head into a recession (after all, many give based on prior-year returns when the market was stronger) and will trail a recovery (alas, the same principal still at work but based on a weaker market). The Great Recession seemed to have challenged that rule significantly since not only were foundation boards trying to sustain their philanthropic mission (not to mention the minimum 5% distribution) but were at the same time trying to rebuild endowments. Talk about building the boat as you sail across an ocean!
And lets not forget the game change of the disappearing foundation. Atlantic Philanthropies is in its final spend-down phase having left an enormous legacy, a deep footprint on its way to leaving a significant void among the giants of the foundation world. To be sure, new “Atlantics” are abloom but perhaps being created with the same notion of spend and invest generously during the lifetime of the donor. I refer to this as “supernova philanthropy” — a magnificent burst of energy as a star explodes leaving behind a beautiful aura as a legacy for astronomers and star-gazers (like moi) to behold.
Which brings us to “The Cautious Comeback.” For your consideration:
* According to Giving USA 2014, foundation giving marked a 5.7% increase in 2013.
* The Foundation Center’s own “2014 Key Facts” report published in November 2014 predicts that when all is said and done, ” overall foundation giving will continue to grow a few points ahead of inflation in 2014.”
* The 2014 survey of 637 foundations by Grantmakers for Effective Organizations found that the median level of grants devoted to general operating support rose to 25 percent in 2014, up from 20 percent in 2011.
* Foundation Source, which consults to and helps family foundations manage their funds notes in its annual report that “the combination of a recovering stock market and additional contributions by their funders resulted in increased foundation endowments for a second straight year, in spite of charitable distributions that exceeded the 5% minimum by almost 50%.”
The conditions for a comeback have been created and creatively used by foundations to increase giving. Looking ahead, I see both opportunities and challenges:
Opportunity: General operating support grants are on the rise as many grantmakers seem to be willing to help charities maintain/sustain operating infrastructure costs. According to a colleague in foundation world, this may be because they have seen many grantees make efficient, wise and pragmatic management decisions during the recent financial crises and this has reduced the sense of risk in these types of grants.
Challenge: I see more foundations closing portfolios, preferring to continue to support long-time grantees. Finding new grant opportunities is becoming more difficult and time consuming, adding to the length of time it takes to build or expand a grant portfolio.
Opportunity and Challenge: From my own work as a consultant, I have seen how many foundations have emerged from the Great Recession with stronger, more-targeted philanthropic investment strategies. This will be boon to some and a barrier to others.
I close by wishing all of you every success in your grantseeking efforts in the year ahead. May 2015 bring the investments of others toward the good you bring to those who benefit from your mission, passion and good work.