On a sunny Sunday in November, 2008, the board of the Durfee Foundation gathered in the 48-year-old foundation’s office in Santa Monica, California. The trustees already knew that the foundation’s assets of approximately $30 million had fallen 30 percent. The talk before the meeting focused on the growing economic crisis and its impact on the foundation, local nonprofits, and the national economy. As president, third-generation member Carrie Avery called the meeting to order. The mood was serious, thoughtful, determined. The discussions, similar to those playing out in philanthropic family meetings across the country, focused on community conditions, grantee concerns, and the foundation’s responsibilities. The decisions made at that four-hour meeting reflected the kind of dilemmas the economic crisis is forcing all philanthropists to confront.
The recession that began in 2008 has caused philanthropic assets for most families to decline sharply. Program plans for 2009 and 2010 have been disrupted, forcing many philanthropic families to cancel new initiatives, respond to pleas from longstanding grantees about cash shortfalls, and swing rapidly toward support of basic human needs.
Families who operate foundations, donor-advised funds, and other formal giving vehicles have responded promptly and generously to community needs. By and large, families have acted to protect philanthropic assets, canvassed their grantees to assess the damage, reorganized grantmaking policies and programs to meet immediate community needs, and suspended time-consuming application procedures to speed up the granting process. Many families have, albeit reluctantly, put long-range programs on hold and diverted funds to nonprofits providing for human needs such as food, clothing, rent assistance, and fuel subsidies.
The Durfee Foundation board decided to maintain its current asset allocation system, honor its commitments, cut back on pending new or possible grants, and ensure that foundation actions would not harm the settled expectations of its grantees. The board also examined in-house expenditures for possible savings, and considered delaying a scheduled audit on grounds that the 2007 audit was clean, no personnel or practices had changed since then, and the expense of an audit was substantial.
Observers of the philanthropic scene are noting that family philanthropies are especially positioned to help in times of crisis because they are not “saddled with the bureaucracy” that may slow decisionmaking. In addition, many family philanthropists have business backgrounds, valuable connections, and a first-hand sense of their community’s vital signs, enabling them to quickly diagnose and prescribe remedies to local problems.
Families want to preserve charitable assets for the longer haul, to be sure, but many view the erratic stock market in this way: “We have enjoyed a wonderful five or six years of asset growth,” says Richard L. (Skip) Moore, president of the Weaver Foundation in Greensboro, North Carolina “In 1999, we were about $19 million. We closed out last year at $32 million. We are down now to about $24.5 million. We’ve granted a lot of money during those years, which pleases us a lot. We will not cut back to 5 percent or less. We will probably spend some of the extra money we have earned over the past few years to meet new needs.”
Everyone interviewed for this story stressed that even the near-term future is impossible to predict, given the huge financial dynamics involved, and that every family in philanthropy faces highly individual conditions and will likely respond in highly individual ways.
PHILANTHROPIC FAMILIES TAKE LEADERSHIP ROLES
In a crisis, leadership counts. The Meadows Foundation, one of the largest foundations in Texas, feels a special responsibility to maintain contact with and support for its hundreds of grantees, spread throughout every county of that huge state. “We’ve been through this before,” says Meadows Foundation President Linda Evans, “After 9/11, when charitable donations were redirected to assist victims in New York and Washington and support of local agencies declined, we changed our funding priorities and deferred supporting projects that were not critical in nature. We focused on emergency operating support to meet immediate needs of the Texas nonprofit community and offered bridge loans to some agencies,” Evans says. “In addition, we deferred most capital gifts and invited agencies conducting capital campaigns to come back when things improved,” she adds.
“So we had a template for this crisis,” Evans continues. “We took action right away. The board is watching our budget closely and approving it on a quarterly basis. We are paying all current commitments to grantees and are making new grants to support critical needs. We are looking at every possible way we can to help. For example, we’ve allowed tenants whose leases were about to expire in rent-free space on our nonprofit Wilson District campus to stay in place. We extended it for a year on an emergency basis, to give them some breathing room. You can only imagine how valuable that is to them,” Evans adds.
“In addition, the foundation will continue to convene meetings with our funding partners to develop funding collaboratives. We understand that none of us can address this economic crisis alone but together, we can and will make the difference,” she concludes.
One positive outcome of the economic crisis is that more foundations are working collaboratively. For example, the Boston Globe reported on four Boston family foundations that awarded $1.1 million to food banks, fuel-assistance programs, and other nonprofits providing basic needs in order to help bridge the gap caused by shrinking donations during the holiday season.
FAMILIES EXPRESS THE TRUE MEANING OF PHILANTHROPY
After all the talk about assets and grantees and client loads, families in philanthropy are in these hard times realizing anew the value of their work in the most immediate possible way. They are not talking about changing the world, but about keeping people warm and fed and safe this winter.
It is important to note that, in many communities, support is a team effort that arises from the realization that everybody is in this jam together. Businesses and their corporate giving arms, community foundations, civic groups, and individuals are all stepping forward to do their part. Once again, however, as in previous crises, many communities are finding that family philanthropies are — among all government, corporate, and charitable supporters — the most ready to respond to, knowledgeable about, and involved in the local community.
By Joseph Foote, Contributing Writer at the National Center for Family Philanthropy