One of the many privileges of my work is the opportunity to speak with, share a little experience, and – often – sympathize with grantmaking families on a daily basis. The phones have been busy quite a bit over the last several months and, for the first time in my almost 29-year history in this work, the number one topic is not generational succession. It’s requests for ideas of how other families are handling painful economic times.
This issue of Family Giving News helps to address that need. The lead story is an excerpt of our latest Passages issue paper, Families Step Up to Meet the Economic Crisis, by Joe Foote, National Center contributing writer who has spent the past several weeks interviewing family foundations and funds, large and small, across the country. I am very happy to announce that we have suspended our policy of making these issue papers available only to Friends of the Family, Family Philanthropy Online subscribers, and funders so that all those in family philanthropy can take advantage of the support offered by this paper.
This FGN issue includes a related piece on payout by National Center Senior Fellow, Alice Buhl, one of the country’s leading family philanthropy consultants. We are grateful that she has started contributing briefing commentaries to FGN.
I’d like to share what a few families have told me they are doing in response to this crisis:
1. Some are raising payout for 2009. I have heard examples that include raising it to 7% for very large foundations to as much as 17% for smaller to mid-sized foundations (and these are endowed foundations currently committed to perpetuity). Most are trying to approximate 2008 levels – while admitting that will be difficult – and most expect needs to only increase. Similarly, I have heard of donor advisers adding to their funds so they can be more generous. Many newer funds and foundations did not begin with a perpetuity strategy and, for them, as one person said, “we are making our grant limit up as we go along!”
2. Some are re-negotiating the terms of existing grant agreements. For example, they are:
- Extending the time the grantees have to complete the work;
- Allowing the grantee to allocate the funds to other needs that may have become more pressing since the grant was awarded;
- Dropping the match requirement to for challenge grants;
- Making payments sooner than originally planned;
- Extending the time to pay out grants to some of their larger, better endowed grantees. One funder reported re-negotiating a few three-year grants to universities and research institutions, spreading the grants over five years to free up dollars for smaller, more vulnerable grantees;
- Re-considering what the value of the U.S. Dollar will buy. For some international grants, the value of the dollar has declined since some multi-year grants were made. Adjusting expectations for what those dollars will buy has become a necessity for some funders.
3. Rather than dipping into some fragile investments, some are taking a line of credit against assets and making grants and paying operating expenses from that credit line;
4. Several have added programs to make emergency grants and loans to current and even new grantees. One family foundation has put a special emergency grant program into place where grantees can ask for modest grants that are approved more quickly than regular grants;
5. A few have extended their services beyond grants. One foundation is convening regional nonprofits to identify problems, work on solutions, and keep funders and nonprofits communicating and supporting one another;
6. Some are offering much needed technical assistance to those dealing with legal, real estate, personnel, and financial questions that are either beyond their normal scope of expertise or were once handled by staff that had to be cut back;
7. Many have changed the timing or frequency of their grant cycle so grantees don’t have to wait as long.
8. One trustee spoke of the need to eliminate some of the paperwork from the application and reporting processes – recognizing that nonprofits may have fewer staff with less time;
9. Quite a few are re-thinking their position on perpetuity. Some are recommitting to perpetuity, and their concern for future generations and needs has led them to limit support only current grantees. Others are willing to extend the payout for a couple of years knowing they may, ultimately, have a smaller asset base when things return to normal. Some are deciding that perpetuity is not the reason they do this work and they are concerned with the needs of the causes, institutions, and communities they have come to care about.
10. That caring – the very personal nature of family giving – makes donor families much more likely to focus on relationships as much as corpus. They cannot imagine their lives or their communities without these services and resources. As one person said, “it is much like what happens when there is a natural disaster. We step in and do what we can to alleviate suffering. People are suffering now from this economic disaster and we want to be part of making life better.”