Q: How can we make sure our international grants have the most impact in times when the dollar is weak?
A: An increasing number of family foundations are giving internationally. Our 2008 Pursuit of Excellence survey discovered that 21 percent of family foundation respondents make such grants. According to the Foundation Center, foundation giving for overseas recipients climbed to a record $1.9 billion in 2006. In a time of a relatively weak dollar, though, philanthropists may find that their international grants aren’t going as far as they may have in the past.
We turned to David Roth and Ardie Geldman of Donor Associates in Israel, who’ve witnessed this problem first-hand, for ideas to consider when giving overseas amid a weakened dollar. Roth and Geldman suggest:
- Fund in the local currency. Overseas organizations naturally budget their program expenses in their own currency, even when they depend on overseas donations. Once you know the amount you plan to commit to a project or program in a country in which the dollar continues to weaken, convert your dollars to the local currency even prior to transferring the funds. You may choose to park these converted dollars in a reputable overseas bank until all allocations to the project are completed. This will help ensure that your grant will maintain its full value to the beneficiary. For example, over the past nine months the U.S. dollar has lost approximately 30 percent of its value against the Israeli shekel (ILS), wreaking havoc among thousands of Israeli nonprofits. Some organizations are beginning to base their funding requests on the shekel rather than on the dollar, to ensure that the value of the grants received still meet their budgets.
- Give general operating support. Wherever the declining dollar has created budget deficits in overseas nonprofits, consider a general operating support grant to help offset this shortfall. This will go a long way in helping to stabilize the organization you support, and will probably make more of a difference than funding for a specific project. If your program grant has lost 30 percent of its value, don’t assume that the organization will be able to carry out the program as originally planned. Keep the organization’s doors open. It is unrealistic to expect nonprofits to run in the red, anywhere in the world.
- Be strategic. Two ways to give strategically are to: (1) partner with other funders to leverage your dollars, and (2) think about giving more dollars to fewer organizations. Don’t spread yourself too thin.
Roth and Geldman’s tips apply whether you’re considering a new grant or fulfilling a multi-year commitment. Monitor your grant’s real, continuing value to the grantee, keeping an eye on the exchange rate. If the value of the grant declines, consider giving general operating support, or adjusting the payment schedule of your program grant to help an important project succeed.