Survey Says Nonprofit Giving Has Declined 10% due to Economy

In order to keep an eye on my chairites from time to time I review research and statistical informatio n to post on my website http://www.roccobasile.net/. According to survey findings released by the Foundation Center, giving will likely decline by more than 10 percent since 2008. The survey is the result of interviewing and obtaining the responses of 600 foundations. What’s more, continued reductions are expected throughout 2010.

The year has suffered declines in overall consumer demand and our country’s highest unemployment figures in a quarter century, so it is no surprise that the future outlook for the nonprofit community has been impacted by the recession. The field of philanthropy will become more strategic as a result of the economic crisis.

The majority of experts believe that the nonprofit sector will emerge stronger but agree that ultimately there will be fewer organizations. U.S. foundation giving suffered an estimated 22 percent drop in foundation assets in 2008. Earlier this year, the Foundation Center estimated that 2009 giving by the nation’s more than 75,000 grant making foundations would “decrease by around eight to 13 percent, and at this time, it seems as if it is likely the decline will be even more.

The economic crisis has forced nonprofits to adjust their operating costs. More than two-thirds of respondents to the September 2009 said they have in some way reduced operating expenses since the beginning of the economic crisis, even those that still have endowments. It seems that some nonprofits are trying to preserve the value of their endowments, so that they will not permanently diminish grant making capacity, while others have determined they will be smaller institutions going forward and are making necessary staffing and expense adjustments.

How are they cutting back? Many have reduced operating expenses since the onset of the economic crisis, by reducing staff travel and salaries. Two-thirds of the respondents that cut expenses reported reducing staff travel budgets and/or limiting staff to attend conferences. A little over one-third indicated that they had also reduced staff training and professional development opportunities.

A larger share of respondents expect that their giving will be lower in 2010 (26 percent) than higher (17 percent). Larger foundations, those giving over $10 million, are more likely than smaller foundations to reduce their giving further next year. While asset averaging generally limits the impact of modest economic fluctuations on annual giving, the extreme 2008 asset losses will not be balanced out by 2007 asset growth and the 2009 turnaround in the market.

Finally, the impact of the economic crisis on foundations has been twofold. 1) There is a clear expectation among grant makers that the field of philanthropy will become more strategic as a result of having weathered the economic crisis. 2) The long-term impact of the crisis on their own foundations are forcing engaging in “more robust strategic planning,” “more focused use of the foundation’s capabilities,” and being “more focused and disciplined in executing our strategy.” The focus of other types of long-term changes cited by survey respondents ranged from governance to grantee relations to investments.

The Foundation Center’s next Foundation Giving Forecast Survey will be conducted in January 2010, with results released in the March 2010 edition of Foundation Growth and Giving Estimates.

The annual Foundation Giving Forecast Survey and made it available to approximately 5,000 large and mid-size U.S. community, independent, and corporate foundations.

-- Rocco Basile
Source: Foundation Center, 2009 http://www.foundationcenter.org/gainknowledge/research/pdf/researchadvisory_economy_200911.pdf