The State of Philanthropy in 2010

By Betsy Nelson



The downturn in the economy has been difficult for all of us, but even more so for nonprofit organizations who serve those in need and the philanthropies who finance their critical activities. This challenge is system-wide and is affecting all types of nonprofit organizations.

The recession is impacting a much larger segment of our community. And, unlike past downturns, this one came faster and affected people and organizations in more unexpected ways. The irony, of course, is that as more individuals and families experience financial and associated social difficulties, the charities whose missions are to offer assistance are financially challenged themselves.

Traditional funding sources, such as government contracts and foundation/corporate grants, have decreased. Earning income through fee-for-service or entrance fees is also more difficult.



What did foundation giving looked like in 2009?

Foundations are required to give away an amount equal to approximately 5% of their assets each year, so this market decline has greatly impacted current giving and has real implications for future years.

Nationally, foundation giving is predicted to have declined by more than 10% in 2009, and for many foundations, the declines have been greater. Some foundations are committed to not decreasing their grants, choosing instead to give more than the mandatory 5%. Others, mindful of issues of perpetuity, are challenged making this payout.

A recent survey from the Foundation Center predicts that foundation giving will decline even further in 2010.



How have foundations adjusted to this new reality?

Tightened resources have forced funders to be more strategic - more focused in their grantmaking and operations. Many foundations have seen an increase in requests, though there has not been a dramatic shift in the amount or type of request.

Some are actually getting fewer requests, perhaps because the time and staff available to write proposals are in short supply for some organizations.

The decrease in grantmaking has been compounded by the fact that many funders are fulfilling previously committed multi-year grants, leaving fewer uncommitted funds for new requests. Supporting key nonprofit partner organizations has been a top priority for many and may extend beyond traditional grants to include general support and technical assistance.

Limited resources also have caused some funders to focus more on specific issues and geographic areas. Conversations around foundation board tables have been intense, with difficult decisions about where funds can have the most effect. All funders are looking more carefully at how their grantees manage and plan for difficult times.



What does all of this mean for

nonprofits?

One school of thought is that the economic crisis is an opportunity to strengthen the nonprofit sector, believing that nonprofits will pursue more creative fundraising strategies and less traditional sources of support, such as revenue-generating activities; that they will develop concrete sustainability plans; and perhaps, that they will collaborate more.

However, there is also concern that nonprofits are not using the recession as an opportunity to review and rethink their activities.

Considering new ways of operating or partnering with other organizations can be difficult for nonprofits. Nonprofits are often founded and led by visionary people who believe they have found a new way to solve social ills. There aren't many incentives for nonprofits to collaborate.

Funders ask organizations to articulate how they are unique and often don't include enough funds for them to "share" with others. To bring about different behavior and structures, outside forces may well need to be brought to play.

While the "giving season" is now over, charities remain in need. If there is a bright note, history tells us that Americans are philanthropic by nature, giving generously even in recessions. Consider further engaging with nonprofit organizations. The bottom line is: They need you.



Betsy Nelson is executive director of the Association of Baltimore Area Grantmakers (www.abagmd.org). She can be reached at 410-727-1205.