Foundation Fundraising2009

FOUNDATIONFUNDRAISING2009A Little News, a Little Historyand a Little Advice

www.aagpnorcal.org

WORD HAS IT…2008 Keynote Speaker

10th Annual National ConferenceAmerican Association of Grant Professionals

October 23, 2008

Throughout his career, Steve Gunderson has served three terms in the Wisconsin State Legislature and 16 years in the U.S. Congress. Gunderson’s distinguished career included leadership roles on AIDS policy, modernization of our nation’s employment policy, lifelong learning, community learning centers, and job training policies for a global hi-tech economy.

Steve Gunderson

President and CEO of the Council on Foundations.

KEYNOTE EXCERPTS:

“Of course, for three years I’ve shared with anyone who would listen that despite my flaws, I would preside over the greatest growth of philanthropy in world history!

Never did I realize that I’d also preside over its greatest evaporation of resources in the Economic Crisis of 2008.”

- Steve GundersonPresident & CEO

Council on Foundations

KEYNOTE EXCERPTS (CONT’D):

On Friday, October 10th, our investment advisor told us that most foundations had lost between 14% and 30% of their value.

The last couple of weeks have added an additional 15% loss.

Today, most foundations have witnessed a 30-45% loss in value!


Council on Foundations10/23/08


To give you some sense of this, if foundation assets were $670 billion at the market’s peak in October of 2007, we have probably witnessed the loss of $280 billion over the past year!

If we believe, as most do, that philanthropy’s investment returns are better than the average, we could project a 30% loss which represents a decline of $200 billion over the past year.




“Virtually every foundation endowment stands at considerably less value today than it did only a few weeks ago, and assuming our institutions meet the commitments they have previously made, which most will, there will be dramatically less new money to give out in the next few years, at least.”

- Gara LaMarchePresident & CEO

Atlantic Philanthropies

KEYNOTE EXCERPTS (CONT’D):“Corporate philanthropy will be dramatically reduced, and among those in the financial services industries who have kept their jobs – or, indeed, their firms – most will be much less generous in their personal giving.”

“Government revenues and social spending will continue to shrink – the Center on Budget and Policy Priorities just looked at the budget gaps of fifteen states, from California to Rhode Island, reeling from the credit crunch, and found six whose deficits are ten percent or more of the total budget.”

- Gara LaMarche


“All this will have a sharp effect on the funding and programs of non-profit organizations, and in what kind of social climate?

One in which human need – foreclosure, unemployment, greater health problems even less covered by insurance, hunger, homelessness, crime and violence -- grows ever more acute.

What we are facing, then, is a kind of perfect storm.”

-- Gara LaMarche

HISTORICAL PERSPECTIVE

On average, recessions occur every 5-10 years During each of the past four recessionary periods,

inflation-adjusted foundation giving increased slightly and unadjusted declined less than 3%

Giving by 72,000 foundations rose by 10% in 2007 to a record $42.9 billion

Assets nationally grew by an estimated 9% in 2007 and 11.6% in 2006… in California, assets rose 16%

Nationally: 1400 new foundations…in California: 451

NorCal Chapter

Individuals$229.0374.8%

Foundations$38.5212.6%

Bequests$23.15

7.6%

Corporations$15.695.1%

2007 CHARITABLE GIVINGTOTAL = $306.39 BILLION ($ IN BILLIONS)

Source: Giving USA 2008

MITIGATING FACTORS Grant Appropriation process

According to the Foundation Center’s “Foundation Giving Forecast”:

1/2 of all foundations base grant appropriations on value of prior year’s endowment

1/3 average their endowment value over two years

How will the stock market behave through 2009?

How will Foundation Boards behave in response?

How will your nonprofit behave in response?

HOW SHOULD PHILANTHROPY RESPOND?

“I want to start this conversation at its very core. Those of us in philanthropy believe deeply – that in good or bad economic times – we must articulate the distinction between charity and philanthropy.

Charity is a wonderful value. In many ways it defines Americans across all faith and ideological boundaries.

But, charity is a gift of the heart – a gift of the moment. Philanthropy is a very different form of giving. It

represents a strategic investment over a significant length of time.”

- Steve Gunderson


“My board chair, Ralph Smith of the Annie E. Casey Foundation, and I recognize this economic crisis as a leadership moment for philanthropy. As a result, we issued an Open Letter to the Field encouraging each philanthropic organization to carefully reflect how it could best play a constructive role in this economic crisis.”

- Steve Gunderson

HOW SHOULD PHILANTHROPY RESPOND?“Specifically, our letter suggested 3 recommendations:

1. Let’s reach-out to the nonprofit sector, especially those we currently support – recognizing that the nonprofit sector will bear the brunt of shrinking resources and growing need.

2. Let’s play an active and visible role in helping communities and regions identify the scope and extent of the challenges they face – and in finding solutions that make sense.

3. Let’s pay special attention to those situations where the loss of philanthropic resources could be the unintended consequence of mergers, consolidations, or government intervention resulting from this economic crisis.”

- Steve Gunderson

Inspired by this challenge of our time, Dr. Bob Ross of the California Endowment submitted the following… Board-CEO Principles for Managing thru the Crisis:1. Re-affirm and stick to our values.2. Balance “responsiveness” (to communities in need) with

“responsibility” (to prudently steward the assets).3. Guard against reacting to panic with panic. Take the long

view, and wherever possible, make time our friend rather than our enemy.

4. Philanthropy is recognized as a voice and advocate for the underserved; let’s remain cognizant of how our actions may influence the behavior of others in our field.


Board-CEO Principles for Managing thru the Crisis (cont’d):5. In the months ahead we will face some tough decisions. It’s a

good time to reaffirm the treatment of community, grantee, and staff with dignity, respect, compassion, and transparency.

6. Recognize that the severity and depth of the economic crisis represents an entirely new and unanticipated set of realities for us, and we must be willing to re-examine old assumptions, suggest and weigh new ideas, and out-of-box thinking is welcome.

7. Keep in mind: the Chinese translation for crisis includes the notion of opportunity.


REACT NOW

TIGHTEN YOUR BELT Revisit your 2009 budget

Communicate with staff

Conduct cost/benefit analysis

Collaborate

Consider putting new programs on hold

Concentrate on programs serving critical needs

DO YOU HAVE ANINTEGRATED DEVELOPMENT PROGRAM? Individual Giving > Major Gifts

80/20 rule: 80% of contributions from 20% of donors

Research > Targeting > Communications > Stewardship

Gift Reporting > Segmentation

Board > Strategic Plan > Development Plan > Work Plan

Budget > Sustainability > Cash Flow

Organizational & Development Audits

KNOCK ON MORE DOORS

• Turn to your donor database

• Find new prospects by asking old friends

• Use foundation research tools

• Follow philanthropic news sites & blogs

• Build online giving

• Brainstorm with your team

COMMUNICATE

• Keep donors informed

• Share your cost-cutting strategies

• Communicate the need

• Talk with your funders about how you can support their efforts to meet critical needs in your community

“We all need to break down the silos and address the common, underlying challenge – which is poverty. For then, and only then, are we truly engaged in philanthropy’s best definition.”

Gara LaMarchePresident & CEO

Atlantic Philanthropies

“We must soon recognize that philanthropy cannot do this alone. We need public and private sector partners. And this is why advocacy is essential for those organizations committed to serving the common good!”

- Melinda Gates

“The real test is not whether you avoid this failure, because you won't. It's whether you let it harden or shame you into inaction, or whether you learn from it; whether you choose to persevere”.

- Barack Obama

NorCal Chapter

THIS WORK WAS CREATED BY MARIE BEICHERT AND IS LICENSED UNDER THE CREATIVECOMMONS ATTRIBUTION-SHARE ALIKE 3.0 UNITED STATES LICENSE. TO VIEW A COPY OFTHIS LICENSE, VISIT HTTP://CREATIVECOMMONS.ORG/LICENSES/BY-SA/3.0/US/ OR SEND A LETTER TO CREATIVE COMMONS, 171 SECOND STREET, SUITE 300, SANFRANCISCO, CALIFORNIA, 94105, USA.

Thanks for who you are and all that you do.

-Steve GundersonPresident & CEO


Documents

Foundation Fundraising2009