Heads up on Foundation Giving

Say I have $100,000 want to start a foundation with it.

Someone will take that $100,000 and invest it. 

Assume those investments get me a 10% return on my money, or $10,000.

That $10,000 is the money I'm going to give back to nonprofits in the form of grants.

Most foundations base their giving on a 2-3 year average of their investment returns.

This means that the horrible economy of the past year or so hasn't really been reflected in the amounts that foundations give to grantees . . . yet.

But it's coming, so be prepared it.

Assume that in the next 2-3 years foundations are going to do some combo of the following:

1.  Reduce the amount they give to current grantees

2.  Reduce the amount of new grantees they allow in

3.  Change their giving guidelines so that they are more focused in their giving.

Obviously, not all foundations will do those sorts of things, but most of them probably will.

So if you are an arts organization that gets a large bulk of your funding from foundation, now is the time to start anticipating cuts in your giving and coming up with a plan to deal with it.

If you have a good relationship with a foundation program offer (and you should), don't hesitate to give them a call and get any advice you can on how to deal with what's coming.

They may not have great answers for you yet, but they can at least let you know when those answers will be available.

Also, if you have a major plan coming up in the next few years that will require a decent chunk of foundation money, be sure to put that on the foundation program officer's "radar" ASAP.  If you have an exciting, interesting project maybe you can get a few dollars that someone else will not.

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And speaking of knowing where the money is coming from, I now yield the floor to Sasha who presents the one thing you need to know about that sort of thing.

 

 

 

Comments

[Chris Casquilho]

Chances are, you're going to put $5000 of that $10k back into the pile. The Feds are going to say you have to use $5000 for program activities - including grants. But guess what? You can also call your admin costs "program expenses." So you're going to use about $1000 for that. Now you have $4000 to grant out.

In a bad year, the percentage return will go down - but guess what doesn't - that's right - your admin payroll. Remember, when the hard times come foundation cost-cutting works like this - "first you, then us." They'll keep their staff and reduce grants to the field.

If you're in the arts, probably 85% or more of your funds come from individuals. Spend at least 85% of your time developing those relationships instead of a lot of time tracking down elusive and erratic grant funding.