Foundations

  • Some foundations, including the Ford and Gates foundations, have been increasing their donations to counter the affects of the economic downturn. But most foundations are being substantially impacted by this recession. As the stock market has been recovering, investment portfolios have regained some of their value.

  • Regardless of the loss of value in the investment portfolios of many foundations, all foundations are required by law to donate 5% of their assets annually in order to retain their tax exempt status. As a consequence, many foundations were forced to draw down their principal or reserves, thus diminishing the value of their assets over the long term.
    • YSK Consulting predicts that it will take more than a year after economic recovery for many foundations to be able to donate at the levels they donated at prior to the economic recession.

  • The Chronicle of Philanthropy reported the following outlook from a study of foundation giving conducted in 2010:
    • Foundation endowments remain roughly 17% below their pre-recession highs.
    • Of the 107 foundations surveyed abou their outlook for 2011:
      • 37% expect donations to drop
      • 33% expect donations to stay the same
      • 11% expect to donate more
    • The economic recovery has prompted foundations to transition out of crisis mode with many ending emergency grant programs to social service groups and others hard hit by the bad economy in favor of making multi-year grants and filling job openings.

  • Many foundations refocused their importance in tough economic times. While not all foundations are willing to draw down on their principal, many are and recognize that they are more important to nonprofits now during these weak economic times.


  • In order to survive, some foundations merged with other organizations, sharing offices and reducing staff.


  • Certain philanthropic foundations are determined to invest in trying to make up some of the community cause funding shortfalls.


  • Some foundations which have an established expiration date and must distribute all their assets by a target date. They will continue spending down their assets to meet that deadline.


  • Connect to your core foundation donors, those who have a long term relationship with your organization, and especially those who share a similar mission and goals.

Remember that to retain their tax-exempt status, foundations must distribute a minimum of 5% of the Fair Market Value of their net assets to charitable causes.