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Foundations Plan to Shrink Grants

(April 28, 2009) The number and size of foundation grants will likely decrease this year, and grants for upstart organizations will be hard to come by, according to a study by the Foundation Center.

The report Foundations Address the Impact of the Economic Crisis states that close to two-thirds of foundations expect to reduce the number and/or the size of grants they award in 2009.

Organizations in need of capital support will also be particularly hard hit, with over one-third of foundation respondents (37 percent) reporting that they will reduce the amount of capital support they provide.

In addition, the new survey reports that over half of respondents are reacting to the economic crisis by engaging in more non-grantmaking activities. Fully two-thirds of these funders plan to seek out more collaborations and partnerships in 2009.

Establishing a grants budget following a year when overall foundation assets dropped an estimated 21.9 percent posed unique challenges for grantmakers, notes the report. Yet based on responses to the latest survey, the Foundation Center estimates that giving in 2009 will decline by a far lower percentage—from the high single digits to the low double digits—than did assets in the prior year.

Other key findings from the new advisory include:

  • Foundations will draw upon various resources to fund their 2009 giving — close to two out of five respondents expect to draw at least in part on their endowments to fund grants.
  • About 14 percent of respondents either have made or plan to make exceptional grants or launch special initiatives in response to the economic crisis, largely by reallocating existing grants budgets.
  • Nearly one-third of respondents made operational changes as a result of the 2000-02 economic downturn that they believe better prepared them to face the current downturn, such as changes in investment strategies or reducing operating expenses.

About the Survey

In January 2009, the Foundation Center mailed its annual "Foundation Giving Forecast Survey" to approximately 5,000 large and mid-size U.S. independent, corporate, and community foundations. The survey included questions on foundations' giving and assets in 2008, the outlook for giving in 2009 and 2010, and how foundations are responding to the economic downturn. A total of 1,243 foundations provided usable responses.

The report can be downloaded at no charge from the Gain Knowledge area of the Center's web site.

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