October 13, 2008

Grant Makers Urged to Respond to Financial Crisis

An association of the country’s largest grant makers is urging its 2,000 members and other foundations to support charities that are struggling due to the down economy and assist cities where the financial crisis has sapped philanthropic resources.

In an “open letter” to foundations, Steve Gunderson, president of the Council on Foundations, and Ralph Smith, the chairman of its board, write that philanthropy can not ignore the current credit crunch and other problems hitting America and the world.

While today’s economic stress was unexpected, “there is no avoiding the question: what could it mean for philanthropy to step up in these circumstances? How can we play a constructive role without raising unrealistic expectations?” they write.

First, they suggest assisting cash-strapped nonprofit groups. “Our nonprofit partners will bear the brunt of shrinking resources and growing need. Within parameters defined by our respective missions, resources and work, we should actively look for creative ways to assist the sector in weathering this storm and serving those most impacted.”

In addition, they said philanthropies could bring together state and local government officials, business leaders, and others to discuss what needs to be done to bolster the economy in their region and aid places facing a decline in grant making.

For example, they pointed to Washington, where the government takeover of the mortgage giants Freddie Mac and Fannie Mae has raised concerns about whether their giving for social services is in jeopardy. The two organizations gave last year about $47-million to fight homelessness. prevent hunger, and support child welfare around the nation’s capital.

The council, which is based in Arlington, Va., will continue to make suggestions, including specific grant-making practices, on how foundations can respond to economic woes, said Mr. Gunderson and Mr. Smith.

To be sure, foundations themselves are hurting from the financial meltdown and stock-market volatility, which may limit their ability to respond. According to a recent Chronicle article, while some have said they will increase or maintain their current levels of giving, others said they expect to cut their grant making.

Mr. Gunderson and Mr. Smith said in the letter that “even if fully implemented,” their “recommendations do not constitute a sufficient response.” However, charitable efforts during the crisis on Wall Street “offer us the opportunity to continue to serve the common good in these uncommon times,” they write.

The letter is available on the Council on Foundation’s Web site.