How has the economic climate affected your foundation's relationship with the community?
What are you doing differently to address the concerns of your grantees?
Catalyze and Connect
Just as the "dot-com boom" was most extreme here in Silicon Valley, the bust has been most deeply felt. Joblessness holds steady at 8.4 percent. Forbes just named San Jose its Most Overpriced City. Major foundations garner headlines for cutting grant funding.
Far more significant for most of our grantees are government cutbacks. With the California budget signed August 2, cities and counties now are rebalancing budgets they slashed in June (and adding costs for California's recall election). Our county could make $50 million in new cuts. This follows a $150 million cut in June 2003, and $80 million to $120 million next year.
To date, public benefit agencies absorbed 8 percent of the total county budget reduction and eliminated more than 320 jobs, according to the Silicon Valley Council of Nonprofits. In months to come, we will see more nonprofit layoffs. Some agencies will close.
But we will also see agencies merge, form strategic alliances, and employ other cost-saving strategies to maintain services to the community. Community Foundation Silicon Valley (CFSV) has committed grant funding to help agencies create partnerships.
We're also keeping our donors updated on issues as they emerge. Our goal is to catalyze action and connect donors with community needs. We recently brought government leaders together to discuss the budget deficit with private foundations, CFSV donors, and corporate funders.
That is critical because most of our donors are living and will be for decades. Of the $77 million in grants that we awarded last year, 98.5 percent came from advised-funds created by individuals, families, and corporations and from our supporting foundations. This is confusing for the community we serve, especially in difficult times. Our assets and competitive grants pools don't correlate in the way grantees expect.
We are one of a new breed of foundation, working to respond to our region's critical needs together with our donors. Our staff and board's responsibility is to inspire action, encourage entrepreneurs to become philanthropists, and build a pool of endowed capital that is ready to address future needs.
The most striking effect of the economy on our relationship with the community is that, despite the economic conditions pre- and post-September 11, 2001, we have seen an increase in the number of funds being established by individual donors and nonprofits. In fact, 23 percent of our 550 charitable funds were created since 9/11 and we have been around since 1918. We think the events of September 11 made people keenly aware of the fragility of life, as well as the importance of making a difference, and leaving a legacy behind.
In October 2001, The Philadelphia Foundation conducted an Economic Impact Assessment to determine how a sample of our grantee population was being affected, particularly after September 11. Nearly all of the organizations surveyed (83 percent) reported experiencing some drop in contributions to their organizations since 2000.
Because of this decrease, we began seeing organizations looking to expand their fundraising activities to better diversify their revenue streams. In particular, they are looking to us to help them with offering planned giving options to their donor base, because most do not have the time, human resources or knowledge base to implement their own programs.
The Philadelphia Foundation has developed a comprehensive program for them to implement at little or no cost. After all, our role is to advance philanthropy through building permanent philanthropic resources. This service allows us to advance our mission while enabling organizations to secure planned gifts to build their endowment and better sustain themselves in the future, when they again face economic challenges.
In May of 2003, the Collier County, Florida, nonprofit community was shocked by the news that its local community foundation had laid off 20 percent of its staff, including the president of the organization, due to the weak economy.
The foundation, which has an excellent and trusting relationship with its grantees, is seen as the stable "rock" of the community. It is a place where nonprofits seek advice on practically any topic, or funding for start-up projects and internal capacity building. Many of the nonprofits became anxious over the news. They knew that the economy was creating difficult times, especially for the smaller nonprofits, but the community foundation has always been viewed as fiscally stable.
And that fiscal stability is exactly what drove the board of trustees to make its most difficult decision in years. The weak economy had a tremendous negative impact on returns, and on the amount of dollars we raised for operations. The board met numerous times, once confronted with the news of a large deficit, but they were continually faced with the same issue: Do we preserve operations or community programs? In the end, preservation of programs to community nonprofits became the overriding priority. Several board members even stepped in to fill the gap as a smaller staff reorganized itself.
By preserving community programs, the board ensured that nonprofits had full access to the foundation's new grant programs and continued use of the Leadership Center, a nonprofit management program housed at the foundation. The new grant programs were rolled out in late 2001. They focus on helping nonprofits improve the way they do business. Professional development grants provide funding for NPO staff to attend conferences, bring in outside consultants, and improve technological tools. Planning and evaluation grants offer a way for nonprofits to take a fresh look at program evaluation. Nonprofits are required to attend a three-month workshop on developing outcomes, and then implement a plan to measure those outcomes.
Nonprofits also told us that they are working much harder to raise the same dollars they raised three years ago. The Leadership Center, in response to nonprofit organization feedback, increased the number of seminars on fundraising. And, despite reduced budgets at local nonprofits, attendance at training sessions remains high.
The response from nonprofits has been extremely positive and understanding. Many of them have experienced layoffs as well, or they are considering cutting back on programs. Our job is to be as supportive as we can as many nonprofit boards face the same challenges and tough decisions.
Illustration by Franklin Hammond
Heather Gee is director of development services at The Philadelphia Foundation.
Mary George is managing director of The Community Foundation of Collier County.
Leo Chavez is executive vice president of Community Foundation Silicon Valley.