The 2008 Financial Crisis Likely to Affect Assets and Grantmaking Through 2015
New York, NY — November 17, 2011.
According to a new report from the Foundation Center, a small but important subset of grantmakers — those who work on issues ranging from human rights to environmental justice — has been disproportionately impacted by the global financial crisis and their recovery remains in jeopardy. Diminishing Dollars: The Impact of the 2008 Financial Crisis on the Field of Social Justice Philanthropy examines historical trends in foundation assets, spending, and giving levels; describes strategies used by foundations to cope with depleted assets immediately following the crisis; and presents projections through 2015 for asset and grantmaking levels.
“The ripple effect from the damage to these foundations’ endowments has the potential to be significant and lasting for the social justice arena,” said Sara K. Gould, the Foundation Center’s Atlantic Philanthropies senior fellow and author of the report. “These are key players in the field of social justice philanthropy, often serving a unique and critical role in local communities with grassroots efforts and an on-the-ground presence. Yet, they are also some of the most vulnerable.”
Key findings of the study indicate:
- Unless the field sees five years of above average investment returns, social justice grantmaking in 2015 will remain below 2008 levels.
- Small foundations (less than $50 million in assets) will struggle the most to recover from the economic downturn.
- Nonprofit organizations seeking new funders will have a difficult time.
- Some foundations are unintentionally depleting their endowments at a very slow rate.
The study examined endowed foundations that engage in social justice philanthropy in at least two geographic regions of the U.S. and award $100 million or less in grants annually. The giving of sampled foundations ($763.1 million) represents approximately one-quarter of all documented social justice giving in 2009 ($3.1 billion).
“The volatility of the current economy and the uncertainty of future markets drive home the significance of these findings and implore the philanthropic sector to take note,” said Elizabeth Sak, executive director of the Cricket Island Foundation, the partner in the study.
“The future of social justice philanthropy looks grim unless foundations and nonprofits working in this arena can devise ways to effectively navigate this climate.”
This report brings a level of transparency to the field that can empower both grantmakers and the nonprofit organizations they support. Foundations working in the sphere of social justice can use this report to strategize about ways to bring additional funding to the field. For nonprofits, the findings are crucial to their planning efforts and their ability overall to weather the storm.
Diminishing Dollars: The Impact of the 2008 Financial Crisis on the Field of Social Justice Philanthropy (PDF) can be downloaded at no charge from the Gain Knowledge area of the Foundation Center’s web site.
Funding for the study was provided by the Cricket Island Foundation, the Ford Foundation, and the Edward W. Hazen Foundation.