Community Needs Can't Wait for the Markets to Rebound

Like everyone else, I've been carefully paying attention to the stock market the last few days. As the leader of a community of more than 500 grantmakers, I'm conscious of how attentive foundations are when the US stock market tumbles. I'm also reminded that we've been here before. When we entered the recession eight years ago, it came as a shock to many. But now we have a deep base of experience to draw from if we face another economic downturn.

My dear colleague Brad Smith, president of the Foundation Center, gave some advice to nonprofits in a recent Philanthropy News Digest blog. He suggests that when the economy hits some bumps, nonprofits need to pull back on fundraising requests, expect less and start adjusting their budgets downwards.

Yet here's the thing we can't forget: it is the exact people nonprofits exist to serve that suffer the most in times of economic strife. As a result, the need for their services will only grow if the economy begins to falter. Instead of nonprofits changing how they operate, it's grantmakers who need to adjust our approaches. Here are three shifts I suggest we in philanthropy embrace:

  • Give more when the economy is on the ropes. These are the exact times when philanthropic dollars are most vital, so don't look for the bare minimum you can responsibly give, go for the maximum.
  • Invest in ensuring grantee resilience. Funding operating support, overhead and multiyear support build the very resilience necessary to get though downturns. During the 2008 downturn, grantmakers rapidly retreated from providing multiyear support. This practice has just recently rebounded to previous levels according to GEO's 2014 survey, and yet these shouldn't be fair-weather practices; they should be the norm.
  • Most importantly, grantmakers' responsibility as financial stewards of the foundation's assets must be balanced by the responsibility to the mission and people the foundation was created to serve. Though investment performance is easier to measure than progress against mission, it should never be the primary or only consideration when a foundation is deciding how best to react to changing circumstances.

I was inspired by the many GEO members who turned outward during the recession and made decisions that really bolstered their communities during a tough time. We learned a lot from their deep listening and thoughtful response. These things do come in cycles. Whether this current dip is just a blip or more enduring, we need to hold strong to the things we know work.