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During these leaner times, people who need help because of the Great Recession aren’t the only ones getting a harder look by agencies that help them. Those agencies are likewise being scrutinized by the charitable foundations whose dollars help make those services possible.
Stung by the economic slump and skittish about the future, foundations are making sure nonprofits and public agencies can make verifiable differences in the lives of the people they serve.
The recession, though thought to be over by economists, has made foundations more careful with grant making just as donors became more careful with contributions, data show and local and statewide community foundation leaders say.
“We’re all having more struggles with resources than we had in the past,” said McCray Benson, CEO of the Community Foundation of Henderson County. “They are not out there, or they’re not as plentiful as they used to be. People are going through a stronger decision process when they do their giving. Even though dollars have come back some, they’re not where they were.”
Charitable giving nationwide in 2007 and 2008 was the lowest it had been in 40 years, falling a combined 13 percent after adjusting for inflation, according to Giving USA Foundation, which tracks charitable contributions in the United States. Endowments and other assets of the more than 76,000 charitable foundations in the country dropped to $565 billion in 2008, losing 17.2 percent of value – the largest decline tracked by the Foundation Center, a New York City-based information center about U.S. philanthropy.
The losses that the recession inflicted on the stock market meant many donors had less money to give to the Community Foundation of Henderson County, Benson said. At the same time, the recession, with its attendant layoffs and wage reductions, created a huge increase in the number of families seeking help from the nonprofits funded by community foundations.
“All of them (the nonprofits) said they had increased demand because there’s very high unemployment in our county and has been for years,”said Sally Lesher, chairwoman of the Rutherford County Foundation. “People are struggling. Jobs that have come back don’t pay what the textile workers were making.”
Last fall, the Rutherford County Foundation made $1,739 grants to seven nonprofits including the Community Clinic of Rutherford County, New Beginning Soup Kitchen and Grace of God Rescue Mission. Lesher said the review process was more detailed than ever. Recipients had to verify how they had helped their target populations.
The same is true at the Community Foundation of Henderson County, Benson said. Everyone is looking for maximum return on the dollar. “It’s no longer a matter of ‘just please give us money and this is what we’re going to do with it,’” he said. “It’s more a discussion now of what results they’re getting and what we expect to see.”
‘During the recession, there wasn’t a place to hide’
Rutherford County Foundation is one of nine foundations affiliated with The Community Foundation of Western North Carolina.
CFWNC serves 18 counties in an area that extends from Cherokee to Morganton. The affiliates raise their own money and let CFWNC invest and manage it. They rely on CFWNC for office support and technical expertise. They recommend charitable organizations for funding, and CFWNC relies heavily on those recommendations in making awards.
Last year, CFWNC distributed $8.7 million to hundreds of organizations. It received gifts totaling $16.8 million.
CFWNC’s assets in 2007 – $170 million, $94 million of it managed as endowment – fared “same as anyone else’s” during the recession, said Elizabeth Brazas, the foundation’s president. “During the recession, there wasn’t a place to hide. If you were invested in any format, you went down. It’s what you did in response to it. We hunkered down, (decreased) salaries and benefits, let two people go, abandoned grantmaking and started our Recession Response Fund.”
That fund, which for 2008 and 2009 replaced CFWNC’s competitive grants program, raised and distributed more than $1 million to nonprofits and public agencies that helped people with housing, heating, hunger and homeless emergencies. Recipients included MANNA FoodBank (Buncombe County), Thermal Belt Outreach Ministry’s Pathway of Hope (Polk County), Yokefellow Service Center’s recession recovery program (Rutherford County) and the departments of social services in Clay and Cherokee counties.
The recession didn’t cause CFWNC to revise its investment policy (as a result of improved contributions and market returns, is assets are back at $170 million). But it did prompt CFWNC to refine its business model with a new five-year strategic plan.
(Carolina Public Press is a nonprofit media project and, as such, received a $7,000 grant from CFWNC in 2011 to support the project’s launch.)
“The world is a very different place than it was in 2008,” Brazas and CFWNC foundation chair Marla Adams wrote in a letter last year introducing the plan’s executive summary. “This prolonged recession has brought into high relief the need to streamline operations and pursue goals as strategically as possible.”
CFWNC’s new plan focuses giving on four areas:
- People in Need – serving the region’s most marginalized populations.
- Early Childhood Development – working to improve educational and developmental outcomes for WNC children.
- Food and Farming – supporting WNC’s local food movement while preserving mountain farm heritage.
- Preserving Natural and Cultural Resources – protecting WNC landscapes and enhancing its cultural assets.
Brazas emphasizes that the recession didn’t drive the creation of CFWNC’s new strategic plan. She was asked to create it, she said, when she arrived in November 2009.
“The leadership had changed, the economy had changed and what people expected of a community foundation had changed,” she said. “We, certainly like everyone in the nation, saw a decrease in donor funding. We saw organizations continuing to struggle.” The plan was created – and is meant – to help CFWNC better use its discretionary money and advise donors during these challenging economic times.
Nonprofits’ impact looked at differently in post-recession
Giving USA Foundation’s observation that the recession has sharpened the focus of community foundations nationwide is true also of the North Carolina Community Foundation.
Each of the Raleigh-based foundation’s affiliates “is looking at ‘impact’ differently since the recession,” said Jennifer Tolle Whiteside, the foundation’s president and CEO. NCCF serves 60 affiliate foundations throughout the state, including the Eastern Bank of Cherokee Indians and those located in the counties of Cherokee, Clay, Graham, Haywood, Jackson, Macon, Madison and Swain.
Affiliates are “spending more time and energy looking at community needs and prioritizing them and making sure local needs are met,” Whiteside said.
NCCF, created in 1988, manages $145 million in its affiliates’ assets and, based upon the affiliates’ recommendations, made $6.8 million in grants last year – an 18 percent increase from the previous year, communications director Noel McLaughlin said. NCCF’s endowment has grown since the recession, from $113 million in 2007 to $145 million now. Over the last two fiscal years, 39 percent of NCCF’s income was from contributions and 61 percent resulted from endowment portfolio return.
‘Everyone is having to look at things twice’
The prognosis for charitable giving seems to be good. Giving USA Foundation and its research partner, the Center on Philanthropy at Indiana University, in July estimated that total charitable contributions from American individuals, corporations and foundations was $291 billion in 2010, up from a revised estimate of $280 billion for 2009.
Because of an improved stock market, charitable foundation giving “stabilized” at $45.7 billion in 2010, nearly unchanged from 2009, the Foundation Center states in its 2010 yearbook.
Endowments and other assets rose 4.5 percent to $590 billion, compared with $565 billion in 2008.
The Community Foundation of Henderson County has also seen improvement. Its investments increased its endowment to $71.8 million from $62 million the year before, said Benson, its CEO. The foundation awarded $2.4 million in grants in fiscal year 2011, significantly more than the $1.9 million it gave out the previous year.
“But if I were to go back three, four years ago, it’s a different story,” Benson said. Back then, the foundation awarded about $2.6 million.
“So we’re just now getting back to where we were then,” he said.
Contributions are also down, declining last year to $1.3 million from $1.8 million the previous year.
“There’s still been a struggle with contributions,” he said. “Folks were just unsure of what’s coming in the future. In Henderson County, we don’t have large business contributions, but we’ve had some regular contributions from corporations. They’ve been able to continue, but they’ve expressed a desire to see how their dollars are getting to the services they’re meant for.
“Their hearts are still there. But it’s not a plentiful resource. Everyone is having to look at things twice.”
Giving USA’s 2011 Executive Summary [PDF – large file]