Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

December 19, 2011

Foundations giving less for social change

By Todd Cohen

After gaining ground in the first half of the decade, foundations in the wake of the 2008 economic collapse have reduced their investing in efforts to try to fix flawed social systems to better serve people in need.

That finding in a report from the Foundation Center on the impact of the 2008 financial crisis on social-justice funding is particularly troubling because our deeply-afflicted economy has put vulnerable populations at even greater risk.

Social-justice grantmaking in 2009 fell to below 2007 levels, and likely still will trail 2008 levels in 2015 if funders do not see five years of above-average investment returns, says the report, Diminishing Dollars.

So in addition to the pain it has inflicted on people in need, the broken economy is making it tougher for nonprofits that work for systems-change to secure the funds they need to do their work.

And in the face of escalating and interconnected social and global crises, the nonprofit perspective in the often-corrosive debate about systems-change is indispensable.

Working in the trenches of society, nonprofits see first-hand the damage its broken social systems inflict on vulnerable people, as well as the obstacles those systems create for needy people to help themselves.

And nonprofit policy groups serve as the civil society’s research-and-development arm.

Foundation support is important, yet foundations accounted for only 14 percent of the nearly $291 billion in charitable giving in the U.S. in 2010, with nearly half of foundation giving coming from family foundations.

And data on social-justice funders sampled in a separate report from the Foundation Center, show their giving totaled only $3.1 billion in 2009, down from $3.7 billion in 2008.

So with foundation support shrinking from an already-small base, the challenge for nonprofit groups engaged in policy work is to better identify and tap private resources in the social economy that can be used for social good.

To address rising demand for the work they do, all nonprofits, not just those involved in policy work, face huge challenges in strengthening their organizational “capacity,” including the need to stop treating fundraising as a business transaction and build more meaningful partnerships with individual donors, foundations and corporations.

Policy work is difficult, messy and thankless, and it is essential that nonprofits be able to make a clear and compelling case that helps donors and funders understand social and global problems, and see how supporting their organization will help address those problems.

That requires even more work on the part of policy groups to understand funders’ values, the causes they care about and the problems they face.

Doing a better job understanding and connecting with donors and funders not only can produce greater investment in policy work, but also can help build the networks of individuals and organizations that will be needed to truly fix the broken social systems in our damaged society.


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