Inside Philanthropy

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

April 27, 2009

Giving sector needs to adapt to economic crisis

By Todd Cohen

Business as usual should be history for the giving sector.

The recession should be spurring nonprofits, giving organizations and individual givers to regroup and find innovative ways to address urgent social and global needs that only are getting worse because of the growing economic crisis.

Three new studies underscore the need for givers and nonprofits alike to change the way they operate.

On study looks at steps U.S. foundations are taking to cope with the crisis, another looks at the need for U.S. nonprofits to fill key jobs, and a third says U.S. corporations and nonprofits could do more with pro-bono and skilled volunteers to offset a decline in corporate giving.

Foundations already are retooling their work, with nearly two-thirds expecting to reduce the number or size of their grants, or both, according to a new survey by the Foundation Center.

Over half the more than 1,200 foundations responding to the survey say they are responding to the crisis by taking on more work other than grantmaking, with two-thirds aiming to collaborate more, one-third planning to act as convenors, and one-fifth planning more staff-led work such as technical assistance, bridge and emergency financing, or advocacy.

Foundations also say they will tap a range of resources to fund their giving this year, with nearly 40 percent expecting to dip into their endowments.

Fourteen percent of foundations have made or launched, or plan to make or launch, special grants or initiatives to address the economic crisis, mainly by shifting existing grants budgets.

And in response to the economic downturn in 2000-02, nearly one-third of foundations say, they made operational changes, such as adjustments in their investment strategies or reductions in their operating expenses, that they believe better prepared them for the current crisis.

“Foundations are not rolling over in the face of adversity,” says Steven Lawrence, senior director of research at the Foundation Center. “The new survey shows foundations being creative, strategic and willing to dig deep to ensure that their agendas move forward while this crisis persists.”

In a separate survey of nonprofit executive directors, Bridgespan Group finds a leadership deficit projected in 2006 may have widened in 2009 and that, despite tighter budgets, nonprofits already see a need to fill 24,000 vacant or new jobs, in areas such as finance and fundraising, in the face of growing management complexity and retirements by Baby Boomers.

Developing nonprofit leaders remains critical, Bridgespan says, with nearly three-fourths of 433 executive directors responding to the survey saying they value skills from the for-profit sector.

But despite big layoffs of corporate managers, 60 percent of those nonprofit executives believe they will not get enough qualified candidates.

“It’s a wake-up call that even as the rolls of unemployed executives swells, nonprofits are struggling to fill key positions,” says David Simms, a Bridgespan partner. “There is an overwhelming perception that these roles will be difficult to fill due to the need for specialized skills, compensation and funding challenges, competition for the best candidates, and lack of career development opportunities.”

The third survey, by Deloitte, finds that while nearly 40 percent of nonprofit executives say they will spend $50,000 to $250,000 of “hard-won” cash on outside contractors and consultants this year, 24 percent say they have no plans this year to use skilled volunteers or pro-bono support.

“The current economic crisis and the new [Obama] Administration’s national call for service underscores the need for corporations and nonprofits alike to broaden their definition of corporate giving,” says Barry Salzberg, Deloitte’s CEO.

“Nonprofits and corporations are encouraged to think of pro-bono and skill-based volunteerism as a valuable form of currency,” he says. “It is an opportunity to more fully maximize corporate assets, especially when demand for nonprofit services are on the rise and corporate giving is on the decline.”

The ruins of the U.S. economy and capital markets can be the seedbed for innovation in the charitable marketplace.

Instead of bemoaning the obvious, which is that times are tough, nonprofits and givers alike can look for ways to work smarter and make a greater impact.


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