Yesterday's program, Meet the Grantmakers: Bay Area Social Justice Funding and the New Normal, focused on a recently published Foundation Center report Diminishing Dollars: The Impact of the 2008 Financial Crisis on the Field of Social Justice Philanthropy and how the report is reflective of the experience of local Bay Area social justice funders. The panel included: Cedric Brown, CEO, Mitchell Kapor Foundation; Irene Kao, Senior Strategic Advisor, Tides Foundation; Luke Newton, Program Officer, Common Counsel Foundation; and Ray Santiago, Development Officer, Peace Development Fund (PDF). The panel was moderated by Janet Camarena, Director, The Foundation Center-San Francisco. The report found that 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.
We can all agree that the current nonprofit landscape is a rather rocky one, but the pressure of the present situation has resulted in some exciting and positive things.
Irene Kao noted that tough times often result in increased giving on behalf of individuals. Consequently, many nonprofits are able to recoup their former grant funding from individual sources. Overall, the panelists agreed that if the financial crisis has taught us anything, it is that we need to think sustainable when devising an overall funding plan. The funders noted that the key for survival within an organization lies within the diversity of its funding streams. Reliance on foundation funding alone is not a viable strategy.
One of the components of this rocky nonprofit landscape is the role that technology can play in fundraising. Cedric Brown noted that he likes to see grantees integrating funding sources generated by fundraising technology, such as crowdfunding and text-to-give, into their overall budget, or as a source of contingency funds. Not only does this help nonprofits stay afloat in difficult times, it demonstrates that others want the organization to succeed.
A Change of Focus
The panelists agreed that details that used to consume their focus, such as an organization's budgeting practices, are not the large priority they once were. This is not to say that organizations can throw caution to the wind when it comes to budgeting. Budgets are still a major factor in securing foundation funding. However, funders may not dwell as long on line items such as how much an organization spent to cater an event. Overall, the funders on the panel are more concerned with an organization's capacity to do the work and how the work gets done.
Some foundations are focusing more on providing unrestricted funding. Luke Newton and Ray Santiago said that their organizations provide general operating support to their grantees. Ray says that PDF provides mostly general support. Luke mentioned that although they do look into an organization's financials, they don't scrutinize this aspect as much as the work the organization does; however, he notes that financials can be a good indicator of the history of an organization's operations.
Impact investing, was referred to by Cedric as "the new philanthropic frontier." Luke explained that impact investing has the potential to release new funds into the sector, but wonders whether is means nonprofits will go into competition with businesses.
Existing in Perpetuity
One of the key findings in the report indicated that some foundations are unintentionally depleting their endowments. The rate of this is slow, but some foundations show a projected decline of 1 to nearly 3 percent each year. Although many private foundations are limiting their payout to the minimum requirement of 5 percent, some social justice funders are spending more than that. Cedric Brown said that the board of the Mitchell Kapor Foundation is committed to maintain pre-2008 funding levels and that they don't hold to the 5 percent minimum payout. Their payout is closer to 10 percent. In line with this thought, Luke indicated that some foundations are considering the idea that in times like these distributing foundation funding now while there is a need might make more sense than existing in perpetuity as a foundation. He suggested that a foundation's purchasing power goes so much farther in this moment than ever before as nonprofits are doing more with less.
The panelists provided helpful advice regarding their own programs, but it's safe to say the sentiment crosses organizations.
- Cedric: Be aware of funder to funder recommendations. When Kapor sees an organization that doesn't fit into their program areas but is still effective, they will recommend that organization to another funder that is a better fit
- Irene: Think about the social justice sector as an ecosystem. Understand that your organization is part of a greater network and see possibilities for collaboration
- Luke: This particular political moment requires budget increases to do the work, but if you decide to increase your budget you need to justify the choice. Understand the criteria you're trying to fit and frame your organization to suit the opportunity
- Ray: PDF scours a number of sources looking for potential grantees. Since Web sites are often the first point of contact for a funder, make sure yours is up to date
The panel provided these additional resources:
- The Nonprofit Finance Fund
- Bay Area Justice Funders Network
- National Committee for Responsive Philanthropy
Did you miss the panel? Register for upcoming Meet the Grantmakers sessions:
Thursday, April 5, 4:00-5:00 pm Coffee & Conversation with a Grantmaker: Kaiser Permanente-East Bay in Oakland
Monday, April 16, 10:30 am-12:00 pm Meet the Grantmakers: Funding Opportunities for Health & Human Services Organizations in Santa Clara County in Sunnyvale
Monday, April 23, 4:00-5:00 pm Coffee & Conversation with a Grantmaker: Loren Brown, AAA
Thursday, April 26, 10:00 am-12:00 pm Meet the Grantmakers: Health and Human Services Funding and the New Normal