Despite lip service, rural America is the forgotten landscape of the U.S. political arena and certainly in American philanthropy.  Foundation grantmaking and federal government support to rural communities should be a continuing, serious priority in this nation and within the nonprofit sector.

But unfortunately, for the moment, it appears that rural philanthropic grantmaking is tanking, not just because of the economy, but because of its low ranking in the priority lists of foundation grantmakers and some public decision-makers.  This is contrary to what common sense should tell us:  investing foundation dollars in rural communities is a sensible, constructive part of a philanthropic agenda for social progress, social justice, and economic recovery.

In this brief commentary, we touch on the following issues:

1.  What happened in response to Senator Max Baucus’s challenge to foundations to double foundation grantmaking in 5 years?  What did the foundation sector actually do?

2.  Despite the problematic data on reported foundation grantmaking priorities, what do the trends in domestic U.S. rural development grantmaking look like?

3.  How are rural development organizations experiencing and responding to the continuing diminution of foundation grant support to rural areas?

4.  In what ways does foundation grantmaking relate to federal government policy and budget decisions?

5.  What might be some public policy priorities that rural nonprofits and foundations might think about with clear and specific implications and parallels for the content of foundation grantmaking? (more…)

It is hard to fathom the outcry of the nonprofit sector, almost in complete unanimity, against President Obama’s proposal to cap the charitable deduction at the 28 percent tax level for households earning $250,000 or more.  The opposition was and is, to our mind, fueled by an unattractive sectoral insularity, shaped by “sectoral leaders” who, in their successful advocacy against the tax proposal, are transforming the nonprofit sector from a steward of the public interest to just another special interest.  There may be problems with the President’s plan for paying for part of health care reform with a change in the tax deductibility of itemized deductions, but the debate within or by the nonprofit sector has been less than illuminating.

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Readers who are used to the extensive footnotes in Cohen Report postings wondered why the recent posts on the conditions of funders and nonprofits during the current economic downturn (Foundation Grantmaking during Economic Collapse: Pollyanna or Cassandra at the Helm? and Nonprofits Speaking for Themselves: The Impact of the National Economic Tailspin) had lots of citations, but not from the specific grantmaker and nonprofit association reports.  Well, we have the reports containing the core information used in the postings (some RAGs gave us information, but not in report form), of course!  At CR, we love telling stories with numbers.  But the articles were so long without this list of reports, we figured we’d publish the list separately–here. (more…)

Have you ever wondered how foundations determine how much they can and should spend in a particular year in grants, loans, and administrative costs? The current economic crisis is a case study on the intersection of endowment management practices, Internal Revenue Service Code requirements, and navigating potential penalties and excise taxes.

When the James Irvine Foundation announced its plan to maintain or increase its grantmaking in 2009, it offered a brief instructional on the practice of “using rolling averages to calculate its annual grantmaking.” Like many other foundations, Irvine “bases its annual giving budget on the average size of its assets over a multiyear period rather than [on] … the size of its asset base at the end of the most recently completed fiscal year.”

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What will happen to foundation grantmaking in 2009 and 2010?  The roots of the story are in the vicissitudes of the stock market, where foundations invest the bulk of their tax exempt assets.

At 1:00 p.m. on February 23, 2009, the Dow Jones Industrial Average fell to an 11-year low, to 7,190.72, the lowest since October 28, 1997. By the end of the month, the market closed at 7,062.93. Compare that with the all-time high on October 9, 2007, of 14,164. In less than 18 months, the Dow, the Dow Jones Wilshire 5000, and the Standard & Poor’s 500 indices have lost more than half their value.

While foundation executives and staff have thought carefully about what to do during a recession, their tried-and-true strategies may not hold up during this economic maelstrom, which is different and deeper than any in the past two decades. What should foundations do when their own assets have plummeted so precipitously? How should these institutions respond when the U.S. automotive sector is in danger of bankruptcy, the banking sector is so weak that former Federal Reserve chairman Alan Greenspan hints at “temporarily” nationalizing key banks, and hundreds of thousands of nonprofits may simply go out of business?[1]

True, foundation grantmaking constitutes only 12.6 percent of total charitable giving, according to Giving USA 2008,[2] leading some observers to suggest that foundations do not merit the attention they garner. But foundation grants are one of the few sources of discretionary capital that nonprofits might-again, might-be able to use to sustain capacity and subsidize programs to weather financial storms. The role foundations choose to play during these times will speak volumes about their commitment to people in need and to the services and advocacy organizations that serve them.

So how have these important financial institutions responded to the worst recession since the 1930s? How will their strategies for navigating the next months-or years-of national and global economic crises alleviate or exacerbate these turbulent times for America’s nonprofit sector?

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Many nonprofits depend on corporate donors for critical philanthropic support.  Can they depend on corporate donors through this economic turmoil?  That is the question we explore here.

There has always been something counterintuitive about corporate philanthropic grantmaking during recessions.  Although one would think that shrinking corporate bottom line would dampen their philanthropic spirits, the data has shown–at least in the past few recessions–that corporations did not deep-six their charitable instincts despite squeezed profit margins, especially compared with the bravado of endowed private foundations.

How will corporate philanthropy actually fare during this recession-closing-in-on-depression?  Despite early indications of confidence, economic realities have begun to temper corporate philanthropic predictions.

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None of us are experts on investments in the stock market, not even the stock market experts.  Every day, foundation endowments, public pension plans, and your 401(k)s sink further toward oblivion.

As a run-of-the-mill investor, what you lose in the markets is your responsibility, the result of your risk-return calculus.  But as a nonprofit manager or foundation director, your responsibility is different.

It’s not your money.  Regardless of whether they’re in overnight sweep accounts or long-term investment funds, the funds you are investing are not yours.  They are the funds meant for public benefit that the American taxpayer has entrusted to you for your stewardship.

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Remember the debate in California regarding getting large foundations in that state to report on their grantmaking to racial/ethnic communities and to people of color-led organizations?  In several postings (available under the “racial equity” category here), the Cohen Report covered the foundations’ visceral, furious reaction against the legislation that the California state legislature was considering.  Before the legislation got to a vote in the California State Senate, in June 10 foundations struck a deal with Assemblyman Joe Coto, the original sponsor of the proposed legislation, to pull the bill in favor of the foundations spending 6 months or so to come up with a voluntary plan for increasing funding and increased capacity-building support for organizations serving minority communities and for POC-led organizations.

In December of 2008, 9 of the 10 foundations released a report describing their 2-3 year plan, titled Strengthening Nonprofit Minority Leadership and the Capacity of Minority-Led and Other Grassroots Community-Based Organizations.  Although the foundations’ report includes extensive discussion of the foundations’ current grantmaking reaching communities of color, the following chart lists all of the foundations’ self-categorized “new” commitments, both individual and collaborative, emerging from their 6-month review. (more…)

How will changes in the civil rights movement–changes in leadership, strategy, and program–affect the future of the nonprofit sector? News coverage of the turbulent recent history of the National Association for the Advancement of Colored People led to a spate of newspaper articles questioning whether the NAACP had a future or whether the civil rights movement itself was a historic anachronism. Coinciding with the presidential campaign and subsequent election of Barack Obama, the NAACP has embarked on a course to challenge reports of its obsolescence with a new, young leader, Benjamin Jealous, at its helm. How will the NAACP under Jealous’s leadership transform itself at this pivotal historic intersection of Obama’s presidency and its own 100^th anniversary?

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Is there anyone left in the nonprofit sector who hasn’t come across a bevy of articles listing the foundations and charities that have been ripped off by Bernie Madoff and his $50 billion pyramid scheme?  The press has been tallying the losses to investors, operating charities, and foundations, but there has been precious little analysis of what this means for the needed monitoring and oversight of how some foundations handle their–our–tax exempt dollars.

What can we learn from Madoff’s horrific financial shenanigans?  What does it all mean for the nonprofit sector? There are some important lessons here for every nonprofit in the U.S., whether victimized by losing the bulk of their resources or simply outraged by the cozy relationships of investors and foundations–playing fast and loose with tax exempt moneys.

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Are there lessons for foundations and nonprofits from the corruption cesspool seeping out of the Illinois governor’s office? When political corruption puts its arm around charity and philanthropy, teachable moments emerge and we should all pay attention.

Prospective replacements for Barack Obama’s Illinois senate seat are running as fast and as far as they can from the recently arrested governor of the state, Rod Blagojevich. Nonprofits, foundations, and labor unions might be well advised to join the Illinois pols in creating yardage between them and the pay-to-play state executive.

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If President Obama is going to confront the depths of urban and rural poverty in the U.S., he is going to need to build the capacities of, and infuse capital into, community-based nonprofit organizations in poor communities. In addition to joblessness, lousy schools, high crime, and poor health outcomes, the least successful poor communities lack local nonprofits capable of providing ideas, expertise, and leadership for community renewal. The few localities making some progress, notwithstanding the past eight years of intentional downgrading and corrosion of federal government support, are those with functioning nonprofits—generally backed by an infrastructure of national and regional capacity-builders, financial intermediaries, and foundations.

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Imagine being an investor in the stock market—a scary thought in these times—examining investments in potential securities, but being unable to distinguish and disaggregate equities (stocks) from bonds, cash equivalents, and other assets. You may think you’re buying into a fund of large cap equities but you discover you actually just landed a bunch of U.S. treasuries or even a Real Estate Investment Trust .

Welcome to the bollixed up way we think about the similarities and differences among U.S. foundations!

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Like any other sector of society, a healthy philanthropic sector needs the scrutiny of external watchdog organizations as well as appropriate governmental regulation and oversight. But ensuring that the watchdog does not turn into a lapdog is a challenge that bedevils even countries with well-developed philanthropic sectors and confounds those where the sector is only beginning to build an infrastructure.

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History As A Teacher: The Interactions Of Foundations And Legislators

In foundation circles, it is an oft-repeated truism that McGeorge Bundy, when he led the Ford Foundation, and his foundation colleagues botched their relationships with Congress when they testified against federal regulation and specifically what led to the 1969 Tax Act’s controls on private foundations. Though their dire predictions of the collapse of foundations after the Tax Act hardly came to pass—in fact, foundations boomed in numbers and assets following it–Bundy and his big foundation colleagues have morphed into philanthropic archetypes of how not to handle elected state or federal legislators.

The performance of some California foundations on May 12^th may be instructive for philanthropic leaders eager to avoid becoming New Millennium protégés of McGeorge Bundy. On that day, the California Senate Committee on Business, Professions and Economic Development met to discuss pending legislation that would have required large California-based foundations (with assets over $250,000,000) to report on the racial/ethnic composition of their grantees, their grantees’ target communities, and the foundations’ own staff and board leadership.

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