Philanthropy's Leadership Moment
When the economic crisis hit the nation, one of the first sectors to feel its impact was philanthropy. As markets crashed, the endowment values of most foundations plunged. Losses were 30 percent in 2008 alone. Between October 2007 and March 2009, many foundations witnessed a 40 percent decrease in their resources.
But just as philanthropic resources were being dramatically reduced, our nonprofit partners were facing growing demands for their services. Unlike charity organizations, which often focus on the short-term out of necessity, philanthropic organizations usually make long-term strategic investments to achieve real change, making multi-year grant commitments financed by the projected growth in their endowments. So imagine the new financial challenges when those endowments shrank drastically. It was a time for leadership, and many in our sector answered the call.
In October 2008, when the economy began drastically unraveling, our board chair Ralph Smith and I sent an open letter to the field encouraging our sector to rise and face the new economic realities. In that letter, we asked our foundation members and all philanthropic leaders to do three things:
1. To reach out to their nonprofit partners and find ways to maintain service amidst the economic crisis;
2. To use philanthropy's convening power to help communities and regions develop appropriate strategies to meet their respective needs; and
3. To pay special attention to those circumstances where philanthropic mergers, consolidations, and outright evaporation of resources (such as those caused by the Madoff case) resulted in the immediate loss of support for local nonprofit services.
I was proud to see philanthropists around the country respond with a commitment to serving the common good. Many foundations took internal steps to save costs in ways that could transfer savings into new support for grantees. Some foundations moved away from traditional brick-and-mortar investments, instead directing their funding to address urgent needs. In many cases, they provided grantees with new levels of flexibility for using existing and new grant dollars.
Foundations within the Jewish Funders Network, to give one example, rose to the occasion by replacing charitable dollars lost through the Madoff scandal with new support from their foundations. Community foundations, recognizing the need to provide new levels of leadership, convened nonprofits to identify immediate needs and then convened donors to develop appropriate strategies in response. And almost every foundation sought to maintain their grant commitments despite the loss of their own resources.
All this has required innovation and risk-taking so we can stay focused on our cause: serving the common good. As I see the glimmering signs of economic recovery on the horizon, I take pride in believing our sector will continue to support our nonprofit colleagues and our wider communities as we walk through this storm together.
What I've learned is that you can't schedule leadership moments -- they find you. And how you respond to the challenges of your time define whether you individually, or collectively, have met the true test of leadership.
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Posted by: Dermitt | September 5, 2009 6:01 PM
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