Trusted nonprofit information' Confident decisions'

1
Trusted nonprofit information. Confident
decisions.
2
FoundationsThe Current State of Giving

• Suzanne E. Coffman
• Director of Communications
• GuideStar USA, Inc.

3
Preface
4
Issues Affecting Foundations
5
Madoff

• 12/11/08 Madoff arrested. Former Nasdaq stock
  market chair founder and head Bernard Madoff
  Investment Securities LLC

• 12/15/08 JEHT Foundation announces closing down
  end of January 2009

• 12/19/08 Picower Foundation closing down

• 1/28/09 BNA Daily Tax Report reports Sen. Chuck
  Grassley asked why nonprofits had put all of
  their eggs in one basket.

6
Madoff

• 1/29/09 New York Times list 147 foundations
  that invested with Madoff

7
The Economy
2008 GuideStar Nonprofit Economic Survey Change
in total grant money awarded

• Pd. Covered Resp. Dec. Same Inc.
  ?
• Jan.-Sep. 08 112 22 42 35 1
• Jan.-Sep. 07 162 10 35 54 1

8
The Economy

• Chronicle of Philanthropy survey
• 104 foundations

• Total assets 2007 213.8 billion

• Total assets 2008 163.4 billion

• ? 50.4 billion (24)

Source Noelle Barton and Ian Wilhelm,
Tightening Their Belts, Chronicle of
Philanthropy, April 9, 2009
9
The Economy
March 2009 GuideStar Nonprofit Economic
Survey Change in total grant money awarded

• Pd. Covered Resp. Dec. Same Inc.
  ?
• Oct. 08-Feb. 09 472 31 44 22
  2
• Jan.-Sep. 08 112 22 42
  35 1
• Jan.-Sep. 07 162 10 35
  54 1

226 private foundations 246 public charities
10
The Economy
March 2009 GuideStar Nonprofit Economic
Survey Did the economy cause you to change your
grantmaking practices or guidelines between
October 2008 and February 2009, compared to the
same period a year earlier?

• Yes 41

• No 57

• Didnt know 2

11
The Economy

• Change in Grantmaking, Oct. 2008-Feb. 2009

Yes details

• Cut back on program types funded 17

• Reduced payouts already committed to 8

• Stopped accepting applications 7

• Only accept applications from previously funded
  organizations 5

12
The Economy

• Change in Grantmaking, Oct. 2008-Feb. 2009

Yes details

• Increased grantmaking to help grantees cope with
  economy 5

• Did not make payouts committed to 1

13
The Future

• Lois Lerner, director, IRS Exempt Organizations
  Division, 4/6/2009
• So far this year, the IRS has received more
  applications from new organizations than we had
  predicted. There are more charities chasing
  fewer dollars.

14
The Future

• Foundation Center survey, Apr. 2009
• 1,243 foundations (includes community
  foundations)
• Grantmaking in 2009

Source Foundation Center, Foundations Address
the Impact of the Economic Crisis, Research
Advisory, April 2009
15
The Future

• Foundation Center survey, Apr. 2009

• 63 award fewer or smaller grants

• 46 reduce number of new grantees funded

• 44 award fewer multi-year grants

• 43 reduce overall number of grantees funded

• 37 reduce amount of capital support provided

Source Foundation Center, Foundations Address
the Impact of the Economic Crisis, Research
Advisory, April 2009
16
The Future

• Foundation Center survey, Apr. 2009

• 94 maintain or increase geographic areas funded

• 80 maintaining number of program areas

• 14 launching special initiatives

• 3 increasing program areas funded

Source Foundation Center, Foundations Address
the Impact of the Economic Crisis, Research
Advisory, April 2009
17
The Future

• My predictions

• Fiercer competition for foundation dollars

• More emphasis on collaboration between grantees

18
The Future

• My predictions

• Extend private foundation rules to other types of
  funders
• Supporting organizations
• Donor-advised funds
• Endowment funds
• Venture philanthropy funds

19
The Future

• My predictions

Since some of these walk and talk like private
foundations, it's fair to ask why the private
foundation rules shouldn't apply to them. 
20
The Future

• My predictions

For those foundations that view the 5 percent
threshold as a floor rather than a ceiling, there
is no reward. They get treated the same as those
who treat the 5 percent as a ceiling and don't
pay out any more.
21
The Future

• My predictions

The federal bridge loan fund proposal -- to help
small charities that are not being paid timely on
their contracts with state and local governments
-- is worthy of
consideration. However, it begs the question of
why various grant-making entities and funds
couldn't pool their resources to do the same
thing or just increase their payouts. 
22
The Future

• My predictions

The proposal to simplify the private foundation
excise tax is also worthy of consideration but
not necessarily as stimulus. Some foundations
have decided it's the right thing to do to
increase payout now and worry about the
additional excise tax later. That makes me wonder
whether foundations that are lobbying for this
rule change would actually increase their giving
if Congress were to enact it today.
 
23
The Future

• My predictions

I will continue to press the Internal Revenue
Service to improve reporting requirements for
charities, particularly for private foundations
and colleges and universities and to improve its
enforcement efforts, including its compliance
studies.
24
The Future

• My predictions

2004 Senate Finance Committee staff paper
proposed

• Prohibiting or limiting compensation of private
  foundation trustees.

25
The Future

• My predictions

2004 Senate Finance Committee staff paper
proposed

• Requiring justification if a private foundation's
  administrative costs exceed 10 percent of its
  total expenses and limiting the proportion of
  administrative expenses that can be counted in a
  foundation's qualifying distribution.

26
The Future

• My predictions

Pension Protection Act of 2006 Signed into law
August 17, 2006
27
The Future

• My predictions

• Fiercer competition for foundation dollars

• More emphasis on collaboration between grantees

28
Presented by

• Suzanne Coffman
• Director of Communications
• GuideStar
• scoffman_at_guidestar.org
• 757-229-4631, ext. 27