With fewer resources, groups opt to give less

The Buffalo News reported how the downturn has impacted local foundations. As the article relates:
Battered by more than $80 million in stock market losses last year, the John R. Oishei Foundation suspended new funding for medical research. The James H. Cummings Foundation, whose assets dropped by about 30 percent, probably will give away $500,000 less in 2009 than in previous years.

The Grigg-Lewis Foundation lost about $12 million and informed charitable organizations it wouldn't award any more grants this year.

"We tell them, 'Come back in January, and we'll take a look,'" said William May, executive director of the Griggs-Lewis Foundation, based in Lockport.

The stock market began turning around in the first half of 2009, but the impact of the 2008 free-fall will be felt in local philanthropic giving for years.

"This is not your daddy's downturn. This is an entirely new animal," noted Paul Hogan, vice president of the Oishei Foundation. "A third of the money has just disappeared. That doesn't come back in a normal cycle."

It took just four months in 2008 to wipe out almost a decade's worth of investment earnings at Western New York's largest private foundation. Oishei had $232.9 million in assets at the end of 2008 — down from $332.9 million at the close of 2007.

In addition to investment losses, overhead costs of $2.6 million and the payout of nearly $16 million in grants — the most in its history — further drained Oishei's net assets.

Other Western New York foundations were in the same boat.

"We will not have the income in 2010 that we had in 2009 or 2008. Nowhere near," said Robert Kresse, a trustee with the Margaret L. Wendt Foundation, where assets fell from about $120 million to $80 million. "We're in a very tight squeeze."

The Wendt Foundation already has sizable grant commitments to pay out from previous years, pinching its ability to award new grants.

Grantmaking hasn't stopped, but foundation representatives said they would have to be more selective than ever. Some foundations acknowledged they're now less inclined to do multiyear grants. Read more here.

With decreased resources, funders will have to cut back on their giving. As these cutbacks impact the sector, nonprofits facing growing deficits and cash flow issues will clearly be facing critical issues. Some nonprofits will go out of business. What does this mean for the sector? How can nonprofits prepare or respond to these funding issues? Share your thoughts here.