October 2, 2011; Source: Washington Post | Fannie Mae and Freddie Mac have been on the skids for some years now, victims of (and some people might say contributors to) the implosion of the housing markets, although Fannie had its own self-indulgent management meltdown under former CEO Franklin Raines that exacerbated the organization’s problems. Both Fannie and Freddie are now basically being controlled by the federal government–and subsidized with serial bailouts in order to remain semi-solvent under Congress and the White House finally figure out what to do with the secondary market for housing mortgages.
Of concern to nonprofits, particularly in the metropolitan Washington DC area, is what is happening to the philanthropic contributions of these two for-profit but governmentally backed behemoths. Fannie Mae shut its foundation some years ago during its initial managerial flame-out, moving all charitable contributions to the corporate side of the ledger, but promising to maintain its commitment to DC-area charities. That commitment waned over time, though kept alive by the advocacy efforts of local nonprofit associations such as the Nonprofit Roundtable of Greater Washington and others to keep Fannie and Freddie alive as philanthropic players for local groups in the nation’s capital. Still, the two gave $100 million to some 500 local organizations over the past four years, a big number but still a reduction compared to past giving. Fannie in particular had used its charitable giving to metro DC groups as a bargaining card to maintain property tax exempt status for its headquarters on Wisconsin Avenue despite Fannie’s status as a for-profit corporation.
A new report from the George Mason University Center for Regional Analysis tells what everyone had largely suspected was going to occur sooner or later, that Fannie’s and Freddie’s charitable giving is likely to disappear in the near future. The Freddie Mac Foundation is spending down its assets with 2015 as a target date. Already way down in giving, Fannie has announced plans to terminate its signature charitable activity in the District, its homeless walkathon on the Mall, after having slowly cut many other programs. The George Mason report says that Fannie expects federal officials to tell it to “curb if not eliminate its nonprofit funding…” Now that it is under federal conservatorship, Fannie apparently doesn’t need to play the philanthropy card to maintain tax exempt status perhaps.
The challenge in DC is that there aren’t that many local funders of Fannie’s or Freddie’s past philanthropic girth, certainly not from the corporate foundation side. DC nonprofits always show up high in the amount of foundation giving they get, but that’s because of national nonprofits located in DC. Local DC nonprofits have always faced a tough fundraising hurdle given that the basis of DC’s economy has long been the federal government, not private business. After Fannie and Freddie, the most reliable philanthropic funders of local groups are foundations such as the Eugene and Agnes Meyer Foundation and the Morris and Gwendolyn Cafritz Foundation, both excellent and steadfast supporters of metro DC nonprofits, but hardly mammoth foundations
The George Mason report compares DC’s prospective loss of the corporate philanthropy of Freddie and Fannie to Detroit’s where the automobile manufacturers saw their corporate profits disappear which caused most of their philanthropic grantmaking to tank. But Detroit has some of the nation’s largest foundations, located in Michigan, maintaining their grantmaking in what has to be the most challenging nonprofit and municipal environment in the nation, funders like the Kresge Foundation, the C.S. Mott Foundation, the Stillman Foundation, and the W.K. Kellogg Foundation.
The Roundtable is going to try to gin up other corporations in the region, maybe targeting the high tech sector that has evolved and grown in northern Virginia, and is planning events to raise corporate and individual commitments toward replacing some of the Fannie and Freddie philanthropy. All well and good, but the impending loss of Fannie’s and Freddie’s giving is a body blow to the metro DC nonprofit sector.—Rick Cohen