September 20, 2011; Source: AdvisorOne | According to a brief new report from the Foundation Center, nearly all foundations answering an FC survey (a group representing 75 of the 220 foundations on the Center’s Grantmaking Leadership Panel) said that some of their grantees had been affected by state budget cuts, more than half said that most or all had been affected, nine out of ten said that the impacts on some grantees were severe, and one quarter reported that some of their grantees actually had to “suspend operations.”

We sort of had two responses to those findings. One was, ya think? The other was, why didn’t the other 145 foundation leaders have something to say to the Foundation Center researchers about the impact of the budget cuts? (It’s too bad, because without more scientific random-sampling techniques, it can be dangerous to draw strong conclusions from responses to a voluntary questionnaire.)

More interesting is what the Foundation Center report says foundations are doing vis-a-vis the state budget cuts. Of the Foundation Center respondents,

almost half (47 percent) indicated that they have awarded grants or provided other kinds of assistance in direct response to funding cuts resulting from the current state fiscal crises…[and] one-third of surveyed foundations (33 percent) reported that the fiscal crises affecting state governments had influenced how their 2011 grants budget was set and/or how their funding was allocated.

The report also observed that some foundations said that they intended to provide technical assistance, facilitate convenings, “seek..out opportunities to partner with state governments to address the crisis, and increas[e] support for public policy-related activities to inform budget debates,” although typically the foundations speaking in these terms were community foundations.

Here are the problems: 

  1. Half or one-third of 75 repondents (out of a potential 220) is a pretty small proportion of foundations even intending to step up to the plate for nonprofits whacked by state budgets.
  2. If only one-third altered their grantmaking priorities to address the impacts of the budget crisis, then the other foundations that say they made grants to help are probably talking about grants they probably would have made anyhow.
  3. And if the typical grantmaker specifically addressing the policy and advocacy needs of nonprofits during this time is a community foundation, what does that say about the family foundation community?

Overall, the Foundation Center’s research doesn’t make us feel like the foundation sector is completely behind nonprofits that are feeling the brunt of the nation’s serial state budget implosions.—Rick Cohen