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Tested by Tough Times

Foundations and nonoprofit organizations have seen their investment portfolios shrink by an average of 30 percent.

asking_handsgiving_handNearly every entity – from government and business to the American family – is struggling to make sense of current economic conditions few imagined possible. . . Nonprofit organizations are no exception.

For nonprofit organizations around the country – many with SPEA grads at the helm – the story is much the same. Nonprofits, whether still thriving or just surviving, are dealing with momentous change.

As culture program officer for the Joyce Foundation in Chicago, Michelle Boone (MPA ’98) is responsible for distributing nearly $2 million in grants annually to arts and cultural organizations, primarily in the Windy City, but around the Midwest as well. Closely connected to the local arts community, Boone shares some observations on what nonprofit organizations are facing. Among the notable shifts is an influx of new grant requests from organizations that have never before applied to the Joyce Foundation.

“The arts groups that are most vulnerable right now, at least for us here in Chicago, are the mid-size organizations with budgets of between $500,000 and $2 million who have overhead – rent to pay and payroll to meet,” says Boone. “The funding requests I’m receiving now are less about organizational advancement for things like marketing and technology and more about meeting critical needs like salary support.”

While foundations and nonprofit organizations have seen their investment portfolios shrink by an average of 30 percent, the Joyce Foundation remains in a relatively strong financial position. In fact, not only is the 60-year-old foundation able to maintain its giving levels in 2009, it’s also considering alternative ways to help buoy those groups in most critical need.

“The foundation has been around long enough and survived peaks and valleys before,” says Boone, who left jobs in television and the entertainment industry and enrolled in SPEA as part of a plan to find a more meaningful career. “Many foundation portfolios took a huge hit after 9/11, too, and while situations like these are disturbing, the Joyce Foundation has been cautious, conservative, and diversified with its investments.”

Courting donors in down times
Some nonprofits relying on fund-raising have experienced a drop in both corporate and individual support. Rebecca Fedewa (MPA ’98), executive director of the Flint River Watershed Coalition in Flint, Mich., says her organization recently scrambled to replace program funding lost after a large automaker’s charitable arm was forced to reduce its level of support. She believes some individual donors are also cutting back.

“I’ve noticed at some of our events, silent auctions and so forth, that people are donating less money,” says Fedewa, who majored in fisheries and wildlife biology before coming to SPEA for her MPA degree in the late ’90s. “People are tightening their belts, and it’s showing in our ancillary funding.”

Due to significant grant monies, the coalition is in an enviable financial position presently, despite the ongoing economic crisis. However, Fedewa, who spent seven years at a foundation before joining the coalition, is reluctant to remain solely dependent on foundation grants and has recently started a major donor initiative and an online fund-raising program. She hopes these efforts will make the organization fiscally stronger regardless of the economic climate. Fedewa speaks candidly about the country’s current situation in donor appeals.

“You might as well acknowledge it,” she says about contacting donors in tough times. “We’ve told our donors that we know it’s not the best time to be asking for their money, but we remind them of the services we provide and why they should consider donating in the future.”

SPEA graduate Jeff Lindauer (BSPA ’92) agrees. As associate vice president for development for the Indiana University Foundation, Lindauer says staying in contact with donors in both good and bad times is key. The Foundation, like the Flint River coalition, has tweaked its donor message to reflect the current environment.

“We want to be clear we understand some [donors] may not be able to help as much as they have in the past, but we hope they will choose to remain involved and to support IU with a gift they are comfortable with now,” Lindauer explains. “Our hope is that they will stick with us during this time, and when the economy turns around, they’ll return to prior levels of support or beyond.”

New challenges, differing perspectives
Although the IU Foundation is feeling the effects of the nation’s weakened economy, Lindauer, a 20-year veteran of the organization, says the group remains committed to its fund-raising priorities and proven strategies.

“I’ve seen some organizations completely revamping their fund-raising programs due to the current conditions, and I wonder if they are overreacting,” Lindauer says. “Our fund-raising strategy is based on the belief that we have lifelong relationships with donors and our ultimate mission is to provide support for the university over time.”

Others – like Fedewa – are taking a conservative approach. The watershed coalition is postponing the expansion of a school education program until the economy improves, using allotted funds instead to shore up the current program.

“We’re a small organization, so I think it’s easier for us to get by, whereas some of the larger organizations are definitely feeling the hit a lot more than we are,” Fedewa observes. “A lot of the colleagues I speak with are not as fortunate; many are implementing downsizing plans, letting staff go, and trying to find more money.”

– Jill Meadows Jansen