December 8, 2008

Ford, Gates Plan Larger Payouts In 2009

The stock market has plunged and with it many endowments. While some nonprofits have laid off employees, some of the world’s largest foundations still expect to boost their payouts next year. While not as large as previously planned, 2009 payouts still are expected to grow by about 10 percent.

Jeff Raikes, chief executive officer of the Bill & Melinda Gates Foundation in Seattle, said in a letter posted on the organization’s Web site that the organization plans to stay focused on the core issues where it can do the most good. Those issues include increasing opportunity in the United States through education, and improving health and fighting poverty in developing countries.

“Within these areas, we’ll continue to follow the evidence. We will make grants in the areas where the data tell us we have the best chance to make the greatest impact,” Raikes said.

“Like all our fellow foundations, we’ve been thinking a lot about what the downturn means for our work, and would like to explain our perspective on what we are doing,” he said.

The Gates announcement came about two weeks after Ford Foundation President Luis Ubiñas pledged to increase the foundation’s monetary payout rate by about 10 percent. “Every organization has taken substantial financial hits,” he said. During remarks at Independent Sector’s annual conference in Philadelphia, Ubiñas said it’s important to not let the short-term challenges of the stock market, which can usually last 24 to 36 months, undermine the long-term goals of social justice. Funding growth within the foundation’s overall $412 core program budget, he added, will fluctuate based on institutional priorities.

Ubiñas said the foundation took action in February to protect core program budgets, with an eye toward a summer that looked like it would be difficult. The New York City-based foundation has employed technology to cut costs, using IP video conferencing, he said, while also looking at other media that could help reduce expenses. Tens of millions of people can be reached for free on social networking sites, he said. “It’s not how do we use technology that we’re used to more efficiently (like television and radio), but how do we use media that our kids are used to (like the Internet),” Ubiñas said.

Ubiñas also promised that grantmaking ratios for U.S. causes versus international causes would continue in the vicinity of the 50-50 range. “Soon, there will be no grantmaking in the U.S. if we hold to the idea that one dollar can save 10 lives in sub-Saharan Africa versus one in the U.S.,” he said.

“At this point, what we’re expecting, given that we haven’t seen a rebound in the stock market particularly, in the aggregate, we’re likely to see foundation giving go down a little bit” next year, Steven Lawrence, senior director of research at The Foundation Center in New York City, “That said, I don’t think we’ll see a decline that you’d expect given the decline in market.”

Anecdotally, Lawrence said he’s hearing about some foundations that will increase payout rates to maintain a stable level of giving, matching the 2008 levels in 2009. With assets having decreased so much, it could mean some substantial increases, he added.

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This article is from NPT Weekly, a publication of The NonProfit Times.

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