Foundations – Hold the Line (Or Better Yet, Step Boldly Beyond It)
David La Piana, Managing Partner, talks about an important topic that many foundations are grappling with during our current COVID-19 related stock market slump.
When the stock market drops as it has over the past couple of weeks, a familiar set of conversations ensues at many private foundations – should we reduce our grantmaking in order to preserve our capital for the long term? During the Great Recession a decade ago, many investment committees seemed to agree on this course and grantmaking dropped. There were a few notable exceptions, brave funders that actually increased their payout, recognizing that people were hurting, but that was the exception.
The reasoning funders use for the cutbacks is that their long-term ability to pursue their missions requires preserving their capital, and this is more important than responding to an immediate crisis. That is certainly an argument worth considering. But, sitting in positions of extraordinary wealth and power, they should at least consider the immediate needs of the organizations they support, whose revenue generators – everything from client fees to galas to conferences to bake sales – may be cancelled, and more importantly, the needs of the communities these grantees serve. Philanthropy professionals (and consultants) can work from home with no loss of income, but for hourly workers such as childcare staff, and the legions of gig workers, loss of income is a real and potentially devastating prospect.
If the current Coronavirus-related stock market slump endures, and the overall economy stumbles due to restrictions on the movement of people and goods, reduced work, cancelled school, and everything else we may face, we may have another opportunity to revisit this question. As Vu Le reminds us in a recent post, now is not the time for funders to pull back. Now is the time for organized philanthropy to make plans, and in the short term, to put mission ahead of capital preservation.