Wednesday, November 30, 2011

Is there ever turning back from shifts in foundation giving?

Several articles in this week’s readings emphasized the need to shift strategies when the external environment changes. In particular, while IBM needed to adapt to changing market conditions to retain profitability, GE reduced its focus on financial engineering to go back to the basics of manufacturing products.

The readings brought to mind one of the most significant changes in the external environment in the recent past—the economic downturn. Clearly, many organizations have had to shift their strategies in order to remain competitive in this new environment. In particular, nonprofit organizations have taken a huge hit. According to Guidestar, 52% of nonprofits experienced decreased funding and 8% were facing imminent danger of closing their doors in 2009. As a response to the struggling nonprofit sector, how have foundations, corporate giving, and other charitable donations shifted their strategies in these times? Have they merely decreased the amount of funding that they have given to struggling nonprofit organizations, or have their strategies shifted in perhaps more subtle ways?

On the corporate philanthropy side, The LBG Research Institute notes that while over 52% of corporations reported decreased giving in 2009, these corporations are replacing their financial philanthropy with other forms of philanthropy—including increasing corporate volunteering, in-kind donations, and product donations. In addition, almost half of the corporations that LBG surveyed indicate that they are prioritizing the establishment of partnerships with nonprofits instead of straight cash donations.

On the foundation side, a 2010 report from the Monitor Institute indicates that while the last decade of foundation giving has focused on improving organizational effectiveness, efficiency, and responsiveness, their strategy has shifted to include a focus on coordination and adaptation within the nonprofit sector. The emphasis on coordination stems from the harsh reality that nonprofits are facing decreasing resources due to the economic downturn. Instead of fostering competition to capture funding, foundations anticipate rewarding nonprofits that coordinate programs and services in order to tackle shared issues. The focus on adaptation stems from the economic downturn, as well. As a result of the increasing pace of change in today’s markets, foundations need to continually assess their position in the marketplace and shift their strategies as necessary.

My question is this—are strategic shifts cyclical in nature or do they represent more permanent shifts? Regarding philanthropy, will corporate donations ever return to their pre-economic recession levels…or will corporations continue to focus on alternatives to cash donations? In a similar vein, will foundations shift away from coordination and adaptation? If so, what would make their strategies shift?


References:

Guidestar. “NP Economic Report, Part 1: The Effect of the Economy on the Nonprofit Sector, October 2008 – February 2009”. http://publications.guidestar.org/nonprofit-economic-report

LGB Research Institute, Inc. “Corporate Giving Is Moving Into a New Age, According to Survey Released by LBG Research Institute”. Press Release. August 25, 2009. http://www.lbgresearch.org/survey09.php

Lohr, Steve. “Lessons in Longevity, From I.B.M.” New York Times, June 18, 2011.

Monitor Institute. “What’s Next for Philanthropy.” July 2010. http://www.monitorinstitute.com/downloads/Whats_Next_for_Philanthropy.pdf

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