Past Economic Downturns and the Outlook for Foundation Giving

Abstract

To address growing concerns about the impact of the current economic downturn on foundation giving and the nonprofit sector, the Foundation Center can provide historical context through an examination of foundation giving trends in prior recessionary periods and times of economic distress. Drawing upon existing data and research, Steven Lawrence offers perspectives on the future outlook in light of current conditions and explains factors that affect foundation giving when economic conditions are turbulent. Since the current economic crisis began in the latter half of 2007, we at the Foundation Center have been fielding questions about the possible impact of a downturn on foundation giving. Each new bank buyout or failure, stock market drop, or prediction of a long and deep recession has led to renewed concerns about the health of the nonprofit sector and of the foundations that serve as one of their sources of support. The scale of the current financial market meltdown and the reach of its impact throughout the United States and globally feels, in many ways, unprecedented. With no clear bottom yet in sight, it can be tempting to conclude that the work of many institutions will be imperiled or, at a minimum, substantially compromised. But short of a complete economic collapse, the behavior of institutions during prior economic downturns does provide some perspective on how they may weather today’s challenges. This certainly seems true for foundations. Since the Foundation Center began collecting data on all grantmaking private and community foundations in 1975, the country has weathered several recessions. During each of these recessionary periods—1980, 1981–82, 1990–91, and 2001—U.S. foundation giving in inflation-adjusted dollars did not decline and, in fact, increased slightly.