How One Community Foundation is Responding to Economic Crisis

The current economic emergency is placing a great strain on the residents of the Richmond Region, most particularly on those less fortunate in our community. Nonprofits that meet the needs of these citizens are faced with rising demand and declining revenues from gifts. In yesterday's Richmond Times-Dispatch, there is a front page article on this problem.

In order to help meet the extraordinary demands on nonprofits that serve the basic human needs in our community, The Community Foundation has established the 2009 Safety Net Fund and is seeding it with a commitment of $1 million. The following memorandum describes the need and our response, and it describes how you can also

Our approach is the same as we have used to meet the needs of those affected on 9/11 and of those affected by Hurricane Katrina. That is, 100% of donations to the 2009 Safety Net Fund will be used to help nonprofits meet community needs. There will be no charge for overhead. Already, we have had Board members, staff and advisors to funds at The Community Foundation make commitments.

The following memorandum from Tom Byer, Chairman of the Distribution Committee, and Darcy Oman, President & CEO, describes the 2009 Safety Net Fund and the rationale for it in greater detail.

How to Help Meet Basic Human Needs in Our Community During This Economic Crisis

The economy resembles a line of dominoes, each toppling the next. Falling home prices have led to rising personal bankruptcies. Miserable retail sales are prompting a wave of corporate failures and forced mergers, which is leading to rising unemployment.

The nonprofit domino is now teetering. While we won't know how badly overall giving has declined until after December 31, the early indicators are troublesome. The Community Foundation received $7.9 million in requests for funding on November 5, compared with $5.85 million last year. The Commonwealth of Virginia is slashing funding for nonprofits. The demise or buyout of local businesses is crimping corporate giving.

Demand for nonprofit services, meanwhile, is rising sharply. The Salvation Army reports a 97% increase in the number of individuals served in September compared with the same month last year. The number of people they had to turn away was 763, a 140% increase. Bare shelves at FeedMore (the consolidated Central Virginia FoodBank and Meals on Wheels) have been well chronicled. Homeward reports a 10% increase in the number of homeless children to 155, compared with this time last year. HOME (Housing Opportunities Made Equal) reports the number of foreclosures up by 195% in this year's third quarter compared with 2007.

How will we loosen the vise of declining revenues and rising expenditures?

The Community Foundation (TCF) represents an important counterbalance to these negative forces. As an endowment based organization we budget conservatively. We consciously grow the endowment, while meeting community needs during good years. So, when we experience tough times such as these we can increase spending to meet even more pressing needs. TCF's Board held a special meeting on November 10th, where it approved an additional $1 million to the grant budget, which comes from unrestricted funds that we have "saved for a rainy day."

2009 Safety Net Fund

TCF invites other foundations and individuals who have similarly been conservative in their financial planning to help us lean against the rising tide of basic human need in our community so it does not grow into a civic tsunami. We will use the $1 million in emergency funding to seed a temporary fund called the 2009 Safety Net Fund. Anyone may give to this fund, from which 100% of the dollars will be used strategically to help our region's nonprofits meet basic human needs in our community such as emergency financial assistance, housing, food, employment and health care.

Part of this cash infusion will be deployed as TCF collaborates with the Partnership for Nonprofit Excellence (created by TCF two years ago) to help nonprofits identify innovative solutions to meet payroll, reduce overhead, improve budgeting practices and maintain core services. Nonprofit managers and their boards should evaluate whether their long-term survival may require consolidation or other fundamental changes.

Why Endowments Are Important

We are often asked why endowment building as a strategy makes sense. During trying times like today, we find the answer. Diversification in grantmaking is every bit as important as diversification in investments. When giving by governments, corporations and individuals is curtailed, nonprofits need help from endowed foundations to stay afloat.

TCF's endowment has been built by charitable bequests and lifetime contributions from people who wish to permanently benefit our community. Each donor's endowment supports the charitable purposes he or she feels are most important. Donors who have made gifts on an unrestricted basis have provided TCF has the financial flexibility to respond to the community's changing and emerging needs through time.

We invite you to support the 2009 Safety Net Fund. Visit our website at to learn more or to give online. You may also want to consider this fund for direct distributions from your IRA.

Robert Thalhimer

Posted at 1:20 AM, Nov 20, 2008 in Philanthropic Strategy | Permalink | Comment