First the good news…

The William Penn Foundation has always placed a high priority on stability in its grantmaking, and has a track record of setting our grant budget conservatively. Our spending on grants is determined using a three-year rolling average of investment returns, which means that when the market boomed in recent years, we didn’t raise our grant budget to unsustainable levels, and now that the economy is bad, our budget is not in a state of rapid decline. We expect this relative stability to allow us to meet prior grant commitments and we are hopeful that in 2009 and 2010 we’ll be able to keep our grantmaking at or near its current level of $63 million.

The bad news is that like most other market-based investors, our portfolio is being hit hard, and that makes the outlook for future years much less certain. Barring a significant market turnaround, we are likely to confront tough choices in 2011 and beyond.

In the meantime, we recognize that economic turmoil is a pervasive fact of life for grantees, public agencies, and the community at large. We cannot simply conduct business as usual, oblivious to these stresses, nor do we want to react so dramatically that we cause the very disruption that we hope to avoid. At a time like this, we are very sensitive to the fact that our relative stability puts us in a position to be of even greater service to our region.

Given the economic environment, and our own situation, the following principles will guide our grantmaking and the ways in which we pursue our strategic plan. Different sectors of the nonprofit community require different approaches, so these will vary somewhat in their application to our three grantmaking programs, but they provide a general sense of our thinking.

• Maintaining our strategic focus. While we expect to see increases in short-term needs resulting from these extraordinary economic conditions, we must not lose sight of our strategic vision for regional advancement. We will continue to invest in our long-term program strategies because they represent the best opportunity to ensure that our region is poised to benefit when economic recovery eventually comes.
• Recognizing the need for grantees to maintain their focus. Our staff understands that some nonprofits may have to employ a back-to-basics approach by cutting back on their programming and seeking efficiencies. We are generally supportive of these strategies, provided they are done prudently and in keeping with the organization’s mission and core values.
• Prioritizing our investments. We will ask ourselves at every turn: “if we had less money, would this grant be funded?” We will press harder on the rationale for proposed projects.
• Supporting strong leadership. In difficult times, we want to support people and organizations that are proactively meeting their challenges with creative strategies appropriate to their organizations, whether that means seizing unexpected opportunities, forming strategic alliances, or making hard choices about programming.
• Flexibility. We will be as flexible as possible about modifications to already-approved grants when it helps organizations to deal with austerity. We are open to changes if it is the right strategy for the grantee.
• General operating support. We will be open to providing general operating support when it furthers our programmatic goals and makes sense for the grantee.
• Discouragement of capital campaigns. This is not a good time for fundraising, and capital campaigns may further over-extend organizations. There will be exceptions, but in general we will try not to make grants that encourage campaigns that should probably be delayed.
• Careful use of multi-year grants. In an economic environment as uncertain as the one we currently face, the standard for making large multi-year grants is high.
• Identifying key interventions. We will seek opportunities within our funding priorities where an investment might ameliorate the effects of the economic downturn. For example, helping service organizations that support smaller, more fragile nonprofits.
• Protecting our investments. Fiscal pressures threaten to distract from hard-won advances in public policy and program change achieved in recent years. We will be exceptionally alert to those threats and support advocacy that encourages public officials to follow through with previous policy commitments.

If you have specific questions about how these principles are being employed in our three grantmaking programs, we encourage you to talk with our program staff in your area of interest. We seek to be as clear and transparent as possible, but please understand that we face a degree of uncertainty over the long-term as well, and this limits our ability to make specific promises.

Dealing with the fallout of a fractured economy is not a happy task. The horizon is fraught with fiscal challenges for nonprofits and regional decision-makers, but we are more determined than ever to advance our vision for the region by supporting our grantees and Greater Philadelphia’s policymakers in developing the best possible responses to new realities.