The steep drop in equity markets in 2008 has triggered an erosion of foundation wealth, with many foundations reporting losses of nearly a third in the value of their assets, the Chronicle of Philanthropy reports.
A recent Chronicle survey found that among the fifty-seven grantmakers that provided data for 2007 and 2008, endowments declined by a median of 29 percent. Not surprisingly, foundations with investments in companies that went bankrupt or were especially hard hit by turmoil in the economy and markets fared even worse. For example, the New York City-based Starr Foundation, which held a significant position in troubled insurance giant American International Group, lost $1.7 billion over the course of the year, or more than half of the value of its endowment.
But while foundation losses were significant, the median decline among the fifty-seven grantmakers surveyed by the Chronicle was not as bad as the drop in the S&P 500 index, which fell 38.5 percent. Indeed, few foundations said they planned to make significant changes to their investment strategies, although many indicated that they planned to reduce their grantmaking budgets and/or administrative costs.
Several foundations also indicated that they planned to maintain their 2009 grantmaking at 2008 levels. The James Irvine Foundation, for example, plans to commit approximately $80 million to advocacy work and other efforts in 2009 — about the same amount as it spent in 2008. James E. Canales, Irvine's president, said the foundation had little choice, given the state's current fiscal problems. At the same time, Canales said, grantmakers need to ask themselves, "What are the opportunities this unfortunate market creates?"