Foundations Weigh Options in Tough Economic Times

By Lana Gersten

Published November 13, 2008, issue of November 21, 2008.

In the continuing coverage of Wall Street woes, add Jewish foundations to the mix.

Like almost everyone, Jewish foundations are taking a hit these days as investments continue to lose value and endowments dwindle. While it is still too early to gauge exactly how much money has been lost and what will happen from here, Jewish foundations are beginning to re-evaluate their portfolios and strategize how to go about giving money during a time of great need.

“I think we’re still at an early inning of this game in that people don’t know whether we’re at the bottom of the market, whether we’re approaching the bottom of the market,” said Jeffrey Solomon, president of the Andrea and Charles Bronfman Philanthropies. “I think that what we have today is a great deal of nervousness and less solid planning because of that.”

On one hand, many Jewish foundations have an impulse to give more because they know there’s a greater need. But on the other hand, foundations are finding it hard to give at the same levels with reduced assets.

According to Mark Charendoff, president of the Jewish Funders Network, some foundations are approaching the situation knowing that they have spent years making money off their endowments. “We have to think about this over the course of time,” he said. “Over the course of time, investments are doing quite well.”

Others are in a much tougher situation, looking at investments and commitments that they made several years ago when they had planned on a certain rate of return. Now, the money is simply not there.

Even those foundations that do not operate on the endowment model are facing an uncertain future. Jewish family foundations, which tend to receive regular contributions from donors without investing the money, might see a decline in available funds if donors are not in a position to give as much as they had in the past.

Al Levitt, president of the Jim Joseph Foundation, says the foundation has seen a downturn in the value of its assets. So, too, has the Jewish United Fund/Jewish Federation of Metropolitan Chicago, whose chief investment officer, David Brief, said its endowment was down 12% at the end of September.

While most of the foundations interviewed for this article said they will honor their 2008 grants, Charendoff said that he has heard of one sizable foundation, that he declined to name, that had to rescind grants.

“For the most part, that’s been the exception. I think that much more common are foundations that are saying, look, we’re going to meet whatever commitments we have, but we’re not interested in looking at anything new.”

But with the uncertainty of the economy comes an uncertainty of what to do next.

Levitt said that though the Jim Joseph Foundation has no intention of reducing any grants it has already made for this year, it may re-evaluate the amount of money it gives away next year, “depending on how great the need is and what our assets are.”

“There are going to be a lot of areas in the Jewish world in the United States that are going to be hit hard by this, and certainly we want to see what we can [do], how we can help,” he added.

Nancy Schwartz Sternoff, director of the Dobkin Family Foundation, suspects that more foundations might begin funding “emergency relief” efforts, including clothing, shelter and food, and reducing funding for larger programs of social justice and social change.

“They want to make sure that hungry people get fed, that homeless people get shelter,” she said.

At the Charles and Lynn Schusterman Family Foundation, funding levels are not expected to go down next year. In fact, President Sanford Cardin said that the foundation may look into accelerating certain payments if the economic crisis causes the grantee to have special needs.

“What [foundations] have is money,” Cardin said. “They may have less money today than they had yesterday, but they have the resources, and [the challenge is] to figure out how to allocate the resources they have.”

Cardin sees this as an opportunity for grant makers and grantees to work together to get through these tough economic times. In the long run, he believes, it will make for a stronger philanthropic sector.

Charendoff also seems positive. “If history has shown us anything, it’s that the American Jewish community is remarkably generous, even in tough times and sometimes especially in tough times,” he said. “They manage to surprise us and come through again and again. My bottom line is optimistic.”



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