Listen NowThe turmoil on Wall Street has more than banks and businesses on alert. Foundations and nonprofits here in Louisville are bracing themselves for the fallout. WFPL’s Elizabeth Kramer reports.
It was just days after Lehman Brothers filed for the biggest bankruptcy case in U.S. history when the Association of Small Foundations held its annual conference.
“Ninety-four percent of them said that they felt that the recent turmoil was more serious than previous shocks such as the collapse of Enron, the bursting of the dot-com bubble or the decline following the nine eleven attacks,” Walter says. “And actually eighty-four percent of the respondents said that their endowments were down this year, some dramatically.”
Louisville’s foundations are considered small, but, each year, they give away millions of dollars to local nonprofit organizations.
The current financial crisis has local foundations thinking about their investments and how nonprofits they support will weather the storm.
Mason Rummel is paying close attention. She’s with the area’s largest foundation, the James Graham Brown Foundation.
“We’re going to sit and watch it and we’re going to keep talking to our managers about their strategies and why they’re staying where they are,” Rummel.
Rummel and other local foundation leaders say these days they have conservative and highly diversified investment portfolios they hope can counter market shocks. But they point out that any sharp downturn will surely affect future grants.
The news comes at a time when many arts and social service organizations are already dealing with substantial cuts in government funding. The Humana Foundation’s Virginia Judd says that has implications for foundations.
“There’s been a reduction in state funding and national resources are more limited and so I think there’s an expectation that foundations need to step up to the plate,” Judd says.
So, how much money do local foundations give away? In 2007, the Brown Foundation gave more then $20 million, and The Humana Foundation gave more than $8 million. Actors Theatre of Louisville and Brooklawn Child & Family Services both got money.
Brooklawn has programs for emotionally troubled boys, and here Humana Foundation money underwrites drumming classes. Staff member Dennis Roach.
“It helps teach discipline and they enjoy coming in and doing it,” Roach says. “And so they work hard and they work on that level of working on themselves.”
Brooklawn’s president, David Graves, says that the agency has had to scale back because of cuts in government funding and it’s been a clarion call.
“We’ve got to be more efficient,” Graves says. “We’ve got to combine our resources to meet the growing needs. So, we will be in dialogue with other agencies, a way of sharing operations, a way to collaborate.”
In recent years, Brooklawn and other nonprofits have merged staff and programs. It’s a strategy local foundations find encouraging, says the Brown Foundation’s Mason Rummel.
“The pressure’s on now and so the nonprofits are going to have to get very creative, because, while we recognize what’s happened in the whole philanthropic world, we can’t make up for it, even as large as we are,” Rummel says.
Leaders of local foundations and arts and social services say they will be working to tap into that creativity to deal with any future decreases in government and foundation funding that could cut into the bone of their core missions.