Giving's hard times

As Minnesotans gear up for the season of giving, some of its biggest spenders are evaluating how deep their pockets will be in 2009.

Minnesota's charitable foundations, which granted about $1 billion to social service, education, arts and community groups last year, are grappling with how to respond to the double dilemmas they face. They've lost hundreds of millions of dollars on their own investments this year while demands from cash-strapped agencies continue to grow.

"We have less money to give as community needs are bigger than ever," said John Couchman, vice president of grants and programs for the St. Paul Foundation, which reports a decline of at least $200 million in assets in the first nine months of this year because of downturns in their investments.

"We're not alone," Couchman said. "Everyone in philanthropy has been hit."

The Bush Foundation's investments, for example, dropped from $900 million to $800 million during the first nine months of this year. The Northwest Area Foundation, which focuses on ending poverty, saw investments drop from $480 million to $410 million.

And this was before the October stock market crash.

The McKnight Foundation of Minneapolis, meantime, reports that assets fell $700 million in the first 10 months, diving from $2.3 billion to $1.6 billion. Those numbers do include October's swoon.

"This is significant, and we don't even know where the bottom of this is," said Sandy Vargas, president of the Minneapolis Foundation.

At a meeting at the St. Paul Foundation this week, key foundation leaders concluded nonetheless that their grant-making will not be significantly cut -- at least for now. But giving is likely to decline or remain flat in 2009, which means it won't keep up with demand from local organizations struggling for funding.

"We're asking, 'What are the most important community needs? What are the best strategies? And where are the gaps [in funding]?"' said Bill King, president of the Minnesota Council on Foundations.

With budget constraints in mind, foundations are responding to the economic downturn in different ways, with many putting more focus on core services.

THE OTTO BREMER FOUNDATION of St. Paul last week created an emergency fund, offering up to $100,000 to social service organizations, which will distribute the money to families and individuals in dire need of cash.

The GENERAL MILLS FOUNDATION is looking at ways to expand its anti-hunger initiatives, possibly through more assistance to food banks and direct support to food shelves catering to Minnesota's ethnic communities.

THE ST. PAUL AND MINNEAPOLIS FOUNDATIONS are looking at shifting more focus to basic needs for Minnesotans, such as housing and food.

An example of such a program is The Family Place in St. Paul. It's St. Paul's only day shelter for homeless children and families. The agency offers meals, educational activities for children, a place to shower, do laundry, make phone calls and just relax.

"There aren't a lot of places where a [homeless] man can stay together with his family," said Mark Woods, a young father eating lunch with his wife and three children Thursday. "This is a nice environment. You don't have to worry about people having a fight or getting drunk."

Executive director Margaret Lovejoy said she'd like to hire housing specialists to help her families find permanent housing. Not surprisingly, she supports a tighter foundation focus on basic needs.

"If we had more money, we could do even more," Lovejoy said.

But foundations need to be careful during harsh economic times, said Neal Cuthbert, vice president for programs at the McKnight Foundation.

"It's complicated," Cuthbert said. "If you dig too deep into your assets [to make grants], you have less money to give away in the out years. On the other hand, people are hurting right now."

Jon Pratt, executive director of the Minnesota Council of Nonprofits, said the state's large nonprofit community is particularly reliant on foundations now, as local and state government funding freezes or remains stagnant.

"Foundations are more important in Minnesota than most other states, partly because Minnesota is third in the nation in per capita foundation assets," Pratt said. "Everyone has the same question: What does next year hold?"

Helping charities and nonprofits stay afloat is critical as more and more Minnesotans feel the pain of the economic downturn, said Carleen Rhodes, president of the St. Paul Foundation.

"The charitable sector is not going to get a bailout, so we need to think about what we are going to do to lift it," Rhodes said. "All of us need to recognize this is an important part of the economic recovery."

Jean Hopfensperger • 651-298-1553