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Caring in Times of Crisis
For New Haven Foundation's Ginsberg, the job is about more than giving—it's teaching giving
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Business New Haven
6/9/2003
By: BNH
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When William W. Ginsberg returned to New Haven following a stint in the Clinton administration to run the Community Foundation of Greater New Haven in 2000, the economy was going great guns. Now, a declining stock market has pared the Foundation's endowment from a high of $235 million to about $187 million. In a May 22 interview Ginsberg talked with BNH about how new economic realities have changed the way the Foundation - the oldest (dating to 1928) and largest philanthropic institution in a region of more than 20 towns and 600,000 people - views its mission and goes about its vital business.
Demand for the Foundation's help is of course counter-cyclical to the economy. Just how great has that demand been recently since the economy soured?
What we've seen over the last year or so is a greater demand for support from the Foundation across the spectrum of non-profit activity in the region we serve. At the same time [there are] fewer resources - not only at the Foundation, but fewer charitable resources in the community generally. The agencies seeking our support are reporting reduced giving. People are earning less on the assets they have, and so much of the non-profit community now is dependent on public funds, especially state funds. And of course the state budget has seen major cuts for various social service programs. So it's a very difficult time. The word 'crisis' is used frequently in the non-profit community to describe what's taking place.
Is that a word you use?
Well, it's what we're hearing from the non-profits, so it's a word I don't hesitate to use.
So how do you view the challenge - trying to do almost as much with considerably less?
We certainly do think of the challenge differently [than in the past] - not only because of the economic conditions we're in, but also because we've been doing some thinking and planning about our role in the community. This kind of environment makes it all the more important that we think of our role at the Foundation as determining how we mobilize people to give - not just to the Foundation, but to support important non-profit activity in the community in general. For 2003, we decided to focus on issues of hunger and homelessness, and launched a campaign from January to March, which is not traditionally the giving season. We put $100,000 of Foundation matching money on the table and worked with 11 non-profit partners. The idea was to educate the community about how [priorities] had changed. People know the economy is down; they know joblessness is up - but they don't necessarily think about how it affects the neediest, unless it's brought to their attention. So we did that.
How did it turn out?
Between January 1 and the end of March the campaign raised about $175,000 and we threw in our $100,000 match. So about $275,000 was raised to support food and shelter services.
How does a distressed economy force you to think in new and different terms about the Foundation's mission and methods?
One way is to start to think about how to mobilize giving, and use what we know and our non-profit partners know about the community to mobilize giving. And give people the opportunity to give directly, recognizing that the Foundation is an intermediary, and with these kind of services some people may want to give directly to the agencies providing [the services] rather than to an intermediary.
How has the Foundation's asset base held up in stock market decline, and to how great an extent has it affected your ability to give?
At the end of 2002, the endowment was $187 million. Much of the decline is do to spending is due to spending as well as to decline in the value of the assets. Over that period we withdrew about $27 million from the endowment for spending purposes. We have a five-percent spending rule [five percent of the endowment may be spent each year] set by the board. One of the questions that arise in this environment is, Should we continue to spend at five percent? There's an argument to be made that you should in fact increase spending because needs are up. More frequently foundations are decreasing spending for preservation of capital because asset values are declining. We continue to feel that five percent is the right number. We try to provide a steady stream of charitable dollars into the community on an annual basis. Over the long term the goal is that the return on the endowment should be at least adequate to cover inflation and this five-percent spending each year. And over the long term we are achieving that. Since 1995, when the Foundation put its asset-allocation and spending model in place, we have earned 8.8 percent a year, annualized. Inflation over the same period has been 2.7 [percent] on average, plus five-percent spending. So to cover inflation and spending we would have had to earned 7.7 percent a year, and we've done better than that.
Are you seeing a great deal of attrition on the client side - non-profits that can no longer make a go of it with or without help?
I don't think we've seen a lot of groups actually going out of business. If by attrition you mean programs and/or staff being cut - absolutely we're seeing that in many different areas and agencies. But I think that has more to do directly with the state budget than it has to do with charitable giving.
In a down economy, is there an inherent conflict between demand for short-term financial Band-Aids vs. the Foundation's stated goal of helping to build long-term financial stability for its clients?
Last fall in preparing for our annual board retreat and talking about 2003, we started from the proposition that things had changed dramatically on the funding side, in the service side and in the non-profit community generally. We held a series of focus groups, talked and listened to many of the non-profits with which we work - and that's what led to the [hunger and] homelessness [focus] that I mentioned. The strong message that came back from those conversations was that of course people need funding from whatever sources they can get it. But the underlying message was that, notwithstanding the downturn, the Foundation needs to continue to play the role that it's been playing in recent years - continuing to support building the institutional capacity of these agencies. Because that's how you build a stronger non-profit sector that can withstand the inevitable ups and downs in the economy and public funding that are always going to happen. And the Foundation needs to promote philanthropy - because that's how in the end we get more private dollars into these social services. If we turn away from that long-term approach when times are bad, we will be doing ourselves a disservice long-term. Of course, one still has to get through the short term.
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