WINSTON-SALEM, N.C. - While grantmaking by the state's largest general-purpose foundation will dip only slightly this year from 2008, the next two years likely will be leaner, the head of the foundation says.
The Z. Smith Reynolds Foundation is funded by two separate trusts that have lost about 40 percent of their value from a high $470 million in late 2007, says Leslie Winner, the foundation's executive director.
Given the relationship between the trusts and the foundation, that asset drop will hit Winston-Salem-based funder over the next two and half years.
"We definitely will keep all our current obligations," including the foundation's few multi-year commitments, Winner says.
She estimates grantmaking this year will be about $16 million, down from about $18 million last year.
Each year, the foundation pays out in grants and expenses 100 percent of what it received the previous year from the trusts, she says.
But the trusts pay the foundation based on their previous year's assets, creating a two-year lag before asset dips are felt fully by grantees.
"Grantmaking will go down in 2010 and more in 2011," says Winner. "What we have worked to do is to make that more like a hill than a cliff."
To help smooth that funding decline, the foundation will "front-pay" some obligations, settling in 2009 commitments that are due in 2011.
It also has trimmed its operating expenses where possible, leaving unfilled two open administrative positions.
But to date, the foundation has kept its 10 full-time employees and two fellows and hasn't cut salaries, although "nobody got a very big raise," says Winner.
The biggest impact of the economy so far, she says, is a spike in grant requests to about 450 this spring from 176 last year.
While the foundation remains committed to giving every application fair consideration, meaning additional work for foundation employees, the increase will have an impact.
"It means we're less likely to do grantmaking around the edges of our focus areas," says Winner, noting that those priorities have not changed.
And although the foundation is trying to sustain its relationship with long-term grantees, it wants to remain open to new ideas.
"We don't want to cut off the opportunity to fund new impactful ideas that area really within our focus areas," says Winner.
That increased focus and an eye toward strategic grantmaking likely will be common among funders during these leaner days, she says, a change that may not be comfortable for the state's nonprofits.
"I think all foundations are more focused on their core interests and giving a push to a results orientation that was already in the air," says Winner. "There will be fewer feel-good grants."
And North Carolina's nonprofit sector could see some contraction, through mergers and consolidations as well as a few closures, she says.
"They will tend to focus more on their core mission," says Winner. "You won't see as much mission creep."
But coming off a fresh round of site visits, Winner says, she is impressed by the fortitude of the state's nonprofit leaders and the important role they play in their communities.
"So we may have to be leaner and smarter," she says of the nonprofit sector. "But it's very important that we survive."