The Costs of Losing Organizations Trusted by Their Communities
Many endowed private foundations are wrestling right now with the question of whether to increase their grant spending from what they originally budgeted, even as their endowment values have shrunk, or whether to prioritize maintaining the future purchasing power of their endowments for the inevitable needs and crises of the future. They’re worrying about the incredible needs they see and the viability of their grantees, but they’re also worrying about the consequences of essentially locking in losses by upping their grant spending.
These are not easy choices.
Along with eight other leaders of philanthropy-serving organizations, I have argued that foundations should consider stepping up their grant spending. “Unprecedented challenges require unprecedented responses — and a casting aside of traditional norms and approaches,” we write in this statement released last Thursday.
There are many arguments to be made about whether to spend out more (as Libra Foundation and Mary Reynolds Babcock Foundation have announced they will) — and if so, how much more — or whether to stay the course of pre-established budgets. Many philanthropic leaders I respect greatly, and with whom CEP works closely, see it differently than I do — and have told me of the long-term costs of increasing their spending.
But what’s most expensive, ultimately? That’s a question some nonprofit leaders working with the most vulnerable are asking. “It will take more money to re-start if we’re not here,” Chitra Hanstad, executive director of World Relief Seattle, told me over the phone Friday. “Think about how much cheaper it is to retain good staff than it is to bring on new ones. It’s the same for organizations.”
World Relief Seattle works with refugees and immigrants and has built a deep trust with that community over four decades. Hanstad, herself an immigrant from India, told me that the refugees, asylum seekers, and others they help “absolutely don’t just survive — they thrive.” She took her job the same day that President Trump took office, and she has adopted a consultative, listening-oriented approach to developing the organization’s services. She has held open “community consultation” meetings that have allowed her and her team to understand and respond to the needs of the people they serve.
Today, in the midst of the COVID-19 crisis, there are burgeoning needs emerging, Hanstad told me. Because the immigrants World Relief Seattle supports typically get their first jobs after arriving in the U.S. in the hospitality industry, they are now reeling from job losses. Hanstad told me how she has forged a partnership with hunger relief agency Northwest Harvest and used a parking lot adjacent to a community garden they established as a drive-thru delivery site for boxes of non-perishable food. They handed out 350 boxes last Wednesday and made another 100 home deliveries. Meanwhile, World Relief Seattle’s employment team is moving fast to help those who have lost jobs to navigate the unemployment system and find new jobs with companies still hiring.
Hanstad spoke of the fear among the people her organization serves, both of COVID-19 and of the Trump Administration’s targeting of immigrants. “Between COVID and the Administration’s hostility to refugees and other immigrants, there’s not a whole lot more that can go wrong,” she said. World Relief Seattle’s 50 staff are shifting their work and approaches to respond to an extraordinary moment, knowing that the population they serve trusts them and feels like “they’ve got nobody else to go to.”
“The community of heroes we serve is incredibly vulnerable during this time, and I spent most of last night with tears flowing down my face,” Hanstad told me in an email a day prior to our conversation last week. “What I cry about is the loss of capacity to serve our community. We are the first line of defense for our participants. They don’t have social safety nets, financial safety nets, and they are losing their jobs.…We are their first call.”
The funding gap Hanstad faces right now is huge for her: $350,000 on a budget of about $4.5 million (but effectively two-thirds of that since the other roughly one-third is pass-through funding they pay out to clients in direct financial assistance). Such a gap, however, may not be huge to a major foundation with a focus on helping immigrants, especially relative to the cost of the organization not being able to continue to do what it is doing. “As an organization that is run by a woman of color and deeply committed to diversity, from the board to the front lines, we often don’t have the access to donors and funding networks that others do,” she confided.
Like some of my co-signatory peers at philanthropy-serving organizations, I have worried over the past week about how some would react to the statement we put out on grant spending, knowing many foundation leaders and board members would not agree with our stance. I recognize foundations are grappling with tough decisions. The size of the hit to the nonprofit sector is beyond even the assets of foundations to solve on their own. Government and individual contributions will be required.
But that doesn’t mean that, from their relatively privileged positions, foundations shouldn’t do more. In fact, they must make tough tradeoffs or risk losing some crucial nonprofits that will be financially sustainable only if they can weather the current moment.
A big part of CEP’s work over nearly two decades has been about lifting up the voices of nonprofit grantees, recognizing the dynamic between funders and the funded that renders direct face-to-face candor difficult, if not impossible — and maybe even more so in a moment with so much on the line.
Right now, whether foundations are hearing the full and stark realities from those they fund or whether grantees are hedging in what they say, Hanstad is hardly alone. Her voice speaks for many.
I hope that in the foundation boardrooms and executive offices where conversations about grantmaking are happening, that voice will be heard. 
Phil Buchanan is president of the Center for Effective Philanthropy (CEP) and author of Giving Done Right: Effective Philanthropy and Making Every Dollar Count, published by PublicAffairs last year. Follow him on Twitter at @philxbuchanan. This is the fourth post in a series.
