Tuesday, May 21, 2013
Maine charitable foundations have been hit hard by the international financial crisis and are likely to cut back on the more than $100 million a year they have been spending in Maine.
The financial crisis has eroded the value of philanthropic endowments, and that may have an impact on grant giving for several years as foundations work to rebuild their base.
''They are taking a beating,'' said Janet Henry, president of the Maine Philanthropic Center, of the state's large endowment funds.
Foundation heads have been meeting in recent days to figure out how to deal collectively with the downturn. Many of those in charge of endowments are instituting belt-tightening measures to prepare for the worst, thinking about reductions in their annual giving and acknowledging that they won't be able to take on many new projects.
The challenge to philanthropies couldn't have come at a worse time, officials say. Mainers were already reeling from soaring food and fuel bills, amid declines in the value of their own investments and fears about job security. The need for charitable giving is especially high just as reduced endowments are bringing in less money.
Maine's large endowments generally diversify their investments to weather economic cycles, but the record-setting market declines of the past month will leave no one unscathed, foundation managers say.
''Almost everything is being affected in the current crisis. There is no place to hide,'' said Nancy Brain, executive director of the Sam L. Cohen Foundation, which had an endowment of $44.6 million at the end of last year.
Henry Schmelzer, executive director of the Maine Community Foundation, said he does not know exactly how much value its $245 million endowment has lost since the beginning of the year, but he expects it to be in the double digits.
If the value of the Maine Community Foundation shrank by an optimistic 10 percent, that would mean more than $1 million less to give out, Schmelzer said.
Private philanthropies are required to give away at least 5 percent of their assets each year. While many foundations traditionally spend a much higher percentage, officials at Maine philanthropies say they intend to trim back closer to the 5 percent mark in the future.
Collectively, that could mean millions of dollars less in charitable support for economic development, human services, scholarships and environmental projects in the state.
Libra Foundation President Owen Wells said the foundation, which started the year with a $200 million endowment, will continue to focus on its core projects, including those involving summer camp tuition, children's book distribution and winter sports activities.
''But we will be trimming our sails a bit,'' Wells said. The foundation will not be funding the kind of new start-up, innovative projects that regularly pour into Libra.
Not being able to fund such work will be a loss, he said, because those start-ups often go on to fill major needs in the community, such as the Good Shepherd Food Bank in Auburn, which distributes millions of pounds of food to more than 600 local food pantries annually.
''If someone came to us today and said, 'We want to start a program to drive people who cannot drive themselves to the doctor,' we wouldn't fund that right now,'' Wells said.
Dr. Wendy Wolf of Maine Health Access Foundation said the foundation may hand out fewer grants in the future. Even before the sharp decline in October, the Maine Health Access Foundation's endowment had shrunk from $119 million in August to $109 million in September. Wolf said the foundation also is looking at how to spread its resources more thinly, such as giving out low-interest loans to health centers rather than outright grants. ''So, in time, you get that money back,'' she said.
Schmelzer said the Maine Community Foundation is looking at deferring administrative expenses, trying to persuade wealthy Mainers to step up to the plate and taking other measures to get through the hard times.
''One thing we can do is eat into principal,'' Schmelzer said.
Several foundations say that is exactly what they will do rather than scale back their level of giving.
Sandy Buck, head of the environmentally-focused Horizon Foundation, said this is the wrong time to give less and urged other environmental foundations to keep up their spending. With the real estate market in a slump, now is the ideal time for land preservation or to encourage the resurgence of interest in energy alternatives, he said.
''I like to think of it as an opportunity rather than a time of panic, '' he said.
Staff Writer Beth Quimby can be contacted at 791-6363 or at: