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With its assets down 13 percent, the country’s largest Jewish-focused private foundation announced Wednesday that it was instituting a temporary, four-month moratorium on accepting letters of inquiry regarding proposals for new grants.
The Harry and Jeanette Weinberg Foundation gives out around $100 million annually to support nonprofits that provide direct services to poor and vulnerable populations, with an emphasis on the Jewish community and older adults. But it announced that it would not accept applications between Nov. 4, 2008 and March 31, 2009.
In 2005, the foundation, which also supports Jewish education and other areas of Jewish interest, instituted a two-tiered application process, according to its COO, Rachel Monroe. Those seeking grants must first send a letter of inquiry to foundation staff. If the staff is interested, the foundation invites the grant seekers to submit a formal proposal, which is then reviewed by professional staff and submitted to the foundation’s board of trustees.
The foundation’s corpus grew rapidly with the economic boom of the past seven years, and with it the total number of grants as well as the total amount of dollars distributed each year.
Monroe estimates that next year, the foundation will still give out between $90 million and $100 million. But most of that money has already been approved and allocated — either to aid capital campaigns, or in the form of multi-year operating and program grants. The amount of money already allocated could drop if the grant recipients are not able to meet the fund-raising requirements of the grant.
The decision to effectively put a temporary moratorium on new grants was made in part to give the foundation a chance to evaluate its processes.
"The trustees very much want to take some time to look at a few issues," Monroe told the Fundermentalist. "One, they want to acknowledge there are a substantial amount of grants approved for next year. Two, we have been in this grant-making process for three years and want to evaluate it. And three, the trustees want to assess the economy."
This is a foreboding moment for the Jewish foundation world.
For months, foundation officials have said that Weinberg is uniquely protected from the economic downturn because some 40 percent of its assets are in commercial real estate in Hawaii and in the U.S. mainland. The rest is invested very conservatively.
Still, Weinberg has seen its assets drop from $2.3 billion in 2007 to $2 billion right now – a loss of $300 million, or some 13 percent.
Monroe says that she does not anticipate a huge drop in allocations from the foundation over the next couple of years, providing the recession ends. Last year, this year and next year the foundation has given or will give between $90 and $100 million.
By law foundations are required to give out 5 percent of their assets each year. Many foundations calculate how much that 5 percent is worth based on the value of their endowments from the previous year. Weinberg actually uses a 12-month rolling average for the previous fiscal year of the value of its assets to determine its 5 percent. So unless the recession lasts into 2010, its allocations should remain stable.
But the foundation will not give away more than 5 percent, she said, because barred from doing so under the bylaws set up by Harry Weinberg.
Despite the five-month pause on receiving letters of inquiry, all grants already under review will continue as planned without interruption. In addition, the Maryland Small Grants Program, which will distribute close to $6 million in its first year, will continue without change.
The Fundermentalist is starting to hear multiple reports of foundations cutting back on grants. If you hear of any, please let me know. We are trying to get a read on just how deep the recession is hitting the Jewish nonprofit world.