Cutbacks Take Toll on Programs to Improve Charity Operations

Last year’s decline in foundation assets helped shrink an already reduced pool of money for

organizations that conduct research on philanthropy or provide management assistance to nonprofit groups — two small, but growing, areas of grant making that were receiving increasing interest but may now be in jeopardy.

The David and Lucile Packard Foundation, one of the leading grant makers in those areas, lost more than a third of its assets in 2001 and cut grant making in its Organizational Effectiveness and Philanthropy program from $32-million to $15-million.

Packard’s commitment to the program has not diminished, and the reduction is merely a consequence of lean economic times, said Barbara D. Kibbe, who oversees the effort.

Already Hit Hard

Packard’s cutback takes effect at a time when the amount of money available for nonprofit research and programs to bolster charities’ operations has already been hit hard by the loss of money from Atlantic Philanthropies, in Bermuda, which announced late last year that it will make few or no new grants in those program areas. Atlantic Philanthropies, which was financed by the Irish-American businessman Charles F. Feeney, provides grants to organizations in the United States through the Atlantic Foundation of New York.

Atlantic Philanthropies pulled out because it refocused its giving on aging, medical research, poor children, and public health, said Peter S. McCue, a spokesman for the organization. He added that the assets of Atlantic Philanthropies remained steady at about $4-billion despite the turbulence in the stock market.

In 2000, the Atlantic Foundation of New York distributed $15-million under its Nonprofit Sector, Volunteerism, and Philanthropy program.

Officials from other foundations and Atlantic beneficiaries said the organization had been a longtime grant maker to research organizations and groups that strengthen the operations of charities. Because the group gave anonymously for many years, its contribution to these areas has gone largely unnoticed, they said, but the loss of its contributions will undoubtedly hurt.

(The Atlantic Foundation of New York does not appear on The Chronicle’s main foundation list because it provided its financial information too late to be included.)

Smaller foundations are also reducing their grant making for such activities. The Charles Stewart Mott Foundation, in Flint, Mich., is cutting its grants for the study of philanthropy and strengthening of nonprofit operations from $3.8-million to $2.6-million, said Ray Murphy, director of Mott’s Civil Society Program.

He blamed the cut on a decline last year in Mott’s assets from $2.8-billion to $2.4-billion.

Worried by Losses

The reduction in grants to help charities manage their operations comes as a growing number of foundations are trying to improve the effectiveness of nonprofit organizations, Mr. Murphy said. He and other foundation officials worried that the loss of Atlantic support and the decline in grant making by Packard would undermine the trend.

That same concern afflicts recipients of such grants.

The Nonprofit Research Fund at the Aspen Institute, in Washington, which studies philanthropy and charities, is waiting to hear if it will receive a $50,000 “transition grant” from the Atlantic Foundation to ease the pain of losing the foundation’s long-term support, said Alan Abramson, the research group’s director.

For many years, the fund received about a third of its budget from Atlantic. It also has received grants from Packard, including a $2-million multiple-year grant to study effective philanthropy. Packard expects to fulfill the commitment, but Mr. Abramson is uncertain if other Packard support will be available in the future.

Similarly, the Alliance for Nonprofit Management, in Washington, has received $100,000 from Packard every year since 1998, but is preparing to lose some of that support.

“We’re bracing ourselves,” said Roni Posner, executive director of the organization, which represents consultants and organizations that provide management training to charities. “This whole situation is not Packard’s fault. This is just reality across the board.”

Beyond the immediate impact on grantees, experts said the decisions by Packard and Atlantic would have a serious effect on the broader charity world.

The cutback in funds for research means charities will have less information available to help them run programs, learn about trends, and lobby policy makers.

Atlantic and Packard helped to give charities “the information to do their planning and become more effective and efficient so that policy that affects the nonprofit sector could be built on something besides myth and anecdote,” said Elizabeth T. Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute, in Washington. The center has received funds from both foundations, but Ms. Boris said it has not been immediately affected by the grant makers’ decisions.

The Alliance for Nonprofit Management may raise fees for its management-training courses and increase membership dues to cover the loss of foundation support, said Ms. Posner.

She said she was not surprised that the economic downturn was affecting the fate of her organization and others like it. “We’ve been riding a very high wave,” she said, “and the wave has hit the shore, and we all have to pay for it.”