There is an old saying that I will likely repeat in the future: "Once you've seen one foundation, you've seen one foundation."

It's hard to generalize what foundations will do as a field. But I'm being asked fairly often what I think will happen to foundation giving in 2009 in light of the stock market drop.

Between January and the end of August, the Dow Jones Industrial Average had dropped 10%.

As of Friday (Oct. 10) it is down another 26% since Labor Day. 

While there is a relationship between the value of a foundation's assets and its giving budget, it can be complicated by several considerations.  

One issue involves a foundation's total giving budget. In short, since foundations calculate their asset value over many months, the asset value that will show up on the 2008 990-PF will be higher than current levels, though lower than it was in 2007.

The 5% distribution mandate is, as Congress often reminds us, a floor, not a ceiling. And in the Northwest foundations have been generous in this regard. But foundations may find that they want to be closer to that floor than in past years because they will be making their payout from a diminished asset base.

In addition to the overall giving budget tightening, there is another factor that will affect giving to new projects. With the good investment market of the past few years, many foundations made commitments to multi-year projects. Those multi-year commitments will have first call on grants budgets. That means the truly discretionary giving available for new proposals in 2009 may be smaller.

Finally, your organization's experience with foundation giving will have a lot to do with the specfic proposals you submit. If the downturn in the stock market turns into a national or international business slowdown, putting thousands of people out of work, foundations may give priority to proposals addressing food, shelter, and related needs.

Remember that foundations are only one small part of philanthropic giving, and philanthropic giving is only a portion of nonprofit revenues. So look at your organization's income profile: how much do you rely upon government funding? How much on individual donors? What are you hearing from those sectors?