Recession Squeezes Even Philanthropies of Gates, Allen

Jan 2009
Seattle, United States, January, 14 2009 - Some of the region's biggest givers, who have helped turn Seattle into a center of global philanthropy, are determined to maintain their ambitions. Yet, they are either curbing their planned growth or, in some cases, reducing their giving.

The dreams were audacious, and the money flowing to pursue them set records.

Bill Gates called for eradicating malaria; Nobel Peace Prize winner Muhammad Yunus predicted world poverty would be cut in half by 2015 and eliminated 15 years later; King County vowed to end homelessness within a decade.

Now, an economy mired in severe recession threatens to throw those goals off track.

Some of the region's biggest givers, who have helped turn Seattle into a center of global philanthropy, are determined to maintain their ambitions. Yet, they are either curbing their planned growth or, in some cases, reducing their giving.

The Bill & Melinda Gates Foundation, with assets of $35 billion, is trimming its growth to 10 percent in 2009, compared with a 30 percent expansion last year.

The Paul G. Allen Family Foundation, the charitable arm of the Microsoft co-founder, cut total spending for 2008 by 24 percent, mostly in the last three months of the year. It doesn't expect to increase that amount in 2009.

Today, the Allen Foundation is announcing a shift in strategy to focus on shorter-term needs, such as funding for emergency food banks. The foundation gave away about $22.7 million in 2008, down from $29.9 million in 2007. It aims to spend about as much this year as it did in 2008.

The foundation "is not immune to the current financial crisis," Allen and his sister, Jody Patton, wrote to grantees. The challenges are "managing spending when resources are down, confronting an uncertain future and helping to meet increasing community needs."

At the global level, Gates' goal of eradicating malaria requires significant government funding — about $5 billion a year. And fully controlling malaria will take at least $57 billion over the next decade, according to Roll Back Malaria, a Gates-supported umbrella organization in Geneva.

The financial crisis "has opened up a huge budget deficit and changed some people's view of what we can afford," Gates said last month in a speech to policymakers in Washington, D.C.

The crisis has only increased the need for assistance among the poor, he said.

"In a crisis, there is always a risk that you take your eyes off the future — and you sacrifice long-term investments for near-term gains."

advertisingGates met last month with Vice President-elect Joseph Biden and others on President-elect Obama's transition team to stress the importance of continuing to fund global health and education.

"People in Washington are worried about what can be paid for," said Geoffrey Lamb, the foundation's managing director for public policy. Even so, the talk with Biden was encouraging, he said. "We did not detect any appetite for cutting current levels of assistance."

Some philanthropic efforts are still growing. Seattle now has nearly two dozen organizations dedicated to microfinance, the system created by Bangladeshi banker Yunus to provide small loans to the working poor. Locally, the Gates Foundation and PATH, a global health nonprofit, are continuing to hire.

Still, many local nonprofits are anxious. They rely largely on modest donations from middle-class donors, many of whom are trying to keep their jobs and homes.

In December, a survey released by the U.S. Conference of Mayors reported a 15 percent increase in Seattle homelessness over 2007, and the problem is expected to worsen this year.

People who donated food in the past now are turning up at food banks themselves, said Jared Erlandson, spokesman for United Way of King County. United Way has projected a decline in donations.

World Vision, a Federal Way-based relief-and-development organization, recently conducted a phone campaign to thank donors. The group found many had lost their jobs and others were facing foreclosure, spokesman Dean Owen said.

"There are urgent needs in many places, but the foundation of our work is really long-term development, and we don't want to jeopardize that or compromise that," Owen said. "I don't think we're going to have to, but we don't know yet."

At Social Venture Partners, a Seattle nonprofit that helps wealthy individuals develop philanthropy plans, membership tends to mirror economic swings. The group recently lost 30 members, some because they needed to return to full-time work, director Paul Shoemaker said.

Shoemaker has seen boom-and-bust cycles for more than a decade. Members each contribute $5,700 a year, pooling their money to make grants primarily in childhood development and education.

"Without a doubt, it's a different game now," Shoemaker said. "We're deficit spending this year." Organizations seeking social change on a limited budget are all "going to have to be sharp-eyed business managers and deal with reality as it is, not as you wish it were," he said.

The Allen Foundation will focus on helping nonprofits respond and adjust to the difficult economy, adding a new focus on "relief and recovery."

What likely won't be funded are grants for research, advocacy and capital projects, said foundation Vice President Susan Coliton.

Instead, the foundation will look for ways to make existing programs more cost-effective, she said, such as a $100,000 grant to Food Lifeline.

The money will help create a special fund to purchase fresh produce and meat in bulk, then pass the savings on to individual food banks.


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