"We were in freefall," CEO and President Emmett Carson said last week. The foundation, a promising merger of Santa Clara County-based Community Foundation Silicon Valley and the Peninsula Community Foundation in San Mateo County, was forced to dip into its emergency reserve funds, he said.
The community foundation was not alone. In 2008 some of the country's largest foundations saw their assets shrink by billions of dollars, according to the Foundation Center, a New York-based research institution on philanthropy.
The Bay Area's largest foundations, William and Flora Hewlett and David and Lucile Packard, saw their endowments shrink by one-third, leaders in those organizations said.
Packard Foundation lost $1.9 billion. Hewlett's endowment dropped by $3.2 billion.
Pitted against those losses were the sudden needs of nonprofit organizations that had lost public and private support. Safety-net nonprofits strained to provide services to the swell of newly jobless and homeless clients.
Like Silicon Valley Community Foundation, philanthropic groups across the nation dipped deeper into their assets than they normally would have to aid struggling nonprofit groups, according to the Foundation Center.
Four years later, many foundations are still rebuilding their assets and rethinking or restructuring their giving. But some are starting to bounce back.
The financial crisis is likely to affect assets and grant making through 2015, keeping them below 2008 levels, according to a November 2011 report by the Foundation Center and the Cricket Island Foundation. Support for social-justice programs has taken the biggest hit, and the trend is likely to continue unless the field sees five years of above-average investment returns.
Two issues have continued to affect endowments and grant giving: the initial downward spike and the recession's length, said Chris DeCardy, vice president and director of programs for the Packard Foundation.
The recession has dragged on for so long that some nonprofits the foundations support are still in crisis, their contingency plans having only addressed the short term, he said.
The foundation did provide multi-year grants so struggling nonprofit organizations would not have to worry about losing funding. It also helped nonprofits reallocate funds to areas of highest need within their organizations, he said.
Packard also worked with nonprofit groups to streamline their operations and train development staff, DeCardy said, a trend the Foundation Center said it saw among roughly one-fourth of organizations it surveyed in 2010. Those foundations said they had developed new programs, including those to help nonprofits restructure and become more fiscally fit.
Although Packard's endowment took a hit, the foundation did not reduce local grants proportionally.
"We had just made a decision to ramp up the direct local grant making from $8 million to $14 million dollars per year. We did not lower it ... because we knew of the impact of the recession," DeCardy said. "The result is that grant making has been held flat for the last few years as the endowment has slowly come back."
Packard in 2008 distributed $331 million but only granted $234 million in 2010, Communications Director Minna Jung said. Last year, the foundation saw an uptick in its grant-making ability, giving $248 million.
Its endowment, meanwhile, totaled $6.4 billion in 2007 but dropped to $4.5 billion in 2008. Recovering slowly, it reached an estimated $5.5 billion last year, according to Jung.
The Hewlett Foundation also cut back on its grant making during the recession.
In 2007 it awarded more than 750 grants, but by 2010 the figure dropped to about 525, according to the foundation's annual reports.
The median grant dropped from $482,778 in 2007 to $135,000 in 2010.
"We were hit pretty hard because as an endowed foundation we don't raise money, we manage assets," Hewlett's Communications Director Eric Brown said.
Hewlett's peak endowment of $9.2 billion dropped to $6 billion in 2008. But assets have been rising and in 2011 totaled approximately $7.2 billion, spokeswoman Elizabeth Kislik said.
During the height of the crisis Hewlett focused on the most vulnerable organizations. It also stuck to its broad goals, such as reducing the worst effects of climate change and support for educational systems, Brown said.
"Now things are coming back, and we can slowly add back some grants," he said.
Hewlett distributed approximately $213 million in 2011, Kislik said, about half of 2007's $427 million.
(2008 was an unusual year in that the foundation distributed $784 million — including $481.5 million to the ClimateWorks Foundation, of which Hewlett is a founding funder.)
Silicon Valley Community Foundation cut staff by 11 percent as a result of the merger and the recession. It spent $1.2 million of its emergency cash reserves over two years to help at-risk nonprofit groups, Carson said.
The foundation stuck with its five new focus areas: middle school mathematics, regional development and planning, financial literacy and economic security (such as addressing payday lending), immigrant integration and an opportunity fund. The lattermost is a catch-all for good ideas for improving the community, he said.
But it also increased funding for social programs such as food and shelter, which came from that fund.
In 2007, the foundation awarded $242 million in grants. By 2010 the sum dropped to $197 million, only to rebound in 2011 to an estimated $234 million, said Rebecca Salner, vice president of marketing and communications.
The foundation's assets turned around in 2011. Gifts representing new funds or additions to existing funds jumped to an estimated $470 million in 2011 from a low of $156 million in 2010.
In 2007, gifts had totaled $292 million.
The foundation now has amassed more than $2 billion in assets. It has paid back some of the funds to its emergency fund, Carson said.
Five years after its birth, Silicon Valley Community Foundation is one of the top-giving foundations in the state and the largest single grant maker to Bay Area nonprofits, Carson said. And it ranks fourth out of the top 10 Bay Area philanthropic foundations in assets, behind Hewlett, Packard and the Gordon and Betty Moore Foundation, according to a June 2011 report by the Foundation Center.
"We've been on the road to a rocky recovery. It's been slow and painful. But our view was that we needed to keep providing support to the community," Carson said.
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