Community foundation sets minimum for grants
New policy guarantees at least 4.25% to be distributed annually
Ottawa Citizen
Friday, Dec. 18, 2009
Page C1
By Mohammed Adam
For the first time, the Community Foundation of Ottawa has changed its grants policy to ensure that, even when the stock market falls, as it did in the recent recession, funding of community groups will continue.
The change was prompted by significant losses in the recent market collapse, which left the foundation in the difficult situation of having to suspend or cut funding to groups at precisely the time they needed support most.
The foundation depends on investment income from its endowments, now valued at about $80 million, to provide millions of dolloars in charitable grants each y ear. It specializes in smaller grants, typically $10,000 or less, to everything from theatre troupes to the Alzheimer Society to the Ottawa Riverkeeper.
The foundation also distributes funds for the Citizen's literacy campaign.
To ensure market conditions don't hold community groups hostage again, the foundation's board has approved a policy guaranteeing at least 4.25 per cent of its endowment funds -- about $3.5 million a year -- will be distributed as grants, irrespective of market conditions. In addition, "flow-through" donations -- gifts from outside donors that are not tied to the endowment and can be spent immediately -- could increase the annual grants.
"We knew that we may again face the prospect of not being able to do the competitive grants program, and we wanted to be able to say, 'We will make grants each and every year regardless of how the market is doing in the short term.' It is a pivotal change," said Scott Wilson, chair of the Community Foundation's board. "We want to help organizations be sustainable, and, if we are not able to make grants in the year they need them the most, we are not being the best we could be for the community."
Wilson said because the foundation was obligated under the terms of the endowment to onlly disburse investment earnings -- but never dip into the capital -- it sought expert advice to ensure the change was legal. In last yar's financial meltdown, the Community Foundatin's endowmnet lost 17.3 per cent of its value, about $15 million of its $92-million investment portfolio. Consequently, the board decided to suspend grants to community groups for 2009, leaving many of the charities it supports facing deficits and program cuts.
Earlier this year, though, with several groups desperate for funds, the foundation managed to find about $2.7 million to give out from dividend and interest income. Community Foundation president Barbara McInnes said that by November, however, the foundation had given 674 grants worth a total of $3.9 million, thanks largely to the generosity of community donors supplementing the foundation's own money. "We saw the generosity of donors in the face of community need," McInnes said.
Beyond finding a way to keep money flowing to needy groups, McInnes said, donors have opened their hearts and wallets and foundation coffers are filling again. So far, the foundation has received about $4.5 million in donations, including 12 gifts of stock, up from five last year. With markets rebouding, the foundation's investments through September rose in value nearly 16 per cent, or a little more than $9 million.
"We've had an exceptionally good year, a fantastic year. People are starting to build the endowment again. The gifts are coming in every day, people are giving as much as they ever have," McInnes said. "We are astonished that we are getting so many donations. It says something about Ottawa that, in a time of need, they dig deep."
The Community Foundation of Ottawa's grants:
- 2006: 617 grants for a total of $3.5 million
- 2007: 728 grants for a total of $4.4 million
- 2008: 810 grants for a total of $4.8 million
- 2009 (through November): 674 grants for a total of $3.9 million
