January 2009 Letter from the Chair and President
Last year, 2008, was challenging for many non-profits and foundations, including The Overbrook Foundation. We remain committed to the important work of our grantees and we look forward to continuing our support of work in human rights and the environment. However, we are very concerned about the depths of the global financial crisis and the uncertainty it brings. We would like to update you on Overbrook's response to the crisis and to the opportunities the Foundation and our grantees face as we move into 2009 and beyond.
Overbrook is a family foundation started in 1948 by Frank and Helen Altschul. Its directors are descendants of the founders and one non-family director. The family has a long history in investment banking and the Foundation has relied heavily upon equity investment growth to sustain and build the endowment and to fund grantmaking over its 60 year history. Between 1990 and December 2007, the Foundation's fair market value increased from $60.3 million to $187.3 million after paying grants and expenses, growing 6.3% annually. This growth rate does not reflect the Foundation's investment performance as it has been reduced by both grants and expenses. Over this time period, the Foundation made grants of over $100 million.Since 2001, the Foundation's payout has annually exceeded the mandated 5.0% minimum required by the IRS. Between 1990 (the year of its last significant bequest) and the end of 2007 the Foundation was able to fulfill its mission while growing its portfolio faster than inflation.When facing national crises, the Foundation has reached into capital to support emergency grant making. For example, after 9/11, the Foundation made a one-time $1 million commitment to stabilizing New York's non-profit community. More recently, it committed $2.5 million to addressing climate change. We believe the current economic and financial crisis represents another moment in time for the Foundation to step forward.Our endowment experienced great volatility and serious decline in 2008. As of December 31, 2008, the endowment totaled $111.6 million as compared to $187.3 million just one year ago. We know that our grantees have experienced similar challenges; and we are concerned about the implications for support for all nonprofits dependent on fundraising from government, foundations and individuals in 2009. We seek to respond prudently to this very serious financial situation and change in our endowment, while at the same time remaining focused on the work of our grantees around critical concerns and the likely enormous opportunities in human rights and the environment in 2009.We are taking a series of steps to manage through this difficult period that include:
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Honoring our commitments to current Human Rights and Environment Program grantees.
Using a newly created, "by-invitation-only" fund initiated by the Foundation's Directors to take advantage of emerging opportunities for advancing human rights and environment work.
Significantly limiting any other new grant awards to organizations not currently supported by the Foundation.
Structuring the investment portfolio so that 2009 expenses can be met without requiring disposal of equity investments at an inopportune moment.
Instituting a no growth administrative budget for 2009 and planning for additional cuts to administrative expense in 2009 and 2010.
Undertaking an evaluation of all Foundation grantmaking in 2009 in anticipation of the need for further cuts and reorganization of program priorities in 2010 and beyond.
Working with individual grantees on a case by case basis to assist them in whatever ways possible.
Beyond managing the Foundation's grantmaking, the Overbrook Board of Directors expects staff to play an activist leadership role in the philanthropic community. As such, the Foundation's program officers are heavily involved in organizing and managing funder collaborative partnerships such as the U.S. Human Rights Fund and the Civil Marriage Collaborative; creating vital new non-profit organizations to advance change; e.g., Catalog Choice, www.catalogchoice.org, and assuming leadership roles in a variety of foundation associations like the Sustainability Funders Work Group. Through these various efforts, the Foundation has been able to influence the direction of significant philanthropic resources to those issues most central to its human rights and environment mission. We will use all of these mechanisms moving forward to protect and strengthen the fields in which our grantees are active.
Despite the financial crisis and the decline in our endowment, we maintained a 6% payout rate in 2008 and expect to exceed that rate in 2009. But even with an increase in our 2009 payout rate, the Foundation anticipates significant cuts in its total grant expenditures for 2009. It is also likely that we will be forced to absorb further significant cuts in 2010. Because of these anticipated cuts, the Foundation plans to limit awards to very few new grantees in 2009, with one exception, the emerging opportunities fund that is bulleted above. The Foundation's resources will focus on maintaining its mission in support of the environment and human rights.
Our expectation and our goal is that we will preserve the viability of the Foundation and continue to advance its mission as we work through these very difficult times. Despite these challenges, we look forward to working with you in the coming year to move forward a progressive agenda for change.