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Managing Philanthropy in a Downturn (Gerer la philanthropie en periode de recession)

10 Pages Posted: 26 Jun 2009  

Maximilian Martin

University of St. Gallen

Date Written: April 2, 2009


This paper analyzes adjustment mechanisms for philanthropic organizations in a downturn. In the global philanthropic community, the current economic context and the difficulty to make sense of it have led donors to review their activities. In the 2008 recession, many foundation endowments have taken a beating in the order of 20-30% of endowment assets. This surfaces emotions and a sense that some expenditure reduction and expenditure switching are inevitable. Even the large "super endowments" that are implicitly seen as a benchmark in the investment community have not been spared. The paper argues that a focus on first principles is the best bet to manage philanthropy safely through a downturn and introduces an adjustment framework. Acknowledging the non-linear world we live in, it argues preserving or regaining what is referred to as the foundation's external and internal balance, defined as the real value of the endowment and the real value of the project portfolio. The paper maps endowment asset class composition, introduces a conceptual adjustment framework and discusses the adjustment experience of the Rockefeller Foundation in previous downturns.

Notes: Downloadable document in French.

Keywords: Foundation, endowment, adjustment, recession

JEL Classification: L31

Suggested Citation

Martin, Maximilian, Managing Philanthropy in a Downturn (Gerer la philanthropie en periode de recession) (April 2, 2009). Available at SSRN: or

Maximilian Martin (Contact Author)

University of St. Gallen ( email )

Tigerbergstrasse 2
St. Gallen, CH-9000

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