Weathering the Storm Together

Nothing tests the soundness of a house like a hurricane. Unfortunately, we don’t really know how well our homes will withstand a storm until one strikes. In 2008, our economic constructs were tested—roof, walls, and foundation—when the economic recession sorely tested our financial infrastructure.

Homeowners, who had taken out deceptively low sub-prime mortgages and over-leveraged their homes with debt, were suddenly faced with plunging home values and spiking monthly payments. In the Hudson Valley and throughout the nation, foreclosures loomed for homeowners from all walks of life—wealthy, middle class, and impoverished alike.

In response, the Dyson Foundation provided $220,000 in funding to the Rural Ulster Preservation Company (RUPCO), Hudson River Housing, and the Legal Services of the Hudson Valley to help create the Hudson Valley Foreclosure Prevention Program. This new partnership quickly began providing a spectrum of services to support those facing the devastating realities associated with foreclosure in Dutchess, Ulster, and Sullivan counties.

As the year wore on, we soon realized that the sub-prime mortgage crisis would not stay contained to a small percentage of homeowners and that these “toxic assets” would soon taint every aspect of the nation’s economic infrastructure. Their ill effects brought down major banking institutions and caused a credit crisis that froze commerce. With stunning speed, the economy contracted violently, dragging down stocks, consumer purchasing, and employment.

No one has been spared. Perhaps cruelest of all, those institutions that catch people before they fall through the proverbial cracks—nonprofit organizations—have seen their donations, grants, and government revenue slow to a trickle just as demand for their services rises. Meanwhile, traditional funders—government, foundations, corporations, and individual donors—have been left devastated financially, unable to ratchet donations upward to match the growing demand for support.

By the end of 2008, the Dyson Foundation’s endowment had shrunk by $118 million, or 33% less than its value in 2007. This significant reduction has cut into the amount we can prudently award to nonprofits without jeopardizing the corpus, the nest egg from which future funds are derived. We have, nonetheless, decided to maintain giving levels to nonprofits located within the Mid-Hudson Valley region of New York State, recognizing that constituent needs and demands for nonprofit services will increase significantly in the coming year.

Late in 2008, as the magnitude of the impending recession took shape, the Foundation began to frame a strategy for dealing with its many negative consequences. We partnered with other regional philanthropic organizations—including the Community Foundation of Dutchess County/Ulster County Community Foundation and the Berkshire Taconic Community Foundation—to plan a series of seminars designed to help nonprofits weather the coming financial storm.

The workshops, presented in the first half of 2009, were presented by industry experts in a number of relevant fields—such as mergers and alliances, finance, technology, and personnel—and given in various locations and times throughout the tri-state region to make them as accessible as possible. We felt every session needed to engender a sense of urgency and be presented with an eye toward helping nonprofits remain solvent without jeopardizing programs and client services.

We also began planning a new set of giving guidelines, so that our diminished resources could be applied where they would be needed the most. We decided to implement this new set of funding priorities early in 2009 in an effort to address the greatest areas of need in a community suddenly beset by rising unemployment and plunging home values. Under the new guidelines, the Foundation’s support will be directed toward safety net programs such as food security, housing, access to basic heath care, and emergency assistance to low income families.

The Foundation, we decided, would no longer fund capital campaigns or capital projects, believing them to be risky for the nonprofits contemplating them at this time of economic uncertainty. We also decided to cease funding to environmental, arts, historical preservation, or cultural organizations for the immediate future.

These are painful choices, especially for a foundation that has toiled for over half a century to achieve a balanced approach to its giving. But they reflect the dire nature of the times and the need to adapt our philanthropy to suit those circumstances. We find ourselves in a time when nonprofit organizations must embrace efficiency, fiscal restraint, collaborative problem-solving, and volunteerism above all else.

We must battle this storm together. Our community’s best assets have always been the remarkable collection of individuals that reside here. It is a time when individual ideas and effort will be needed more than ever to keep the vulnerable among us safe and to keep the institutions we hold dear viable and strong.

Thank you.

Robert Dyson
President