Dear Friends:

I write this letter with a dual sense of hope and concern.  The present economic turmoil has left us with new challenges but also created opportunities.  I want to explain to our grantees and other friends, how we plan to address these circumstances.

The S. H. Cowell Foundation, like most investors, has lost a significant amount of money during the last several months.  Yet as our resources have diminished, the needs of California’s poorest children and their families have grown.  As the Foundation tries to reconcile its commitment to strengthening the communities where these children live, learn and play with the realities of a much smaller corpus, our board and staff have had to make some difficult choices.

During 2008, the Foundation’s Board completed a ten-year strategic plan, which is available on this website.  The Board confirmed the effectiveness of place-based grantmaking and concluded that the Foundation’s place-based work remains its best strategy for strengthening communities where children suffer from poverty.  Place-based work requires a long-term commitment to the communities where Cowell invests and the nonprofits and school districts with whom we partner.  In the eight years that Cowell has been pursuing place-based grantmaking, we have invested nearly $47 million in talented and committed nonprofit organizations and public schools working to improve outcomes for kids and families in the communities where we fund.  During each of the past four years, Cowell has invested at least 7 percent of its corpus in support of its vision, far exceeding the standard 5 percent “payout rate” for foundations.

As part of its strategic planning, the Board concluded that multi-year grants play an important role in promoting success because they allow organizations to plan work that exceeds one year and achieves longer-term goals and objectives.  Last year, even as the financial markets worsened, the Board continued to approve multi-year grants because the Foundation’s Board and staff believe in the ability of our grantees to serve children and families and improve communities they serve. 

The Cowell Foundation will meet all of our existing grant commitments and will continue to make new grants in 2009 and 2010.  In fact, although the grants budget will be reduced in terms of dollars, the Foundation estimates that it will pay out 10 percent of its corpus in grants in 2009—by proportion, an increase.  This level of grantmaking will continue to shrink the size of Cowell’s endowment but we are committed to providing all the support we can especially now when grantees may be asked to do more with less.

Given both the Foundation’s long-term commitment to communities and the ongoing tumult in the financial markets, the Board and staff have had to make several difficult decisions about how to balance the needs of our grantees with our mission.  The Foundation will implement the following steps in order to strike a balance between our grantees’ immediate needs and our ability to continue investing in their communities and others like them.

• While the Foundation recognizes the utility of multi-year grants, so long as our grants budgets are reduced and the financial markets remain volatile, we must shift, for the short-term at least, to grants of shorter duration.  We expect most grants in 2009 and 2010 will be awarded for one year.
• The Foundation’s strategic plan set out ambitious goals to grow Cowell’s leadership development grantmaking and to expand dissemination of its grantees’ work and what the Foundation is learning.  While we remain committed to these goals, we will delay their implementation.
• Cowell is actively engaged in place-based grantmaking in 19 communities.  We do not anticipate adding new communities in 2009 or 2010.  We also expect to award most of our grants to prior grantees that are experiencing difficulty navigating this economic environment.
• We have tightened our own belt, cutting administrative costs and working with a reduced staff.

In all other aspects, our grantmaking remains the same. 

• Communication with program staff remains vital.  The Foundation is committed to flexibility and cooperation in working with grantees.  Program staff will continue the Foundation’s highly engaged style of grantmaking.  Let us know how we can help.
• Cowell continues to offer substantial support beyond its grants.  The program officers can provide technical assistance, introduction to other funders, and leadership development opportunities for current grantees. 
• We are always happy to hear from you.  Please send us your comments and suggestions. 

At the beginning of this letter, I said that I had hope as well as concerns.  The economic crisis has inspired foundations, organizations and individuals to consider community needs as never before.  When an entire society feels vulnerable to the vagaries of the financial markets, then we grow in our understanding that a community can only be as successful as its most vulnerable members.  It continues to be a privilege for Cowell to work with those who serve the children and families of northern and central California.

Sincerely yours,

Ann Alpers
February 2009