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CORRECTED VERSION - Foundations Trim Staffs After Assets Slide Lower

 

THE NEW YORK TIMES June 21, 2009

By STEPHANIE STROM

Racked by steep declines in the value of their assets, the nation's foundations are paring their staffs in large numbers. The Robert Wood Johnson Foundation was the latest to announce a voluntary severance plan, offered this month to 42 percent of its 250 employees. In May, the Ford Foundationoffered a similar plan to 140 of its 550 staff members. “We need to be an organization whose grant making and administrative costs are those of an institution with $7 billion in assets, rather than one with the $10 billion in assets we had a year ago,” said David J. Morse, vice president for communications at Robert Wood Johnson, pointing out that this is the first time the foundation has had to downsize. Bradford K. Smith, president of the Foundation Center, a research organization, said foundations were resorting to job cuts after having adopted other cost-saving measures, like hiring freezes and reductions in benefits and travel budgets. “Foundations live and die on the strength of their assets,” Mr. Smith said. “With assets down, in some cases dramatically, the only way to restore balance between operating expenses and the amount of money going out the door in grants is by moving dollars out of management and into grants.” The California Endowment cut 44 jobs in December through buyouts and layoffs, partly as a result of a decline in assets and partly because of a change in its strategy. The W. K. Kellogg Foundation has cut more than a dozen jobs by closing offices in Brazil, South Africa and Mississippi. Mr. Smith said, “I think we're just at the beginning of this process,” adding, however, that only about 4,000 of the nation's more than 90,000 foundations had employees other than the founder or family members. To maintain a stable level of grants, most large foundations use a rolling three-year average of their asset value to calculate how much they will give away each year. Thus, grants this year are expected to dip only slightly. Next year, however, the Foundation Center and other analysts expect foundation giving to dive, and foundations are hoping that reducing staff now will help offset the impact of that decline. Robert Wood Johnson, for example, has long worked on health care reform, and now that the issue is taking center stage, the foundation does not want its reduced wealth to affect its role in the debate. It plans to make $450 million in grants this year and would like to make the same amount next year. “To the extent we can, we want to have the same impact we had when our assets were more robust,” Mr. Morse said. The foundation's severance offer went to employees who have a combination of age and years of service adding up to at least 70. In May, the Ford Foundation offered its severance package to employees working in areas where it had the “most excess capacity,” said Marta L. Tellado, Ford's vice president for communications. Ford earlier sliced $22 million from its budget. When the foundation announced a restructuring in April, Luis A. Ubiñas, its president, said the move would not involve staff cuts, but then more money was needed. Officials decided to close offices in Vietnam and Russia, eliminating $5 million in expenses, but wanted to wring another $14 million out of the foundation's costs. “We went back and looked at everything again before we turned to staff adjustments,” Ms. Tellado said. “That was absolutely the last thing we could look at.” Nonetheless, the severance plan has been controversial. Several employees complained that Mr. Ubiñas had rejected a proposal that management take a pay cut instead. “Many of the people who got this package are support staff ' women, single parents, African-Americans,” said one employee who was offered a severance package but was unsure about taking it and thus requested anonymity. “These people have limited recourse because it's been made fairly clear that if this isn't accepted, the next offer, if there is one, will be much worse.” Others questioned why so few managers had been offered the package, saying that only 3 percent of those receiving it were in the upper tiers of foundation employees. “They're the ones who make the big salaries at this place,” said another employee who was considering whether to take the severance package. Ms. Tellado emphasized that the package was voluntary and said no decision had been made about what number of positions was necessary to achieve the additional $14 million in savings. Another spokesman said 29 percent of the staff members receiving the severance offer were African-American. Seven percent of the offers went to managers, Ms. Tellado said, adding that the discrepancy between that number and the figure offered by the critics could have come from different definitions of who is a manager. “We have an extraordinarily diverse work force, with a higher proportion of females and African-Americans in administrative positions,” she said. “After these buyouts, the foundation will be just as diverse as it was before.” She and Mr. Morse of Robert Wood Johnson warned that more staff cuts were possible. “We'll have to wait and see,” Mr. Morse said.

 

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