September 21, 2009

A few months ago, Houston Endowment published a special comment on the ways in which the current economic crisis had affected its invested assets, grantmaking policies, and future capacity. The crisis has evolved, and it is now appropriate for us to provide a fresh report.

The financial markets have improved considerably from the lows reached in March, but the Foundation’s invested assets remain below their pre-crisis value. From a high of more than $1.7 billion in 2008, the endowment currently stands at approximately $1.4 billion.

Houston Endowment remains sound. Its grantees have been well served over many years by the Foundation’s conservative practices for investment and budgeting. Total new funds available for grants in 2009, at $82.2 million, are slightly greater than in 2008 and have not been reduced from the original budget. As emphasized previously, all outstanding grant commitments will be paid in full, as scheduled in our agreements with grantees. However, the Foundation’s reduced base of invested assets will most likely provide less new money for grantmaking in 2010 and 2011. It is not possible to say exactly how much less, because investment experience for the remainder of 2009 and all through 2010 will affect allocations for those years. Currently, we forecast that new money for grantmaking will be flat to gradually trending downward, perhaps by 10% or more, over the next two or three years.

Because economic conditions are still quite unsettled, the Foundation’s modified approach to grantmaking, outlined in our previous statement, remains in effect.

• While we continue to anticipate making fewer multi-year grant commitments than in the last few years, we suggest that applicants proceed with multi-year requests (if appropriate to the purpose), just as under normal circumstances.

• Houston Endowment continues to welcome grant requests from new applicants. Sound organizations with effective and promising programs that are aligned with the Foundation’s interests to address the needs in the community will be considered for funding.

• The Foundation also continues to consider requests for support of capital projects. It has always been rare that Houston Endowment would provide all needed funding for a capital project, so the ability to execute a project has inevitably depended on the applicant’s ability to raise the balance elsewhere. In this unsettled era, we will continue to evaluate requests for support of capital projects with careful attention to the likelihood of success in raising those funds in the next year or two.

Jesse H. and Mary Gibbs Jones established Houston Endowment to improve life for the people of Greater Houston. The Foundation’s aim is to attain the highest possible gain for the community with the grant dollars available. For over a year, the Foundation has been reviewing strategies and priorities in each program area, as we have also been creating a user-friendly website and on-line application process. The intent is to improve efficiency and to clearly communicate the Foundation’s goals and preferences, so that applicants can submit better applications more easily.

Applications will be standardized based on the type of request (general operating support, project support, capital project, etc.), so that they become more naturally focused on the relevant facts and issues. With this approach and by making better use of technology, we hope to create room for more strategic interactions with applicants.

The new website and online application facility are expected to be ready in early 2010. As development continues, we will ask for feedback and guidance, so we can establish robust tools that will bring the greatest possible benefit to our grantees and to the community. Currently, we are seeking to identify a group of organizations interested in helping us finalize the grant applications we are developing.

Houston Endowment is recruiting approximately twelve organizations to complete the new application questions for their next request. The Foundation will provide online access to the application and assistance with both the content and technical aspects of the request. After completing the request, participating organizations will be asked to give feedback on their experience, which will then be used to further improve the application process. If your organization plans to submit a request for general operating support, project support or a capital expense on or before October 31, 2009, please consider volunteering. Our goal is to receive feedback from a diverse group of organizations representing the breadth of our program areas, and we will accept the first twelve volunteers who meet those needs. If you are interested in participating, please contact Lydia Hickey at lhickey@houstonendowment.org.