Not-for-Profits losses continue to mount …..A double-barreled attack on their endowment funds….. and their very existence
It seems terribly ironic that staff and directors of some Not-for-Profits, trying valiantly to squeeze out the last few basis points for their cause, were so severely punished by the falling stock market and the Madoff Ponzi scheme.
For some, the damage was the market itself; retaining endowment levels at the prescribed minimum, has become a previously non-existent challenge for Not-for-Profits. Many have fallen below that minimum and now need legislation to ease the legal restrictions. Half the states have responded–26 have enacted laws to loosen spending restrictions, and 21 others have legislation pending. Only three, Kentucky, Louisiana and Florida have failed to act.
While breaching the legal minimum floor for endowments seemed catastrophic to many institutions, others suffered a far more serious investment loss through the Madoff Ponzi scheme. Some have literally suspended all activities and funding and closed their doors. Others are faced with major financial restructuring and fighting for their fiscal lives. Often- times the problem was a major donor who invested with Madoff and thus could no longer support the Not-for-Profit, but some funding institutions were direct investors.
Perhaps some of those “TARP” funds can be used to develop a financial guarantee to protect the funding sources and endowments for Not-for-Profits?
