On Monday, the Wall Street Journal featured an opinion piece by Pablo Eisenberg that took foundations to task for how they support and work with non-profits.  In it, he decried many things in a list of recommendations, but notably the decrease in funding foundations are providing organizations in these troubled economic times.

What stuck out to me was how that is such a good reason for non-profits to have diverse sources of funding.  Too many groups – especially small ones – are either so reliant on a handful of major gifts (including from foundations) or have a full-time staffer dedicated to filling out mountains of foundation grant requests – usually without much success – yet haven’t even thought of an individual giving program.Of course, the chart about 2/3ds of the way down from Giving USA proves that point: about 75% of non-profit money comes from individuals and only 13% from foundations.

One of Mr. Eisenberg’s recommendations was that foundation be required to give more than the 5% of their assets they are now, saying “there’s nothing sacred about perpetuity.”  On Wednesday, the New York Times published an article about just that topic: foundations that are in spend-down mode.  It’s a boon for non-profits in the short-run, but long-term, if a non-profit is completely reliant of their major grant, then they may face trouble in a couple years if they don’t diversify.

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