By Lauren Otis, Staff Writer
The jittery financial markets and economic recession are bad news for foundation endowments and grant recipients alike, but the Princeton Area Community Foundation is doing everything it can to cushion the impact, said Nancy Kieling, president of the PACF.
”There is no safe cover in this current market,” Ms. Kieling said in an interview last week. However, the Lawrence-based PACF pays out grant funds based not on current investment returns, but attempts to smooth out peaks and valleys through the use of payouts calculated using a two-year trailing average.
”Most endowments, whether it is foundations or Princeton University or others, do a payout calculation based not on the value on one date but based on usually a trailing average,” up to five years sometimes, Ms. Kieling said. “We will continue to be a grant maker, we will continue to be as stabile and predictable as we possibly can.”
For the year-to-date period from January to the end of November in 2008, PACF’s long-term investments were down 22.5 percent, Ms. Kieling said. This is a significant drop but less than others in the nonprofit field, and well below the nearly 40 percent drop in the S&P 500 stock index, she said.
At year-end 2007 the PACF had total assets of a little over $55 million, and awarded 731 grants totaling $2,558,174, according to the foundation’s 2007 annual report. Total awards for 2008 may equal or even exceed 2007 levels, Ms. Kieling said, although there is certain to be a decline in ensuing years.
”I think what the world will see in 2009 and 2010 from the foundation sector in general is a trailing down (in grant awards),” Ms. Kieling said.
Because of PACF’s two-year trailing average in calculating grant payouts, the future variation is managed so it “is not a wild gyration,” she said.
The PACF, in person and through its Web site, is seeking to educate grant recipients in how to manage in hard times, with dwindling donations and other negative economic impacts, Ms. Kieling said.
At present the PACF asset allocation for long-term investments is:
• 30 percent of investments in domestic securities;
• 10 percent in international emerging markets;
• 10 percent in international developed markets;
• 25 percent in fixed income;
• 25 percent in “independent return,” defined by the PACF as “investments managed independently of overriding market forces.”
Asked if the PACF intends to change its current asset allocation plan given the current financial markets, Ms. Kieling said, “not really, it was designed to function in good times and bad times.”
