Fear Not: Foundation Giving to Remain Strong in 2020

I have enjoyed calling the upcoming economic crisis the Great Suppression. This is because the reduced economic activity we are enduring is not caused by anything seriously wrong with the U.S. economy.

The economy is strong. The increased unemployment we are seeing is a side effect of efforts to protect our population from the COVID-19 virus. Accordingly, we can expect the economy to bounce back quickly...especially if the current stay at home orders are reversed soon.

In this crisis, grant writers will be one of the occupational groups to be the least impacted by the economic crisis. Part of the reason is that grant writers are used to working on their own - either in an office or at home. In addition, one of the most significant factors which bodes well for grant writers this year is that the vast majority of foundations, that is the private non-operating foundations, are required to keep making grant and other contributions despite the hardships associated with the COVID-19 virus.

This is called the “payout rule.” With certain exceptions, private non-operating foundations must distribute five percent of the value of their net investment assets each year in the form of grants or eligible administrative expenses, with certain exceptions. The rule was created to prevent foundations from receiving assets but never actually making charitable distributions with them. Remember the donors who established these large foundations received a huge tax break and often tax free income for themselves and their families too. The payout rule is just the government's way of extracting an economic price for these enticing tax benefits. 

This familiar, if complex, rule is getting additional attention from foundations looking at the first quarter of the year amid the economic downturn associated with the COVID-19 pandemic. Grant writers and their employers or clients are undoubtedly asking themselves what do the rules require? And what does this rule mean this year for foundations and the nonprofits dependent upon them?

The good news is that giving in 2020 will not be seriously affected by a slowed economy because distributions must be based on an endowment’s monthly averages throughout the previous year, 2019.  Nevertheless, we should be prepared to deal with the fact that the diminished value of foundation investments at the end of the year and into 2021 could affect giving beyond 2020.

In other words, because of the way complex distribution rules are structured, the short-term outlook for non-profits depending on foundation funding looks very good. In 2021, however, we estimate payouts will drop due to a decline in the stock market associated with a reduction in economic activity connected to COVID-19. 

The bottom line is that foundation payouts will remain strong throughout the rest of the year. It behooves charities to apply for this money now. All things being equal, these same foundations will not be as generous a year from now. Accordingly, it is smart for grant writers to redouble their efforts and maintain their productivity. Ironically, they will be among those least impacted by the crisis and among those most central to mitigating its impact.

Good Reasons for Optimism: Economic Outlook for the U.S. Economy

Even though you might not have any worries about dying from COVID-19, you are wise to worry about its economic implications.

After all, we know for sure that some people are definitely going to be out of work - especially those in non-essential services, travel and live entertainment fields. As far as I can tell, the best numbers out there are predicting we will hit peak U.S. deaths on April 13, 2020. Apparently, the number of deaths will drop to almost nothing at all by the end of June 30, 2020. This means that draconian measures to protect the public by sheltering in place will likely continue at least until the end of May. See the chart below:

Theoretically, the economy might bounce back even sooner if political leaders adopted a strategy where we would isolate the elderly who are most at risk and then let everyone else go on about their business. This way many people will get the virus, most will not even know they had it, and we would end up with a population which is effectively immune from its effects. This is indelicately called "herd immunity." After the herd immunity is in effect, we would expect the elderly and those at greatest risk could come out of their homes and safely mix with everyone else.

This mixing would be all the more safe if we continue to see outstanding progress in the treatment of COVID-19.  On the positive side, we are already seeing how existing treatments - a combination of existing anti-malarial and anti-biotic drugs - may be used to effectively cure the virus, reduce its duration and dramatically reduce deaths.


In the long-run, of course, we will be in great shape because we will have a vaccine that will protect all of us from COVID-19. Unfortunately, the process of creating a vaccine will require about 18 months due to the testing involved. Apparently, this testing is more needed than you might expect because of the possibility that COVID-19 will mutate into something else which cannot be harmed by the vaccine or that the vaccine has some disturbing side effect which might make it worse than the disease.

Largely due to the matters described above, I do have an optimistic take. When I see the people around me in a panicked frame of mind, it seems to me that many of them are imagining an unrealistic scenario where COVID-19 becomes a sustained, unrelenting killer for years on end. This chilling vision is just not a practical reality. It is silly to worry about something that out of line with our historical experience.

On the economic front, I think the pessimists are not showing much faith in our government or our economic system to handle this matter.

Above all, we will not be seeing everyone experiencing what happened in New York City. After all, elsewhere in the country we shut down travel quickly. My wife and I have been sheltering in place for over two weeks now, so we are doing our part to stop the spread of the virus. Likewise, plenty of people will still have jobs and income including government workers, people living on retirement pensions, and those who can effectively work from home...including most of us grant writers

Moveover, certain early theories which made COVID-19 seem more frightening have been debunked including the idea that it floats in the air for a long period of time or the bizarre idea that ordinary masks won't work to stop it.

As I review the economic projections, I'm confident that although COVID-19 will harm the economy it will not produce a profound negative impact. I'm certainly not expecting two quarters of negative growth in the economy. This, by the way, is the working definition of a recession. Why?

First of all, the economy is basically strong. Oil prices are at historic lows. Federal government regulations will be reduced as long as Donald J. Trump remains in office. In a financial crisis like this, we see demand is reduced, but there is no fundamental harm to the economy as you would see in a bank and investment financial sector crisis. Under present circumstances, we should get relief quickly. I suspect that the minute the COVID-19 transmission rate falls beneath 1.0 ...meaning it is dying out...you will see the economy and hiring roaring back. If there is a recession, it will be less deep and will rebound more quickly than if we were dealing with the aftermath of a shooting war, dealing with oil price increases, or enduring a real estate bust, or experiencing financial crisis as we were in the Great Recession of 2008-2009.

Next, it looks like the U.S. economy is better positioned to ride out the COVID-19 crisis than other countries. After all, the US economy is less trade-reliant than some other countries, such as Japan or Germany, which will help to shield us from slowing of external demand.

Third, it seems undeniable that this crisis will harm corporate earnings and negatively impact job creation and unemployment. While these factors will reduce the beneficial aspects of consumer demand, there are reasons to think that consumer demand might drop less than we would normally expect. If parts of the economy are hurting, we can expect those with cash or secure income sources to cash in on the slower economy as they engage in buying of inexpensive properties and consumer goods. Even for those laid off from work, they will have unemployment benefits to lean on. There will also be charities out there providing food and other free services for those who are out of work. There will also be a new federal program which will forgive loans to charities and small businesses provided they can document that this money was spent on paying wages and salaries to their employees.

The folks over at Wells Fargo, for example, still seem bullish on the economy. I reviewed some of their financial guidance and found this snippet regarding the new CARES Act signed into law by president Trump last Friday:

An overriding theme through all these provisions is direct assistance to those whose incomes or revenues are under pressure from the pandemic, and greater flexibility for how and where the Federal Reserve may shore up financial markets. The recent increase in legislative tempo has encouraged financial markets, insofar as the Act allows workers and businesses to bridge the next few months. Most of the provisions of the CARES Act expire between September and December 2020, however. If it takes beyond the third quarter to see a peak in the virus, Congress may need to return with another package.

Ultimately, we believe that the federal government will extend, as necessary, and the economy should rebound by late 2020. Even a strong rebound is possible, once more typical spending rates resume across the economy. Our 12-month outlook is for a rebound in economic growth, earnings growth, and valuations, which should support a broad recovery in equity prices. Yet, beyond the next two years, the implications of today’s strong fiscal and monetary response is likely to include a strong potential for higher tax rates and somewhat higher interest rates, depending upon how much additional economic aid ultimately is added to counter the economic fallout from the virus.

For more on how Drew & Associates can help you tap into that government funding and comply with all the federal requirements, click on this link.

Fourth, I should also mention that there is also a political cycle that will benefit the economy. It usually performs better during an incumbent president's re-election campaign.

The worst thing to do, in my view, is to let fear get the better of you and to slack off on your efforts to bring in business and generate grant letters of inquiry and proposals. Remaining in action is the best possible guarantee that you will not participate in either the health crisis or the economic crisis caused by COVID-19.

Getting in the Zone: Tips for Making the Most of Your New Home Office, Part 1 of 3

Due to the spread of COVID-19 those of us with jobs and businesses will be spending more time working from home. For some, this is a great triumph. I have a friend who told me he thinks this is a harbinger of a brave new world where almost all of us have given up commuting and instead work from the comfort of our dining room table.

As he said, "It makes no sense to drive one hour just to go from one computer screen to another computer screen."

Despite my friend's common-sense observation, I think there is good reason to be cautious about the practicality of working from home. I should know, I've been doing it, off and on, nearly my whole life, as a college student, a graduate student, a young professor, a business owner, and later as a grant writing consultant.

To me, the biggest difference between working at home and working at the office is the different levels of peer pressure you will experience. At the office, much of your motivation and concentration is supported by the social pressures you face to behave yourself in front of your boss and your co-workers. Coming back late from lunch - drunk - will expose you to negative consequences. Working at home, however, you can get away with infractions.

Out of necessity, I have learned some tricks for improving my productivity at home. They boil down to tricks and techniques which improve your productivity in the absence of social pressure. One of my central principles is the necessity of preserving your sense of flow while working from home. To me, flow is the level of concentration and happiness that occurs when you are being most productive at home, it is a mental space where time seems to fly.

Maintaining flow is actually easier at home than it is under the stress of an office. If you concentrate on maintaining flow, then you will be leveraging the advantages of your home office. Potentially, you might find you may be more productive than if you were at the office. Nevertheless, I should warn you implementing these techniques and strategies takes an enormous amount of discipline. All I can say is that it is worth it.

1. Definitely keep track of your hours. For some reason it is very difficult to keep track of the passing of time. It is easy to deceive ourselves about how we spend it. One of the very best things you can do for yourself is set up a spreadsheet and record what you are doing every 15 minutes. You should do this for about two weeks. I think the first week is not really a good measure of how you waste your time because you will most likely be on your best behavior. What you will find is that minor activities like reading the paper, watching the news, or answering e-mails can turn into massive, daily, wastes of time. Keeping track of time will also help you see how little you have of it. 
2. Be realistic about your concentration and focus. I've found that I can only really handle about four hours of sustained writing a day. 
3. Demand quiet and uninterrupted time. This is difficult for some...not so much for me. What loved ones may not realize is that interruptions are huge consumers of time. The lost time is not merely in the act of dealing with the interruption, it is also in getting back into the rhythm and thought patterns of your work - your flow. Ideally, work should be a pleasurable, right-brain activity. You should be concentrating so hard that when you look up you are surprised to see that four hours have passed. That level of concentration cannot be maintained unless you have the active cooperation of those around you. For me, interruptions are physically painful. It hurts me just to think about them right now. 
4. I have found it useful to put up a do not disturb sign on the door to warn my wife off. 
5. Pro-Tip: There is nothing wrong with binge work late at night. I have done this since I was in high school. In the early morning, there are no interruptions because everyone else is asleep. It is quiet and there is nothing to do except work. Once you are on a roll, it sometimes helps to just keep it up. Once your head is into the work, it is unproductive to break your concentration and flow. 
6. Above all, you need to pay attention to ergonomics. This means get yourself a high-quality chair - something way better than what you had at the office. Also, make sure your keyboard is at the right height. Your arms should be level. Definitely get an ergonomic keyboard and use voice recognition software. Take breaks every hour so you do not mess up your back. While you are at it, you should probably make it a habit to look away from the computer monitor occasionally, toward a distant object, to rest your eyes. 
7. Be sure to exercise. Stress in your body distracts your attention and interrupts the state of flow which is essential to keeping yourself, happy, motivated, and taking action in the absence of social pressure.  

For me, the toughest thing about working from home is learning to force yourself to do things you are afraid of or do not want to do. This is where you just have to summon your inner warrior and get it done. Do not be shy about gloating over your superiority when you can force yourself to do unpleasant chores. I like to remind myself that successful people do the things that unsuccessful people do not like to do. Please remember, this is not an easy task. If it was easy to be productive working at home we would not have all these skyscrapers.

Ten Reasons Why Grant Writers Will Thrive Despite COVID-19 Crisis

Thankfully, grant writers will not be participating in the economic stresses created by the COVID-19 pandemic. Below, I will set out my top ten best reasons why grant writers will thrive during this crisis.

1. Grant Writing is Safe. 

Grant writing is an occupation that is well-suited to a dangerous new environment where hand-shaking is discouraged and employees are urged to work at home. It is a productive activity that does not require any face-to-face meetings or exposure. All elements of the grant writing process can be effectively handled by an individual working at home or in a safe, secluded office.

2. Grant Writers are Essential.

Nearly everything of significance in this world must first cross the desk of a grant writer. This is because even in times of crisis paperwork is generated to satisfy the funder's needs for efficiency and accountability. No one just hands out cash. Even now - when the federal government is eager to get more money circulating in the economy - they are demanding we fill out more forms and applications. In sophisticated requests, the grant writer must assemble the research needed to present a project in the best possible light. In my own grant writing consulting business I can report that I am busier than ever before and hiring more staff to assist me in serving our clients.

3. Charities Need Skilled Grant Writers in Tough Times. 

Charities need us no matter what is going on with the economy. After all, there will always be tons of grants available and unrelenting deadlines to meet. Charities are dependent on the skilled labor of a grant writing professional to access billions of dollars in reliable funding from corporations, foundations and governments. There is a particularly urgent need for grant writers who can work quickly. Accordingly, your existing clients or employers will probably make the grant writer the last thing they cut. In fact, if they do cut the grant writer this is a sign that the agency itself will soon most likely go out of business.

4. Funding Sources Remain Strong Even in a Crisis.

In an economic crisis, we can predict that corporate funding may slack off a bit, but foundation funding will remain strong. This is because their income is generated through investments in the stock market and bonds. As long term investors, they are actually making money now by purchasing less expensive stocks. The bottom line is that they are not dependent on the consumers for their financial well-being. Even more significant is the fact that foundations are required to continue making payouts no matter what under IRS regulations. They have to give out 5% of their assets whether or not there is a COVID-19 pandemic.

5. Government Funding is Bigger than Ever. 

Likewise, there is plenty of business out there for grant writers who focus on preparing state and federal grant requests. Given the extent of the pandemic, we can be sure that the government will still be funding grants - even if it has to borrow money to pay for them. After all, political decision-makers are anxious to put money back into the economy, especially to support those who - through no fault of their own - are being prohibited from working their normal jobs. Grant writers are the workers who are most likely to snag significant government grants for their organizations and communities. 

6. Charities Are Running Out of Options in Fundraising.               

There will be plenty of demand for grant writers during this crisis because other fundraising methods are difficult if not impossible to implement right now. Due to social distancing requirements, we can expect most, if not all, charities to cancel large scale fundraising events. They will also have to cut back on major gift fundraising or planned giving...especially in situations which require them to schedule face-to-face meetings with elderly donors. With their other options shut down, charities will be turning to grant writers to keep their charities running strong.

7. Grant Writers Are Needed Despite Short Term Crises.

One of the things that surprised me about being a grant writing consultant is that our work does not seem to follow any seasonal patterns. We seem to be going full tilt all yearlong, slowing down only in December due to the Christmas season. One reason for this continuity is that there is no one set time for government or foundation grant deadlines. These deadlines are all over the calendar. Moreover, many foundations have rolling or quarterly deadlines meaning that you can apply next quarter if you miss this quarter's deadline.

8. Grant Writing Cannot Be Automated.

Likewise, there is no way to automate what grant writers do to reduce labor costs. This work requires swift adaptation to a variety of application formats including on-line applications, letters of inquiry, and full proposals. Government grants have different requirements each year which demand inventive problem-solving. None of this can be accomplished by machines. In fact, due to the importance of clear writing, it is work that is difficult if not impossible to outsource. (Grant research, however, might be automated more in the future.)

9. Historically, Grant Writing is Counter Cyclical.

Even during the Great Recession of 2008-2009, our business remained strong and we kept all our staff working. For the reasons indicated above grant resources remain available even in the worst of times because they tap into both foundation wealth and government resources. In the worst possible case, the government might find itself printing money to help pay for grants. Paradoxically, when times get tough, grant writers are even more in demand because the competition for grant resources increases. Charities which didn't have time for grant writing in the past suddenly find it is just about their only option for winning money in the midst of a crisis.

10. Grant Writers Have Extremely Low Overhead.

Finally, grant writing is not a capital intensive business. It has extremely low overhead. You work at the kitchen table. The start up costs are minimal, typically limited to a high speed computer, a screen, an ergonomic key board, internet connection, cell phone service, and a comfortable chair. I've written grants in airports. I've written them overseas in places like China, Egypt and the Philippines. Due to the low overhead, grant writers are seldom in debt for their capital equipment, supplies or rent. This makes their businesses resilient in times of trouble. Overall, I'm not exaggerating when I say there hasn't been a better time to be a grant writer.