Could the huge grant-giving community in the United States be made more effective? This question needs addressing now, while both the economy and grant giving are down.

The Foundation Center, in New York, estimates that the 75,000 US foundations gave away $45.5 billion in 2008 — a drop of more than 20% from 2007. Small family foundations have to reduce spending when their investment portfolios are down, but it is also common practice for even large foundations to cut back substantially.

As the grants manager of a small family foundation in New York City, I believe that there's no good excuse for this. When the economy tanks, if big foundations need to dig into capital rather than limit their spending to their legal 5% obligation — often covered by the tax-free income on their investments — then they should. Non-profit money generates jobs and purchases just as for-profit spending does, and government money.

Another widespread problem is that many grant-giving foundations won't accept unsolicited grant proposals from universities and other non-profit organizations, even though they have a duty to support them. Instead, they shop around for the organizations that seem to suit their goals best and then solicit proposals from them.

For example, of the 74 grant-giving foundations supporting diabetes research in the United States, only half accept unsolicited grant proposals, according to the Foundation Center's national database. It's worse in cancer research, with only 121 of 276 grant-giving foundations accepting unsolicited proposals.

Foundations based in California and New York were responsible for 30% of all grant giving in 2007. Among the 40 richest foundations in those states, roughly one-third — who gave away more than $1.4 billion in 2007 — lock their doors to grant-seekers they do not know. Here in New York City, Mayor Bloomberg's $1.5-billion foundation is but one example of an organization that refuses unsolicited proposals.

Huge foundations that give away tens of millions of dollars annually need to reconsider their presumptions that they can consistently find their own way to the most worthy projects. They can't.

So, yes, there are ways in which the US grant-giving community could be more effective. More foundations should spend more than their minimum obligation, particularly when times are tough. And all the larger foundations should review unsolicited proposals, to enhance their effectiveness.