Published online 8 October 2008 | Nature 455, 712-713 (2008) | doi:10.1038/455712b


Charitable bodies hit by credit crisis

But most organizations unaffected as yet.

The ongoing financial crisis in the United States and Europe is hitting major research charities and institutions.

Organizations such as the Wellcome Trust in London and Cold Spring Harbor Laboratory in New York say that their endowments have dropped for the first time in years. And some medical charities are bracing for a decline in big-dollar donations from corporations and wealthy individuals. "The events of the past few weeks are clearly going to have an impact on everybody," says Bruce Stillman, president of Cold Spring Harbor Laboratory.

Still, he and other leaders contacted by Nature are confident that sound financial management and careful planning will allow them to survive the economic crash.

The credit freeze, caused by bad loans in the housing sector in the United States and elsewhere, has brought down several leading banks and insurance companies. The time taken for US Congress to approve a $700-billion bailout package caused markets to fall further still, and governments have been bringing out emergency measures to shore up their economies.

The markets strongly influence trends in charitable giving, according to Patrick Rooney, director of research at Indiana University's Center on Philanthropy in Indianapolis. "When the stock market was growing in double digits in the late 1990s, philanthropy was growing in double digits as well," he says. But during the US recession of 2001–03, charitable giving dropped by a few percentage points each year.

Rooney says that it is probably too early to tell how much the crisis has affected charities and endowments. Nearly one-quarter of donations made by individuals and corporations are made during the autumn and early winter, and any decline in giving won't be felt until spring 2009, he says. He expects that organizations that depend mainly on endowments will fare better than charities, so long as the economic downturn is not sustained. But if the economy slides into recession, he warns, "all bets are off".

Some charities have escaped the international economic downturn unscathed. The Howard Hughes Medical Institute's $19-billion endowment is relatively unchanged compared with August 2007, according to Thomas Cech, the institute's outgoing president. Cech says that only about one-quarter of the endowment is invested in the market and that the losses in recent months have been offset by gains earlier in the year. "We are fully confident that we can meet our upcoming commitments," he says.

But others have been directly affected by the economic turmoil. The Wellcome Trust, the world's largest medical research charity, has seen its endowment drop by 5–10% to about £13 billion (US$23 billion) this year, according to Mark Walport, the charity's director.

Still, Walport says that the Wellcome Trust is not anticipating any need to alter its spending. Like most charities, it gives only a small fraction of its endowment to research each year — around £500 million in 2007. That relatively low rate of spending combined with careful management ahead should allow the charity to continue normal operations. "We are weathering the storm as well as can be expected," Walport says.

Cold Spring Harbor's US$300 million endowment is also down, says Stillman, by an estimated 5% as of 31 July. And the laboratory, which supports a broad range of basic biological science, depends on additional philanthropic and corporate support to fund its roughly $120-million operating budget. Stillman says that the money often comes either directly from Wall Street firms or from wealthy investors. The latest fundraising efforts are on track, he says. But "obviously the situation will affect our income down the road".

Rooney says that corporations may be the first to cut back on their giving. "Corporate donations are largely driven by changes in profitability," he says.


Lean times could be especially difficult for charities that depend entirely on annual donations to fund research. "Donors may raise their bar," warns Deborah Brooks, co-founder of the Michael J. Fox Foundation for Parkinson's Research in New York. Brooks says she thinks that wealthy individual donors will probably continue to give large sums but "their first instinct is to give to fewer people".

Stillman says he expects that Wall Street's woes will have a "significant" effect on research universities and charities across the state. Indeed, one important source of funding has dried up for good. Lehman Brothers, which filed for bankruptcy last month, donated roughly $7 million to biomedical research in 2007. Most of the money went to hospitals and research centres in the New York area, with the largest amount, $6 million, going to Weill Cornell Medical College's Lehman Brothers Lung Cancer Research Center. A spokesperson for the school declined to comment on the centre's future, saying only that it was "grateful for the many years of support by Lehman Brothers". 

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