"They are saying, `We are going to take our ball and go home,"' says Peter Skillern, executive director of the Community Reinvestment Association of North Carolina, which received support from the Warner Foundation for its organizing work against predatory lending. "The rest of us are saying, `Well, it is your ball and you've got a right to do that. But the consequences are we are not going to be able to play the game as well."'

"We're not sure what all the implications are. But this does add to the uncomfortable feeling about how many foundations are cutting back," says Kay James, executive director of the Durham Public Education Network. James had hoped that the Warner Foundation's recently adopted focus on closing the achievement gap in public schools made it a natural partner for her group. "The achievement gap has also been our focus for years," she says. "We were looking forward to their gearing up and we're very disappointed that they are now gearing down. It's kind of unusual to have a full staff and no grants for a year and then say you'll have no staff but you will have grants. The flip-flop is huge."

The foundation's assets were also losing some ground. In 2002--a particularly poor year for the stock market--they fell by $2 million, according to financial forms on file with the IRS. Grants that year were 14 percent of assets, while administrative and operating expenses were around 8 percent. But it wasn't just short-term financial pressures that foundation leaders were concerned about. Even if the stock market hadn't taken a $2 million bite out of assets, "we realized we still wouldn't have the money to do what we wanted to do in education," Warner says. "We would have been talking about spending ourselves down in four to five years."

Social conditions & trends
Grants