2010 Annual Letter to Alaskans
Almost 50 years ago, Alaska's Southcentral communities of Valdez, Seward, Kodiak, and Anchorage were rocked by the largest earthquake ever recorded in North American history. The powerful quake temporarily liquefied soils, destroyed homes, structures and streets, disrupted electric and phone service, ruptured water, sewer and gas lines, and created a 400-mile-an-hour tsunami that reached shores as far away as California and Hawaii. Alaskans of the 1960's had never experienced a natural catastrophe of this magnitude and, in its aftermath, were quick to respond, first to stabilize and second to rebuild the state.
Optimistic and action-oriented Alaskans of all stripes, including my father Elmer, stepped up to lead through the crisis. Elected Mayor of Anchorage six months after the quake, he felt that his pragmatic business experience could be of help during a complex time. In his autobiographical account of the times, "Banking on Alaska: The Story of the National Bank of Alaska," my father explained his approach to dealing with tough challenges: analyze the facts; make decisions in an orderly sequence; break problems down into manageable size; and provide people with the means to take on important tasks. He concluded by observing, "This emphasis on the sharing of the work and the responsibility is the crux of my philosophy of life and management."
The current global recession clearly manifested itself in Fall 2008 and reached its most acute point in March 2009. Most Alaskans, myself included, had never experienced an economic catastrophe of this magnitude. As it unfolded, there was an abundance of fear but no ready answers. Here at the Foundation, as the value of our assets fell quickly, we remained determined to be both optimistic and pragmatic. Guided by the principle of preserving the Foundation's assets for the long-term benefit of Alaska, we made the following assumptions to guide our 2009 work:
- Demand for basic services would climb significantly, challenging staff and pressuring operating budgets as our non-profit community responded;
- Giving by Alaskans – individuals, corporations and foundations – would be largely redirected to meet this increase in demand; therefore support for other nonprofits and individuals would decrease;
- Funding, be it either public or private, for new large capital projects would be sharply curtailed, at least in the short-term;
- Our grantmaking would refocus on needs as opposed to wants until the crisis provided more insight about its ultimate resolution; and
- All grant commitments made in prior years to nonprofit partners but not yet paid would be honored.
Because of the steep decline in asset value, we immediately reduced our operating expenses so that more resources could be redirected to our partners in the form of grants. At the same time, we asked our grantees to share the work and responsibility of improved, real time communication so that we could evaluate the readiness of previously funded projects to take grant payments. We anticipated that many projects funded in prior years could experience delays and wanted to be sure that, in those cases, dollars could be immediately redirected to meet current needs. We owe a debt of gratitude to our partners, all of whom worked proactively with us to map out the year.
While navigating 2009, Rasmuson Foundation paid out $16.2 million to nonprofit organizations across Alaska, the majority of which was granted in prior years. The Foundation approved $4.4 million of new grants. Maintaining its commitment to small capital grants, the Foundation awarded $1,305,199 to human services, health, recreation, cultural activities, and arts projects for 79 projects. The average small grant award was slightly smaller than in previous years, reflecting our nonprofit partners' focus on immediate needs.
During much of 2009, the Foundation did not invite new applications for large grants. The reduction in other sources of funding that typically help make these new projects possible coupled with our commitment to act cautiously until the market began to sort itself was complemented by the nonprofit community's recognition that subsequent years might be more opportune for proposing complex projects. However, once the markets stabilized later in the year, we awarded eight new large capital grants totaling $2,275,401.
Our ability to both continue and strengthen our commitment to Alaska relies on well-managed resources. As one might expect, we've spent a significant amount of time reviewing our investment strategy, working hard to understand if and how our assumptions must change in light of both the severity of the downturn and what many are calling the "new normal". I am pleased to say that we remained calm during the depths of the downturn, and were rewarded as our assets recovered slightly, growing from approximately $401 million in January 2009 to $425 million in late December. This 5.2 percent growth was healthy when compared to 2008 which, in contrast, was marked by a steep plunge in the market value of our assets. While we may ultimately adjust components of our investment strategy, its goal of balancing growth with risk minimization will not change.
What will 2010 and beyond look like? Is there such a thing as a "new normal" and, if so, what is it? Events like this recession serve to remind us that, as Danish physicist Niels Bohr observed, "Prediction is very difficult, especially about the future." We will make a series of informed guesses about how 2010 will unfold and yes, we will remain cautious. While the next earthquake and the next financial downturn lurk in the future, and they will perhaps manifest in ways we've not anticipated, Alaskans have consistently and necessarily worked through these kinds of adversity, guided by optimism and an action-orientation, ultimately turning challenge into opportunity. We remain inspired by and committed to working with the many nonprofit organizations and individuals in our state who are dedicated to improving the quality of Alaskan's lives. In the tradition of Alaskans, the Rasmuson Foundation is glad to lend a hand.
Edward B. Rasmuson
May 17, 2010
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