Nonprofits Brace for Fallout From Lehman Brothers Bankruptcy

In the twelve months ending November 2007, New York City-based Lehman Brothers distributed $39 million in corporate contributions and grants. Earlier this week, however, the fabled financial services firm filed for bankruptcy, causing alarm at nonprofit organizations that depend on its support, Bloomberg.com reports.

Through the Lehman Brothers Foundation, which had assets of $20.9 million as of November 2006, the company supported more than two hundred nonprofits a year, most of them recommended by Lehman employees. One of those, DonorsChoose, an eight-year-old nonprofit that enables individuals to fund projects proposed by New York City public school teachers, was awarded $500,000 — or 7 percent of the organization's most recent operating — by the foundation each of the last three years. Lehman, the nonprofit's largest corporate benefactor, had pledged another $500,000 for 2009, which DonorsChoose founder Charles Best said was key to the organization's anticipated national expansion.

Other New York City beneficiaries include City Harvest, the Fund for Public Schools, and the Robin Hood Foundation, which funds a variety of programs and counts Lehman CEO Richard Fuld among its board members. The company has also contributed $375,000 over the past three years to the international humanitarian group Doctors Without Borders and has pledged $10 million to Spelman College in Atlanta through 2011 to support a new curriculum designed to help boost the number of women in financial services.

Of course, without a parent company to sustain it, the company's foundation eventually will have to shut down, said Rockefeller Philanthropy Advisors CEO Melissa Berman — though perhaps not right away. "If a foundation has a very generous endowment," said Berman, "it can sustain itself for another five years."

Boroff, Philip. “Life After Lehman: Nonprofits Brace Amid Bankruptcy (Update1).” Bloomberg News 9/16/08.

Primary Subject: Philanthropy and Voluntarism
Secondary Subject(s): Economic Crisis
Location(s): National, New York, New York City

FC012436