News that Lloyds TSB Foundation for Scotland is to suspend grant-making indefinitely comes as one of the biggest blows to the UK giving community since we went into recession.

The situation is the result of a rift between Lloyds TSB Bank and the foundation following a move by the bank to change funding arrangements, in the light of the fact they expect to make no profits this year.

The decision by the foundation to suspend grant-making, while honouring its current commitments, is expected to have a huge impact on the 1,200 charities it supports over the next few years. Political leaders are urging the foundation to continue talks with the bank to resolve the situation.

But could the foundation learn anything from American funders? This week a White Paper landed on my desk suggesting it and other grant-makers might.

Smart Funding in Tough Times: Philanthropic Funding in an Economic Downturn is a White Paper produced by the Institute for Philanthropy for Credit Suisse that aims to deliver learnings from US philanthropists and funders.

The paper’s conclusion outlines a number of strategies that have been adopted by those trying to do more with less, and is illustrated by case studies.

These strategies include:

• Building strong relationships with grantees and carrying out research among non-profits to better understand their needs during the recession
• Increasing payout levels in order to avoid cutting grants
• Adopting a spend-out strategy at a time when funds are needed most
• Assuming leadership to become public advocates for the causes they support
• Funding collaboratively to maximise the impact of funds, creativity and dedication of others
• Looking for leveraged points of entry to influence public policy

While the report says the economic downturn has taken its toll on philanthropy, it shows that there is reason to be optimistic. It says, ‘Across the board, the philanthropists profiled showed commitment to supporting their grantees through the downturn and to maintaining a long-term perspective that will enable them to emerge strengthened and focused when these difficult times improve.’

Strategy is clearly the way through these difficult times. Fred Nickols, a financial services expert and ‘performance’ specialist, explores the term strategy in an interesting paper defining it thus: “Strategy and tactics bridge the gap between ends and means.”

The economic situation has widened that gap considerably. But with the sector’s renowned innovation – this week we report on a new strategic tool and a new strategy for giving – it’s unlikely to be a bridge too far.