News and analysis
November 09, 2015

Ford Foundation Spells Out Cuts to Make Way for Its Shift in Focus to Inequality

Doug Mills/The New York Times/Redux

Ford Foundation president Darren Walker

Under a new strategy announced today, the Ford Foundation will double the amount it provides to grantees to cover administrative overhead costs and steer $1 billion over five years toward strengthening social-justice organizations. At the same time, it will cut its support of several initiatives, including LGBT rights in the United States, direct cash transfers in Latin America, and microfinance.

The grant strategy fleshes out a broad shift first laid out in June, when the grant maker announced that it would direct all of its work toward reducing inequality.

"We have had an ongoing dialogue with our current portfolio of grantees about our evolving strategy," said Darren Walker, the foundation’s president. "Those grantees who are being transitioned have already been given notice. We are providing final grants to a number of those organizations."

Consolidation

The foundation has reduced the number of its subject areas from 35 to 15. The cuts will result in about 800 fewer active grants in Ford’s portfolio, which has averaged about 4,000 in recent years. The 15 separate program areas Ford will concentrate on are grouped under the following seven headings: civic engagement and government; gender, racial, and ethnic justice; equitable development; inclusive economies; Internet freedom; youth opportunity and learning; and creativity and free expression.

In a letter posted on Ford’s website, Mr. Walker wrote that decisions on which programs to discontinue were based on how central reducing inequality is to their work, the progress they’ve made in their goals, and the availability of other philanthropic support.

For instance, although Mr. Walker said there was much work to be done domestically to increase opportunities for LGBT people, the foundation will now focus its work on the subject internationally, after spending $67 million in the United States over the past ten years. The reason, he said, is that others have shouldered some of the load.

"The reality is there still remain embedded structural barriers to the advancement of LGBT people in the U.S.," he said. "What has changed is there is more philanthropy directed toward solving the problem."

Redirecting Education Funds

Ford will also cut other domestic programs, including grants to promote religious dialogue in the public sphere, to extend the school day, and to build arts spaces.

Each year for the next five years, Ford plans to dedicate $200 million to strengthening institutions through what it calls its BUILD program. The goal of BUILD is to increase the longevity of social-justice organizations and networks by providing general operating support and buttressing their finances.

Additionally, for each project that Ford supports, it will increase the amount of grants earmarked for administrative expenses from 10 percent of the grant total to 20 percent.

"We have been engaged in this sector in something of a charade," Mr. Walker said, explaining the increase in overhead support. "Because of the power dynamic, our grantees often don’t want to tell us what it actually costs to manage a program."

In his letter, Mr. Walker outlined other changes, including a new office of strategy and learning to help evaluate the grant maker’s work. He also said the board would consider whether to steer its endowment toward investments that could provide social, as well as monetary, benefits.

Mr. Walker said his thinking on mission-related investments has "evolved" and that he no longer finds it defensible to focus only on maximizing endowment returns. The foundation’s trustees, he said, could take up the issue as early as June.

Inquality Takes Center Stage

Over the past few years, inequality has gained footing in the broader national debate, spurred in part by the publication of Thomas Piketty’s Capital in the Twenty-First Century and reflected in the traction Sen. Bernie Sanders, a socialist from Vermont, has gained in his quest for the Democratic presidential nomination. Many foundations, too, have devoted more of their work to addressing inequality.

Ford’s articulation of its inequality strategy marks a major milestone, given its place as the nation’s second-largest private grant maker, with $12.1 billion in assets.

Speaking before Ford’s blueprint was announced, Zoltan Acs, author of Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being, described inequality as a huge challenge, and said that Ford combines a great deal of influence and cash that can make a difference.

He praised Mr. Walker for spelling out the foundation’s mission in an October essay called Toward a New Gospel of Wealth. In it, Mr. Walker revisited Andrew Carnegie’s landmark essay on American philanthropy and described Ford’s responsibility as a creature of capitalism to improve the lives of those in poverty by addressing the systems that perpetuate inequality.

But Mr. Acs said without a clear idea of exactly how inequality will be targeted, the changes at Ford could amount to just rhetoric.

"Yes, we need a new Gospel of Wealth, but how you create that in the 21st century is an interesting question," he said. "Is it education? Is it rebuilding families? Is it prison reform? Is it tax reform?"

Exploring New Ideas

Mr. Walker acknowledged that there are myriad approaches to reducing inequality. He said the foundation remains committed to exploring various program areas, even if they have been cut out of Ford’s current plans. For instance, he said the foundation is unlikely to fund religious studies programs or religious groups that provide direct assistance to the poor. But he said that the foundation is open to supporting religious organizations that work for social justice, are part of broader networks, and seek systemic change.

The goal, he said, of a philanthropic institution that was born from wealth forged in the market was to make sure everyone benefits. "The kind of capitalism we want is the kind that produces shared prosperity," Mr. Walker said. "Philanthropy can contribute to that."

Send an email to Alex Daniels.