Beth Collins took over as executive director of the Sisters of St. Joseph Health and Wellness Foundation a few months ahead of the pandemic, and she knew right away she didn’t want to put grantees through the same degrading process she suffered through as a nonprofit leader chasing down foundation dollars.
“I was the one writing the grant and pretzeling my mission to whatever the foundations wanted to hear,” she says about her experience as a regional director of Catholic Charities in West Virginia. “It was like a game.”
So when board members at the Wheeling grant maker sat down last year to discuss changing its grant-making strategy in part to respond to what it learned during a year of Covid and other upheavals, Collins challenged the group to think differently.
“What if we change how we fund,” she asked them, “rather than what we fund?”
The problem with the foundation’s grant-making process, Collins explained to the board, was that it was a time suck.
The foundation had already made some headway simplifying things for nonprofits early in the pandemic. But in response to Collins’s reminder of what grant seekers face every day, the foundation made some permanent changes.
The 12-page applications are gone. Requests for detailed budgets have been tossed aside. The amount of money Collins could send to grantees without the board’s approval nearly doubled, to $50,000 a year. Multiyear grants are available for many nonprofits, and the time the foundation took to review grant requests was cut in half, to three months.
What if we change how we fund, rather than what we fund?
— Beth Collins, executive director of the Sisters of St. Joseph Health and Wellness Foundation
Perhaps most important, the foundation scrapped its grant agreement, which basically consisted of a list of “musts” for nonprofits. Now the foundation also lays out its responsibilities to grantees. It commits to provide training when needed, introduce grantees to other potential supporters, and spread the word when grantees have a job opening.
Sisters of St. Joseph is one of hundreds of foundations that changed how they do business in the past two years.
Within two months of the pandemic reaching the United States, nearly 1,000 grant makers responded to an effort led by the Council on Foundations and others pledging to loosen grant requirements and communicate better with grantees. Following the murder of George Floyd by Minneapolis police in May 2020, many foundations said they would devote more money to support grassroots leaders, particularly nonprofits led by Black people and other people of color that studies show often receive proportionately less foundation support than other organizations.
While nobody has collected up-to-date numbers tracking how many changes have been sustained, two years later, many nonprofit leaders are genuinely impressed with some of the modifications foundations have made. Many applications are easier to complete. Foundations seem interested in listening more and dictating grant requirements less, and nonprofits increasingly have more sway in how grant dollars are spent.
But interviews with more than 30 foundation and nonprofit leaders found that a wariness persists. The changes haven’t been universal. Even foundations that have made moves to streamline requirements for grantees have done so unevenly. They often experiment in only select grant programs rather than making wholesale changes throughout their organizations.
What’s more, there are few signs foundations are making any plans to significantly increase the share of assets they give.
In 2020, foundation grants increased by 16 percent, reaching nearly $89 billion, according to the most recent inflation-adjusted figures collected by Candid, an organization that tracks foundation data. And large grants in response to Covid suggest that trend continued last year. But it is unclear if foundations will keep up the pace. And getting a foundation to provide support for several years is still more of a dream than reality for most nonprofits.
Christopher Gonzales, a top official of 10,000 Degrees, a California education nonprofit, says the newfound leeway from foundations has helped his organization. But he says grant makers “aren’t quite there yet” in providing what his group needs most to grow and plan for the future: multiyear grants.
The only thing that will cause philanthropy to change in the way I wish it would within a five-year period is if we have a reboot.
— Hilary Pennington, executive vice president for programs at the Ford Foundation
“Any time we invest in a community, we want to be really confident that we’re there for the long haul,” he says. “It sends a really great message to our community partners that we’re not just here for a year.”
Philanthropy’s 2020 pivot was an impressive start, but too much has been left undone, says Hilary Pennington, executive vice president for programs at the Ford Foundation and one of the leaders in shaping the Council on Foundations’ pledge. It’s not time for foundations to let up, she says.
Federal Covid payments are now running dry for nonprofits just at a time when they face a surge in demand, rising costs because of inflation, pressure to increase wages in response to the Great Resignation, and many other challenges.
“The only thing that will cause philanthropy to change in the way I wish it would within a five-year period is if we have a reboot,” Pennington says. “Covid helped it, but the freefall that the nonprofit sector will be in as a result of the downturn in the economy may continue to cause us to have to keep asking these questions.”
Endowment Assets
For all the hoopla about the changes foundations have made, nonprofits say something that matters more than anything else is missing: sharing with grant seekers the big run-up in endowment gains most foundations achieved in the past few years of a roaring stock market.
Pleas to increase the share of assets foundations give from their coffers are losing steam, says Ellen Dorsey, executive director of the Wallace Global Fund. In 2020, Wallace increased to 20 percent the share of assets it gives and was part of a group of grant makers and donors that unsuccessfully pushed Congress to pass a plan to require that foundations give at least 10 percent a year for three years, rather than today’s 5 percent a year minimum.
The need for philanthropic cash is still great, Dorsey argues. If social justice, climate change, and pro-democracy leaders don’t get enough support, the movements addressing those issues, which have multiplied over the past two years, will miss a great opportunity to spur change, she says.
“Why would we cut back support now?” she asks. “It’s not as if we’re entering a period of great stability.”
The Pace Center for Girls, a network of centers that provide education and counseling for girls who have experienced trauma, is an example of the types of nonprofits that Pennington and Dorsey are worried about if foundations don’t change their ways.
In 2021, Pace was able to secure nearly $2 million more in annual foundation grants than it did the year before the pandemic. Unlike in previous years, much of the money came without conditions; Pace could use it however it saw fit.
But Pace now faces a new predicament: keeping its health care professionals on the job, says Mary Marx, the nonprofit’s chief executive.
Annual turnover among mental-health workers at Pace Center has reached about 30 percent, a rate Marx says she never dreamed of. She had always assumed retaining staff wouldn’t be a problem because the mission of the nonprofit attracts people with a “calling” to help others.
But an explosion of mental-health needs during the pandemic and the emergence of companies offering new services have made it difficult for a nonprofit to compete. Marx says foundations continue to offer general operating support, which helps Pace set aside more for payroll, but grant makers have not stepped up with larger grants.
“When you’re being offered double your salary somewhere else, people are going to leave,” she says. “We’ve got to be able to address having competitive salaries.”
Grant-Maker Changes
Many of the largest foundations are still evaluating changes they made in response to the pandemic and calls for racial equity. In a survey the Chronicle sent to the 10 biggest foundations, here’s some of what grant makers noted:
We’re much more cautious about what funding we go for now. What that [application] process looks like can tell you a lot about what that partnership will look like.”
— Amber Wallin, executive director of New Mexico Voices for Children
- The Bill & Melinda Gates Foundation is reviewing its grant-making process to make it easier for grantees.
- The Lilly Endowment used to rely primarily on postal correspondence. Since the pandemic, it has increased its use of digital communications.
- Open Society Foundations waived applications and reporting requirements for some grantees in 2021 and is currently reviewing how it can remove bottlenecks that slow down grants.
- The Hewlett Foundation made a $150 million commitment to racial justice, an area it had not formally supported in the past. As part of an effort that preceded the pandemic, more than 60 percent of its grants are unrestricted.
- The W.K. Kellogg Foundation simplified the process for all nonprofits that submit a grant proposal, whether invited or unsolicited. If a nonprofit that sends a pitch is invited to apply, the application consists of just a few questions. Kellogg has committed to closing the loop on the whole process with either a grant award or a denial within 60 days of receiving a full application.
- The Packard Foundation now wires cash to grantees rather than sending a check and accepts applications that nonprofits have provided to other foundations rather than requiring grant seekers to fill out a separate one.
(The Lilly Endowment and Hewlett Foundation are financial supporters of the Chronicle of Philanthropy.)
The announced changes suggest foundations are aware of grievances levied by nonprofits and are highlighting how they’ve changed. But some nonprofits want more follow-through.
Worst Grant Application
Amber Wallin, head of a youth advocacy group, heard a lot from foundations in the early days of the pandemic about how they were going to start listening more to nonprofits and become easier to work with.
Two years later, Wallin, executive director of New Mexico Voices for Children, which receives grants from national and local foundations, says the actual response has varied.
“Some funders have nailed it,” she says. Others, not so much.
Take the national grant maker that last year sent the charity a 30-page application for a $150,000 grant. In it, she says, the foundation posed redundant question after question, required applicants to adhere to a strict word count in each of their responses, and do things like provide “outcome measures” in about 40 categories.
Wallin and other nonprofit leaders that work with New Mexico Voices on projects dubbed the application the worst they had ever seen, she says, declining to name the foundation.
New Mexico Voices didn’t get the money. But the experience helped Wallin consider whether to even apply for similar grants.
“We’re much more cautious about what funding we go for now,” she says. “What that process looks like can tell you a lot about what that partnership will look like.”
Foundations are making some progress, says Sarah Hovseth, development manager at the Good Acre, a Minneapolis nonprofit that offers price supports to small farmers and sells their food locally. Early in the pandemic, some foundations did away with a lot of reporting requirements and quickly moved money to the Good Acre.
But many foundations still seem unreachable, she says.
“There’s a ton of work upfront. They want you to provide all this information and do these interviews, and then they have no interest in creating an ongoing relationship,” she says. “They just want you to submit your reports on time.”
Political backlash may make it hard for grant makers to combat structural racism.
The Good Acre applied for $75,000 in general operating support from the Otto Bremer Trust in 2019. The trust, Hovseth says, acknowledged that the Good Acre had a need for the full $75,000 but provided only $25,000, forcing the nonprofit to hunt for the remainder elsewhere.
The message was, “Come back next year if you do a good job and you haven’t gone bankrupt because we didn’t give you all the money that you asked for. We might give you some more, maybe,” Hovseth says. “That’s one of the most aggravating things in the funding world.”
In 2021, Hovseth reapplied but failed to get another grant. The Good Acre is prohibited from applying again until later this year because of a Bremer rule that nonprofits that are denied a grant cannot reapply for a full calendar year.
Equitable Grant Making
Satonya Fair has a prime vantage point to see both sides of the grant-making process. As president of PEAK Grantmaking, which is a membership organization for people who work in foundations to process grant applications and payments and also relies on foundation support, Fair sees the inner workings of grant-making machinery and experiences the long wait many nonprofits must endure to receive a grant.
Two years after the start of the pandemic, there are worrying signs, Fair says, like long, tedious grant applications for smallish sums — $25,000, for example — that take six months for a foundation to award.
A big indicator of whether a foundation has really changed is whether its staff still goes on “check runs,” Fair says. By not using a digital cash transfer, a foundation that during the peak of the pandemic still used paper checks delivered through the mail required its own staff to come into the office to cut the checks. It depended on mail carriers to risk their health to deliver mail, often to addresses that had been long vacated by small nonprofits.
“People are talking about being an equitable grant maker, and they haven’t even figured out how to make sure that the process of administering funds was actually more efficient,” she says. “Being an equitable grant maker speaks to how quickly you can move funds from point A to point B. Your efficiency can be equity for an organization, especially a small one.”
Still, Fair believes foundation practices are changing. So much so that she tells members of her organization that they should start refreshing their job descriptions to highlight the way they respond and serve the needs of nonprofits. The pandemic, she says, jolted the relationship between foundations and grantees and elevated nonprofits in the eyes of foundation leaders.
“I don’t think that’s going to slide,” she says. “We may not be perfect all the time. We may have more difficult conversations together, but we generally don’t slide back to the transactional after a relationship is formed.”
After several years of a roaring stock market, few foundations have shared their big gains with grant seekers.
Over the first year or so of the pandemic, the Center for Effective Philanthropy tried to determine whether foundations were backsliding. Although the series of surveys the center completed likely attracted foundations eager to showcase changes they had made, they offer solid evidence that practices at many foundations will not default back to pre-pandemic norms, says Phil Buchanan, the center’s president.
The most recent of the reports, based on a survey of 284 foundations conducted in mid-2021, found that a large majority were continuing with changes, like streamlined applications, that they had made during the first year of the pandemic. A similar proportion said they offered more unrestricted support in 2020. Of those, nearly two-thirds said they planned general operating support increases into the future.
Fewer foundations — about one-third of those surveyed — increased the number of grants paid out over many years.
Of all the changes philanthropy has made, the increase in support for organizations led by Black people or supporting racial-equity efforts is perhaps the most tenuous, Buchanan says. The problem, he says, is that foundations may be wary of taking a public stance amid the “orchestrated backlash and fearmongering about critical race theory” and demands for racial justice.
“It becomes more challenging for funders in the face of that backlash to stick with the emphasis that they said they would now be placing on combating structural racism,” he says.
Before the pandemic and the uprisings that followed the murder of George Floyd, a large majority of foundation grants to racial-equity groups were less than $100,000, according to a study by Bridgespan. To really make a difference over the long haul, racial-justice nonprofits need to be endowed with bigger, longer-term grants, says Lyell Sakaue, a principal at Bridgespan and one of the study’s authors.
Too often, he says, Black nonprofit leaders have seen foundations rush to support antiracism efforts and then just as quickly recede.
Sakaue says he doesn’t begrudge the success of large white-led organizations in landing multimillion-dollar fundraising hauls.
“It’s a ton of work, and it means they have a great team,” he says. “But what if other organizations also had great teams and clear pathways to receiving funding?”
One racial-justice organization that has had some success is the Movement for Black Lives, an umbrella organization that supports smaller racial-justice nonprofits nationwide. In the summer of 2020, the organization called for foundations and donors to contribute $50 million.
Charles Long, the group’s manager of resource strategy, declined to provide figures but says fundraising is “on target.”
From the outset, the Movement for Black Lives made it clear that it would work with foundations differently. Rather than file reports with individual grant makers, foundations and donors are invited to quarterly Zoom updates that also serve as a way to educate foundation staff and connect them with people working at the grassroots level.
The movement has also sent out what Long calls an edict for grant makers to stand “shoulder to shoulder” with movement leaders and provide multiyear unrestricted support.
The document asks for a philanthropic relationship that “minimizes and/or eliminates the demand and culture of seeking quantifiable impact and other numerical outcomes — our mission right now is to ensure that as many people are reached as possible. Our focus is on resourceful strategy that impacts as many people as possible — a strategy that is flexible and must remain responsive to need, not numbers.”
The approach has led to more multiyear grants, including one 10-year commitment.
Even knowing what funding is out there is a struggle. Funders are having more closed application processes.
— Makia Green, co-founder of Harriet’s Wildest Dreams
But smaller members of the network aren’t getting the same treatment.
Two years ago, several foundations wanted to provide grants to Makia Green’s fledgling nonprofit, Harriet’s Wildest Dreams, an advocacy organization in Washington, D.C., that supports mutual-aid efforts and the creation of alternative approaches to policing and prisons. After usually just a phone call or two, the money was on its way.
The foundations said that the grants, totaling more than half a million dollars, were just the start. Green had the clear impression that additional support would follow. But since then, Green has heard “crickets.”
“Even knowing what funding is out there is a struggle,” Green says. “Funders are having more closed application processes.”
One foundation, Green says, set up a meeting. Then something came up, and the meeting was canceled. Others said they had closed application processes — Harriet’s Wildest Dreams would have to be invited to apply.
A big goal for the nonprofit is to train 500 leaders in movement work by the 2024 presidential election. Green says the group may not have enough cash to make it.
“I’m looking at a $200,000 gap,” Green says.
Grant-Making Decisions
Among the biggest changes grant seekers have been pushing over the past few years is a shift in decision-making power away from grant makers and trustees only. That’s been slow to happen.
All of these changes are about a shift in power.
— Amoretta Morris, president of Borealis Philanthropy
In early 2020, people from about a dozen foundations were members of the Participatory Grantmakers Community, a network of grant makers that have to varying extents handed grant-making decisions to the people affected by a grant program, according to Candid, a research organization that studies foundations and nonprofits. That number has since ballooned to 800.
The increased number doesn’t mean that many foundations have shifted grant-making decision power. Often a foundation will start by using the process in a certain program area or with a designated fund.
“The more that these funds start, and [if] more people start doing the practice, at least in some way, I’m hopeful that eventually they will integrate it more into their broader giving,” says Sarina Dayal, a research specialist at Candid.
Something similar seems to be happening at the Ford Foundation’s Build program.
The program provides five years of largely unrestricted support to social-justice nonprofits. The foundation committed $1 billion to Build in 2015 and requires that 30 percent of grant budgets across the institution use the approach.
When the idea was unveiled to Ford’s staff in 2015, there were a lot of groans, says Pennington, the Ford executive. Program officers, she says, saw multiyear general-operating-support grants as “money being taken away from them” because they’d have fewer grant decisions to make annually.
When Ford announced an additional $1 billion to the program in 2021, Pennington says the difference was “night and day.” And general-operating-support grants became an accepted practice well beyond Build grantees; about 80 percent of Ford’s grants have no strings attached.
Pooled Funds
Another way foundations have attempted to dip their toes into a new mode of grant making is by joining up with other grant makers to distribute money together through a pooled fund focused on a specific cause. According to a 2021 Bridgespan survey, at least $2 billion in grants are made each year to donor collaborations.
After the murder of George Floyd, many donors and foundations wanted to make long-term grants to racial-justice organizations led by people of color. But, says Amoretta Morris, president of Borealis Philanthropy, they realized they lacked any real connections to the movement.
“We met that need, because we had those relationships,” she says.
In 2021, Borealis landed a total of $82 million in grants, in its nine pooled funds, up from the $50 million it raised in 2020.
Morris hopes the broader dynamic between foundations and nonprofits will change for good. Already, she says, members of the collaborative are increasing their general support grants to projects other than Borealis. But further change won’t be easy, she says. Perhaps the biggest impediment is among foundation board leaders.
“All of these changes are about a shift in power,” she says. “For the boards of those institutions, what that really looks like is giving up power. Giving it in service to the communities that are most impacted. That’s never been easy, no matter what sector you’re doing it in. We’re talking about giving up power, giving up control in our personal lives and in our professional lives. That’s a stretch for us as humans.”
