Changes made by many of the nation’s largest foundations on an emergency basis to give nonprofits more freedom during the pandemic appear unlikely to stick, with grant makers making few promises that they won’t slip back to their old ways as the impact of the virus wanes, according to a Chronicle review.
The Chronicle looked at giving by the 10 biggest foundations, which represent nearly 12 percent of all philanthropic assets. None of the foundations, except Kellogg, committed to increasing grants in 2021.
Three of the 10 foundations — Ford, Kellogg, and Open Society — joined last year with 800 other grant makers to pledge that they would shift money destined for specific nonprofit programs to general operating support so cash-strapped nonprofits could use the money as they saw fit. They promised to reduce paperwork and site visits and relax reporting on program milestones. And three of the biggest — Ford, Kellogg, and Mellon — added to their grant budgets for the next several years by issuing hundreds of millions of dollars in bonds.
Ford and Kellogg said they would continue offering increased flexibility to grantees. Open Society Foundations, which recently went through a change in leadership, is considering altering its grant- making process; Mellon did not provide that information.
The Bill & Melinda Gates Foundation committed $1.75 billion in response to the pandemic and in some cases allowed grantees more flexibility with their grant dollars. Similarly, the Lilly Endowment increased its grant making by more than $200 million and offered nonprofits relief in grant timelines and application requirements. However, neither Gates nor Lilly plan to extend the new flexibility throughout their grant making or make the changes permanent.
The Robert Wood Johnson Foundation’s response included an increase of $100 million in grants that went largely to community-organizing groups. The foundation dropped many of its reporting requirements and, except for grants to colleges and universities, has increased the amount grantees can use for overhead from 12 percent to 20 percent.
The foundation considered an even bigger bump in grants but decided $100 million struck a balance between the enormous needs of the nonprofits it supports and the ability both of nonprofit workers and the foundation’s own staff to make a difference, says Julie Morita, executive vice president at Robert Wood Johnson. Foundations have much less money to push for social change than the federal government, she says, and need to carefully plan how to make the biggest impact with their limited dollars.
“We could throw a bunch of money out the door, but if it’s not strategic, then what difference does it make?” she says. “Because it’s a drop in the bucket compared to the trillions of dollars that have been mobilized by the federal government.”
Rapid Responses
Open Society Foundations increased its grant making with pledges totaling $200 million to address the fallout from Covid. About 42 percent of the foundation’s grants were multiyear grants in 2020, a decrease from 63 percent the previous year. The reason, says Thomas Hilbink, director of Open Society’s grant-making support group, is that much of the philanthropy’s rapid-response grants were short-term infusions of cash meant to stabilize struggling nonprofits.
The total amount of grant dollars that went to general operating support hit 29 percent in 2020, a relatively high mark compared with its foundation peers but way off the 67 percent notched in 2019. The high proportion of general support that year came largely because the foundation devoted $830 million in general support to the Central European University after it was forced out of Hungary and moved to Vienna.
Both Robert Wood Johnson and Open Society are considering making permanent the changes they made to create a more streamlined process for grant applications and requests for changing the terms of a grant. They are also debating permanent changes that would require fewer progress reports.
The situation at Open Society comes as the foundation undergoes an overhaul of its strategy under new president Mark Malloch-Brown. Hilbink says that the foundation was able to sharply expedite the provision of emergency grants during the pandemic. However Open Society is currently grappling with how to triage those needs when the next emergency develops.
“The stress testing of Covid helped us identify some things that we need to think more deeply on,” Hilbink says. “We got flooded with rapid-response requests in the middle of last year. And if everything’s a priority, all of a sudden nothing’s a priority.”
Bloomberg Philanthropies, which includes the Bloomberg Family Foundation, Michael Bloomberg’s personal philanthropy, and his corporate giving activities, granted $1.6 billion to charities worldwide in 2020, down from $3.3 billion the previous year, when it paid out a $1.8 billion grant, first announced in 2018, to Johns Hopkins University for financial aid.
It didn’t sign the Council on Foundations’ “Call to Action” pledge, but Rachel Nagler, its director of communications, said Bloomberg Philanthropies accommodated requests for grant extensions, budget modifications, and grant conversions to general support and delayed reporting requirements on a “case by case” basis in 2020.
Bloomberg Philanthropies will maintain a flexible position as nonprofits encounter challenges related to the pandemic, Nagler said.
Wide Acceptance
Hilary Pennington, executive vice president for programs at the Ford Foundation and a leading architect of the “Call to Action” pledge, said many more foundations than those that signed it agreed in principle to most of the items in the pledge, but some may have declined to sign over one or two sticking points. So the overall commitment to the principles of the pledge may be even more widespread than the numbers indicate, she said.
However, she acknowledged she wasn’t sure to what extent foundations made wholesale changes in the past year and whether those changes will carry forward.
“How much their actions match the pledge I think is harder to tell,” she says.
The Center for Effective Philanthropy conducted a series of surveys that showed a majority of foundations made changes. Phil Buchanan, the center’s president, says studies the center plans to conduct this summer may help determine to what extent those changes have become a regular feature rather than a reaction in a crisis.
“I’m hesitant to say foundations have changed and that they’re going to be different from now on,” he says.
Here’s a look at what the top 10 foundations did in response to the pandemic and what they plan to do next. While the Chronicle asked each foundation for the same data, not all provided comparable responses and some details came from the grant makers’ websites. The foundations are listed in order of 2018 assets, provided by Candid.
Bill and Melinda Gates Foundation
Assets: $47.8 billion
- How it adjusted its giving: Committed $1.75 billion to the international response to Covid-19, including $680 million for tests, treatments, and vaccines and up to $750 million in financing to underwrite costs to quickly procure medical supplies and scale vaccine production. Gave $8.5 million to nonprofits led by Black and Indigenous people and other people of color through the United Philanthropy Forum’s Momentum Fund.
- How it handled grantee needs for flexibility: In some cases, Gates program officers were given leeway to change grantee reporting requirements and payment schedules.
- What’s carrying forward: Did not make any permanent changes to its grant-making process.
Lilly Endowment
Assets: $16.9 billion
- How it adjusted its giving: Made more than $205 million in Covid-19 response grants from March through the end of the year, including $15 million to help create the Central Indiana Community Covid-19 Economic Relief Fund and $30 million to United Ways in Indiana.
- How it handled grantee needs for flexibility: Expedited grant request procedures and extended matching periods and grant periods for previously awarded grants. Extended the application deadlines for grant efforts to give organizations reeling from the pandemic more time to prepare their applications.
- What’s carrying forward: Has no plans to change its grant-making process.
(The Lilly Endowment is a financial supporter of the Chronicle.)
Ford Foundation
Assets: $13 billion
- How it adjusted its giving: Issued $1 billion in bonds, which allowed it to increase its grant budget by going into debt at a low interest rate rather than taking money from its endowment. 2020 grants totaled $743 million, an increase of nearly $200 million over the previous year. Response grants went to a workers fund to support labor advocacy and make direct payments to laid-off workers, organizations working with survivors of gender based violence, organizing groups transitioning to online work, and community funds to support low-wage workers, immigrants, and artists.
- How it handled grantee needs for flexibility: Increased the amount of money it awarded in unrestricted grants from 76 percent to 84 percent of its grant budget and doubled amounts available to existing grantees and applicants to receive funds on an expedited basis. Converted project grants to general operating support, extended reporting timelines, and front-loaded grants payments.
- What’s carrying forward: Increases in the limits for expedited grants are expected to be made permanent. The foundation made increasing general operating support a long-term priority before the pandemic hit.
Robert Wood Johnson Foundation
Assets: $11.9 billion
- How it adjusted giving: Total charitable expenses in 2020 were about 17 percent higher than the $484.4 million it spent in 2019. Expects to match or exceed that mark this year. The share of grants for general operating support in 2000 jumped to 16 percent over the 6.5 percent mark it hit in 2019. The 2020 figures include $50 million granted in emergency humanitarian aid.
- How it handled grantee needs for flexibility: Shortened the application process in 2020 for certain Covid-related awards and suspended narrative reporting requirements for most awards until further notice. Grantees were allowed to use money earmarked for travel and meetings for general support.
- What’s carrying forward: No decisions on grant-making changes have been made final.
Open Society Foundations
Assets: $10.3 billion
- How it adjusted giving: Committed $200 million in new funding to respond to Covid-19.
- How it handled grantee needs for flexibility: Some of the response, like $20 million Open Society gave to the New York City Covid-19 Immigrant Emergency Relief Program and $2 million to the National Domestic Workers Alliance’s Coronavirus Care Fund, came in the form of direct cash payments to individuals. Fulfilled 1,200 grant amendment requests, a 60 percent increase over 2019, including requests to change project grants to general operating support and grant extensions. Waived reporting and application requirements for general operating support. Sped up its response time to emergency grants. In 2020, 58 percent of its grants were “flexible,” meaning they were for general operating support but were sometimes limited to a large organization’s work in a particular region. The year before, flexible grants totaled 46 percent of Open Society’s grant volume.
- What’s carrying forward: Reviewing its strategy under Mark Malloch-Brown, who took over as the grant maker’s president following Patrick Gaspard’s departure at the end of 2020.
Hewlett Foundation
Assets: $9.7 billion
- How it adjusted giving: Made $10 million in grants for “broad Covid relief” and a one-time grant of $17 million to performing-arts groups in the San Francisco Bay Area.
- How it handled grantee needs for flexibility: Offered flexibility to grantees in all grant-making programs, which included reducing or waiving reporting requirements and converting project based grants to general operating support.
- What’s carrying forward: Hewlett officials say they their grant-making practices were already in line with the Council on Foundations pledge even before it was created. Dana Hovig, who oversees Hewlett’s global development grants, noted roughly two-thirds of Hewlett’s international development grant making was unrestricted before the pandemic.
(Note: the Hewlett Foundation is a financial supporter of the Chronicle.)
Bloomberg Philanthropies
$8.9 billion
- How it adjusted giving: Granted $1.6 billion worldwide in 2020.
- How it handled grantee needs for flexibility: Made accommodations with grantees on reporting deadlines, budget modifications, and grant conversion on a “case-by-case” basis.
- What’s carrying forward: Will emphasize a “flexible” approach to grant making as the pandemic begins to ease and needs change.
W. K. Kellogg Foundation
Assets: $8.6 billion
- How it adjusted giving: Issued $300 million in bonds to increase its payout rate over two years. Made $301 million in grants in its fiscal year that ended in August 2020, up from $294 million in 2019.
- How it handled grantee needs for flexibility: Increased the share of grants for general operating support from 5 percent to 11 percent of all grant dollars. Increased “flexibility” on grant reporting and provided grant extensions of six to 24 months, provided extensions and waivers on grant evaluation reports, and allowed grantees to convert program grants to general operating grants.
- What’s carrying forward: Expects its payout rate to be 7 percent to 7.5 percent this year and next year, largely because of the social bond it issued. This fiscal year the foundation expects to issue an estimated $435 million in grants. Since September, 13 percent of its grant making has been for general operating support. More broadly, Kellogg says it’s staying “flexible” as the situation around the pandemic continues to evolve.
Packard Foundation
Assets: $7.4 billion
- How it adjusted giving: Awarded $477 million in grants last year, up from $333 million in 2019, according to data published by the foundation. Did not provide information on how much was pandemic-related.
- How it handled grantee needs for flexibility: Said it was open to converting project grants to general operating support on request. At the outset of the pandemic, gave all grantees a four-month extension for grant reports.
- What’s carrying forward: In a brief statement, a spokeswoman for Packard said, “We are in the midst of reviewing our current practices and processes, including those that were instituted as part of our Covid-19 response. Our hope is to continue these practices and perhaps adopt additional changes that will best support our grantees.”
Mellon Foundation
Assets: $6.5 billion
- How it adjusted giving: Declined to comment for this article. Increased its grant making from a planned $300 million in 2020 to more than $500 million, with $200 million in grant commitments made to arts and humanities groups, according to news releases. To do so, Mellon issued $300 million in social bonds. Did not provide information on how much spending was Covid-related, although its bond offering was billed as a response to the pandemic.
- How it handled demands for grantee flexibility: No information available.
- What’s carrying forward: Pledged to distribute $500 million again in 2021.
