Five of America’s leading private foundations have pledged to increase their charitable giving by a total of $1.7 billion in order to help address the economic problems stemming from multiple crises engulfing the nation, including the coronavirus pandemic and the social unrest following the recent police killings of George Floyd and other African American citizens.
The Andrew W. Mellon Foundation, the Doris Duke Charitable Foundation, the Ford Foundation, the W. K. Kellogg Foundation and the John D. & Catherine T. MacArthur Foundation have all agreed to boost their giving over the next couple of years, made possible in part by their willingness to borrow money – through issuing bonds – to fund the increased grant-making.
Higher education stands to benefit considerably from the new grants, which will be dedicated to the foundations’ various missions, including racial equity and social justice, arts and culture, higher education, human services, climate solutions, and other services and support for communities hit hardest by the impact of Covid-19.
According to the New York Times, the plan, initiated by Ford, will see some of the foundations go into debt so they can increase their spending without eroding the corpus of their endowments.
Most foundations limit their annual spending to 5% of their endowment’s worth, which is the minimum that federal law requires for them to be tax-exempt. While they have issued bonds in the past to finance projects like building new headquarters, it is virtually unprecedented for them to borrow money in order to increase their grant distributions.
Ford will borrow $1 billion, which it will then promptly distribute to grantees, almost doubling the $520 million it gave out in 2019. Announcing the initiative, Darren Walker, president of the Ford Foundation, said:
“The Ford Foundation recognizes that this once-in-a-century crisis—and the overwhelming need to emerge from it with a more just and equitable society—requires a once-in-a-century response…
Given these intersecting, cascading crises, Ford’s Trustees and I have concluded that we cannot and will not merely pay out what we would in a normal year. We cannot and will not allow this economic crisis to decrease our grantmaking next year or going forward. We cannot do the minimum when faced with maximum threat…
And so, today we’re announcing that, for the first time in Ford’s history, the Board of Trustees has authorized up to $1 billion—financed through the sale of bonds—to help stabilize and strengthen the nonprofit sector…
With this new source of funding, the foundation will make strategic investments in the individuals and organizations that are not just fighting against inequality and injustice but preparing to lead us through a post-coronavirus recovery.”
John D. & Catherine T. MacArthur Foundation
In its announcement, MacArthur indicated that it decided to issue a debt offering in order to increase its annual payment by $125 million over the next three years. MacArthur will issue a taxable bond, underwritten by Morgan Stanley.
“This is unprecedented for us, but these are unprecedented times,” said John Palfrey, president of the MacArthur Foundation, which will start with a $125 million bond offering and then assess whether more is needed.
W. K. Kellog Foundation
The W.K. Kellogg Foundation announced it would increase its payout to nonprofit organizations by $300 million over the next two years. It indicated it was still exploring options for how to generate the additional funds.
“This is a time for leadership and action,” said La June Montgomery Tabron, president and CEO. “We are acting now because of the scale of the crisis facing communities and the nonprofit sector. We can see the effect. We know the level of disruption. As communities combat the pandemic and racial inequities are exposed in social systems, we need to adapt and respond at the same pace our grantees and partners are.
Andrew W. Mellon Foundation
The Mellon Foundation announced that it will dedicate an additional $200 million in grantmaking – on top of its $300 million originally planned for 2020 – for emergency support to non-profits in higher education, the arts, and humanities, helping shore up struggling institutions during the global pandemic.
“We cannot allow the crises of today to sideline the unfinished work needed to move us toward a more robustly engaged, diverse, and culturally inclusive country tomorrow,” said Elizabeth Alexander, President of The Andrew W. Mellon Foundation. “We have a responsibility to ensure ever broader access to the transformative power of higher education to drive our understanding of a complex world, and to make sure we fortify the movement in the arts and humanities toward a more complete reflection and diverse examination of the American cultural fabric.
Doris Duke Charitable Foundation
Duke has authorized $100 million in bonds to fund its grants increase. Ed Henry, President and CEO of the Doris Duke Charitable Foundation said, “Amidst this global crisis, we have the opportunity and obligation to intensify our commitment to addressing inequities to ensure a future that improves on the past. The nonprofit sector is essential to building a just and thriving society, and in this moment, their work is more critical than ever. Working with foundations across the country, we will drive forward with a reinforced dedication to our missions and step up our support to vitally important human services, public health, research, environmental, and arts and cultural organizations.”
According to reporting in the New York Times, several other leading foundations were invited to join the initiative but declined to increase their annual spending. How the nation – and history – will view their decision remains to be seen.