Five foundations have committed to increase their payouts $1.7 billion within the next three years — mostly through issuing debt versus spending from endowments — to help stabilize nonprofits impacted by the coronavirus pandemic (COVID-19) and social injustice.
The foundations participating in today’s announcement, followed by their anticipated commitment, are:
- Doris Duke Charitable Foundation, up to $100 million;
- Ford Foundation, $1 billion;
- W.K. Kellogg Foundation, $300 million;
- John D. & Catherine T. MacArthur Foundation, $100 million; and,
- Andrew W. Mellon Foundation, $200 million.
Each foundation will determine priorities of the distribution of new funds based on its grantmaking guidelines and priorities. The financial commitment is new funding above the previously approved budgets by each foundation’s boards.
In the coming weeks, each foundation will share its plan and timing of deployment of the new funds. Generally, funds will cover grantmaking aligned with each foundation’s mission, including racial equity and social justice, arts and culture, higher education, human services, and other areas to provide financial support to communities that are most vulnerable and hardest hit by the impact of COVID-19.
The foundations are exploring different mechanisms to generate additional grant funding, including using funds from their endowment or issuing long-term debt.
The Ford Foundation, which has a $12-billion endowment, plans to sell $1 billion in taxable Social Bonds, Series 2020. Net proceeds will enable the foundation to pay out more than 10 percent of the value of its total endowment in 2020 and 2021. Ford will be the first nonprofit foundation in history to offer a labeled Social Bond in the U.S. taxable corporate bond market.
The bond sale will be underwritten by joint lead managers Wells Fargo Securities and Morgan Stanley. The foundation’s Social Bonds have been assigned Aaa/AAA credit ratings from Moody’s Investors Service and Standard & Poor’s, respectively. Sustainalytics has provided a Second Party Opinion on the alignment of the foundation’s Social Bond Framework with the International Capital Market Association’s Social Bond Principles..
Extraordinary times call for extraordinary measures. Learn why we have issued a $1B social bond—the first ever by a foundation—to double our impact and help nonprofits survive the sweeping effects of #COVID19. https://t.co/t29z0WGNEy #OurSocialBond pic.twitter.com/iGGJ3EhV3t
— Ford Foundation (@FordFoundation) June 11, 2020
The MacArthur Foundation explained on its website why it will issue debt rather than spend from its $6.5-billion endowment. “The pandemic has caused significant volatility in the capital markets resulting in a reduction of all foundation and university endowments, including MacArthur’s. Given the likely continued market uncertainty, investment professionals argue against liquidating assets during times like these if we are committed to our fiduciary responsibility of long-term stability and capital preservation for future grantmaking.”
The Mellon Foundation, which has a $6-billion endowment, announced it will dedicate an additional $200 million in grantmaking for emergency support to nonprofits in higher education, the arts, and humanities. That’s on top of $300 million originally planned for 2020, bringing this year’s total to $500 million.
“COVID-19 presents an existential threat to nonprofits, and we must respond in creative and innovative ways,” Ford Foundation President Darren Walker said in a press release. “The pandemic has brought into sharp relief the results of decades of growing inequality. The virus is only compounding that inequality, taking a disproportionate toll on the poor, people of color, immigrants, people with disabilities, and others who were already marginalized before the crisis hit,” he said via the statement. “Our goal for the additional funds is to help shore up, strengthen, and deepen the resilience of key organizations that are advancing the fight against inequality and injustice at a time when the need is greatest.”