Foundations Keeping Word on COVID Flexibility

Most foundations that pledged to loosen or eliminate restrictions on existing grants and reduce what they ask of grantees in response to the COVID-19 pandemic have followed through on that promise.

“Foundations Respond To Crisis: A Moment of Transformation?,” the first in a series of three reports from the Center for Effective Philanthropy (CEP), found that three out of five foundations surveyed said the crises of 2020 pushed them to accelerate change efforts already underway.

The findings presented in the report are based on survey and in-depth interview data collected and analyzed by the Cambridge, Mass.-based CEP. Many of the questions were based on elements of “A Call to Action: Philanthropy’s Commitment During COVID-19.”

The Council on Foundations (CoF) in March launched the pledge for funders to act with “fierce urgency to support our nonprofit partners, as well as the people and communities hit hardest by the impacts of COVID-19.” Nearly 800 signatories pledged to ease or eliminate restrictions on grants, reduce what is asked of grantee partners, invest in the communities most affected, and more.”

More than 800 foundations were surveyed during July and August 2020.

Responses were received from 236 foundations, of which 170 signed the pledge and 66 did not. Another 41 foundations that signed the pledge participated in hour-long, in-depth interviews with CEP.

When the surveys were administered this past summer, 21 percent of respondents had not decided whether they would change their grantmaking level in 2020. Among those that had decided, 72 percent said they had or will increase grantmaking in 2020 beyond what was previously budgeted for the year.

Two-thirds of those surveyed said they loosened or eliminated restrictions on existing grants since the pandemic began while another third had done so before the pandemic. Similar percentages said they reduced what is asked of grantees. Since the pandemic, 57 percent of those surveyed said they’re making new grants as unrestricted as possible compared with 37 percent that said they had implemented the practice before the pandemic.

More than 40 percent of foundations said they increased or will increase this year’s grantmaking budget by between 1 and 10 percent, relative to what was previously budgeted. A comparable number of foundations surveyed said they would increase the budget anywhere from 11 to 50 percent. Fourteen foundations plan to increase by 91 to 100 percent.

“Looking ahead to 2021, especially as nonprofits that received forgivable loans through the federal Payment Protection Program (PPP) spend down that funding, the question of whether foundation grantmaking levels will stay stable, increase, or decrease looms large,” according to the report’s authors, and CEP will track that in a survey next year.

The data gathered from surveys and interviews suggest that foundations are making significant changes in response to the compounded crises of 2020. They are working differently and trying new things, getting more grant dollars out the door, and being more flexible with and tuned into the needs of nonprofits. They are more focused on addressing inequities, especially racial inequities, and ensuring that their work is informed by those closest to the issues.

In the next report in this series, CEP will focus on how foundations say they are supporting those hit hardest by the pandemic, responding to the nation’s “reckoning with racism” and where foundation practice has not yet changed, or not changed enough.

“Many of those interviewed view their changes as long overdue and hope that they continue after the current crises fade. Whether that occurs, of course, remains to be seen. Given the lack of change for so many years prior, only time will tell if these changes are permanently incorporated into foundations’ practices.”