Ten days ago, we posted Funders Must Step Up – Right Now! (March 16, 2020).  

That same morning, influential blogger Vu Le had posted Funders, this is the rainy day you have been saving up for. Mr. Le has long been a vocal critic of many foundations’ viewing the five percent payout figure in the tax code as a ceiling instead of what it is: a floor. 

During that week, as most of us were slowly coming around to the horrifying scope and extent of the spread of COVID-19, philanthropy leaders were echoing the call for the nations’ funders to commit to enormous spending and to loosen up their policies and procedures. Mr. Le said it – perhaps – the best: “Foundations, I am begging you, if there was ever a time for you to increase your payout rate and get more money out the door, this is it.”  He called on foundations (and all donors) not to do what they did in the financial crash of 2008 and retrench because of their own market losses.

Happily, these pleas appear to have been heard: foundation leaders in the United States are stepping up in a big way. 

  Funders’ Pledge  

Most significantly, a coalition of foundations has issued A CALL TO ACTION: PHILANTHROPY’S COMMITMENT DURING COVID-19.

In light of this “new normal,” some 390 funders have (so far) signed a pledge of action  making the commitment “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.” 

They also “invite funders and other leaders in the philanthropic sector to join” them.  The pledge document is here on the website of the Council of Foundations. 

Under this pledge that will apply “over the days, weeks, and months ahead, signers will:

  • Loosen or eliminate restrictions on current grants including turning program grants into unrestricted support, paying out funds more quickly, and relieving grantees of penalties for postponed or canceled deliverables.
  • For new grants, switch as much as possible to unrestricted ones so that grantees have as much flexibility as possible to meet the extraordinary needs of their communities.
  • Relax reporting and other demands. 
  • Give funds to the rapid-response community funds popping up around the nation.
  • Invite input into decision making.
  • Listen to grantees and their communities. “We recognize that the best solutions to the manifold crises caused by COVID-19 are not found within foundations.” 
  • “Support, as appropriate, grantee partners advocating for important public policy changes to fight the pandemic and deliver an equitable and just emergency response for all.”
  • Learn from this emergency and adjust funding practices in the future.

   Conclusion

In Top Foundations Unite to Give Charities More Freedom Over Grants (March 19, 2020), Alex Daniels of the Chronicle of Philanthropy reported on the background story of this significant step.

Led by “the Ford Foundation and a group of grant makers that practice ‘trust-based’ philanthropy,” the idea for a temporary pledge “to loosen grant-making restrictions” was floated the week before. The purpose is to “help the nonprofits they support remain financially viable and concentrate on the services they provide.” Mr. Daniels observes that the coalition coming together so rapidly is a remarkable achievement in the philanthropy sector which “has a reputation for a plodding decision-making progress.”