The COVID economic downturn has nonprofit management shifting into emergency mode. “Putting on the brakes” would be an understatement. Nonprofit sustainability, or the ability to continue delivering relevant social impact over the long term, has always been important to nonprofit leaders. But as the spread of COVID-19 causes upheaval in just about every aspect of society and highlights the deep social inequities many nonprofits are working to address sustainability is becoming even more of a top priority.
Over the past few weeks, we’ve spoken with many nonprofit leaders who are worrying about how they will continue to sustain the important programs and services their organizations deliver. Indeed, a recent survey from LaPiana Consulting found that 93 percent of nonprofit respondents have already had to adapt or curtail services.
Donors to The Rescue
A game changing announcement by the Ford Foundation, however, has nonprofit leadership across the country breathing a sigh of relief.
The Ford Foundation and other top U.S. grant makers plan to give away substantially more this year and next with a plan that includes something exceedingly rare: issuing bonds to boost grant making. Ford plans to issue $1 billion in debt in the form of 30- and 50-year notes. Morgan Stanley, Wells Fargo, and other financial institutions will market and issue Ford's debt that is backed by the foundation’s $14 billion endowment. The plan also involves the MacArthur, Kellogg, Mellon, and Doris Duke foundations. MacArthur plans to issue $125 million in bonds, and the Doris Duke Foundation will issue $100 million in bonds.
Kellogg will boost its payout by $300 million, and Mellon will increase payout by $200 million, although those two foundations haven't determined yet whether they will issue debt to do so.
A Game Changing Commitment
‘“We cannot do the minimum when faced with the overwhelming threat to the survival of nonprofits and, by extension, our democracy. Foundations must use the full arsenal of tools and assets at our disposal, including our flexibility, ingenuity, and longevity. Imagine if each of our institutions distributed three or four extra pennies on the dollar. The impact would be significant," said Darren Walker, President of The Ford Foundation.
Kathleen Enright, CEO of the Council on Foundations, an organization that represents many of the nation's grant makers, said the announcement was the most significant new development in her 25 years working in philanthropy. “This is the shot heard 'round the world,” she said. "Debt financing is a creative, groundbreaking innovation.”
A Heartfelt Thank You
A quick survey of nonprofits we work with here at GVT elicited this response from one nonprofit leader who spoke for many others we talked to:
“In economic times like this, for the biggest donors to not only commit to an increase in funding but to innovate beyond their normal funding mechanisms in order to make that happen, is an overwhelming game changer. Our organization had an emotional reaction when we heard the announcement. It was both surprising and moving and made us realize that a simple “thank you” was not enough. It inspired our entire organization to re-energize our mission to supply nutrition to the millions of food insecure people living right here under our nose in the wealthiest country in the world. With this pandemic, their need is even greater, and our support is more critical. This renewed energy and commitment is our way of saying, “thank you” to the Ford, MacArthur, Kellogg, Mellon, and Doris Duke Foundations, and all the other donors who have stepped up to reach out to the neediest among us during this worldwide health crisis.”