Seismic Changes in Institutional Philanthropy
Monday, June 29, 2020
Can you feel it? The plates of institutional giving are shifting under our feet. 2020 is proving to be a year of seismic events—the COVID-19 pandemic and resulting economic fallout, the mainstreaming of Black Lives Matter as a global movement, a U.S. presidential election that we can expect will impact nonprofit fundraising more than in other election years—that are changing life, and also philanthropy, as we've known it.
COVID Crisis Grants
We could not have imagined seeing disruptions of such magnitude to the norms of grant making as we have in mere months: Beginning in March as the coronavirus shut down life as we knew it, foundations across the U.S. and around the world mounted a rapid response to move emergency grant dollars to nonprofits on the front lines of fighting the pandemic—amounting to more than $11.4 billion awarded in COVID crisis grants so far.
Despite such concerted philanthropic response to help organizations through crisis, as well as the appropriation of hundreds of billions of emergency federal grant dollars to nonprofits, the prediction is that many organizations will not survive the coronavirus crisis or even the year.
Some of the nation's wealthiest charitable leaders are determined to see philanthropy do more. In May, a coalition led by the co-chairman of the Wallace Global Fund called on Congress to require foundations to distribute 10% from their assets to charity (up from the 5% required now), rather than see foundations sit on their endowments while nonprofits fail. Following the next month in June, major foundations including Ford, MacArthur, Kellogg, Mellon, and Doris Duke announced they will issue debt in the form of 30- and 50-year notes in order to give more out of their assets in an attempt to save the nonprofit sector from financial demise. Kathleen Enright, CEO of the Council on Foundations, called this move towards debt financing "the shot heard round the world"—or at least the world of philanthropy.
Racial Justice Grants
As spring crested into summer, an uprising of awareness and protest has called philanthropy to another crisis. Coalitions like the Association of Black Foundation Executives have challenged foundations to invest in Black-led organizations, as one step in strengthening Black communities and dismantling the centuries-long emergency of systemic racism in this country—and to remedy a funding disparity that shows nonprofits led by people of color, especially Black women, receive less philanthropic investment than organizations led by whites.
In recent weeks, some grant makers have refocused their grant making or released new grant programs to support initiatives and organizations focused on racial justice. What we have seen so far in our research is that many foundations have good intentions to support organizations confronting racism. We are eager to see these intentions take shape in active, open grant making programs.
To help nonprofits access these resources, the Grants Plus team has created an online resource center of racial justice grants available nationally and in select states. Interested nonprofits may sign up for our racial justice grant alert to be notified when new listings are added.
Changing Tides in Grant Making Practice
We are seeing what I hope is the beginning of a sea change in the field of philanthropy that is overdue. It is encouraging to see grant makers give swift financial support to organizations struggling through layers of crisis, and to begin filling holes that have gaped open far too long. It is not just that they are giving, but how some are loosening the standards and strings that traditionally come with funding—many foundations, for example, forgoing formal grant reports, especially related to emergency COVID grants, and instead trusting grantees to spend the funds as they need. Some other funders have even converted previously restricted grants to unrestricted, so that organizations can pay salaries and keep the lights on.
These are the kinds of limitations that nonprofit leaders have implored funders to consider changing for years: less onerous process, more unrestricted funding, and greater transparency and trust. We can hope this is more than an extraordinary moment and that these actions—small things, simple adjustments when made by a single foundation—will be continued and multiplied by many foundations in ways that meaningfully disrupt power imbalances between grantors and grantees, reduce or even eliminate disparities between more and less mainstream organizations, and have the potential to lead to large and lasting change in grant making practice and culture.
Action Steps for Grant Seekers
But what now? What should grant seeking organizations do immediately? Most importantly, nonprofits must not stop. Organizations must not stop striving to fulfill their missions, and so they must not stop growing their relationships with funders and seeking grants. That is especially because grants are and should increasingly be a lifeline for many organizations. In fact, the Center for Effective Philanthropy released a study in May 2020 that demonstrates that organizations most heavily reliant on foundation grant funding are faring better than organizations that have been heavily dependent on earned income for revenue.
Over recent months, our team at Grants Plus has counseled our clients, and shared advice via a series of free webinars and resource guides, to take the following steps to make the most of their grant seeking efforts in this year of challenge and change:
- Communicate now and often with current grant funders. Existing funders want to see your organization succeed. Be transparent with foundations that already fund your organization to share the ways the COVID-19 crisis has impacted your services, programming, and operations. Enlist them as partners to address deep financial concerns, whether by requesting emergency grants or permission to spend grants flexibly. Do not wait until your challenges become insurmountable to include them in problem solving.
- Focus on sustaining your mission and impact first and protecting budget second. Foundations will look favorably on organizations with the discipline and conviction to prioritize making sure the needs of their clients and/or program beneficiaries are met, even if that means transforming how your organization does so. Take a hard look at your structure and spending. Can you fulfill your mission more efficiently? Are some programs or services dragging down your bottom line—and can you scale back to concentrate on sustaining your core? Engage funders in conversations about collaborations, mergers, and other restructuring that may enable your organization to do more with less.
- Cultivate a post-crisis pipeline. Safeguard your relationships with current funders and build new ones. Invest the time now to create or revise a grants game plan that designates activities and timelines to find new funders, cultivate those relationships, submit proposals, and predict the timing of grant awards. This planning is especially urgent as grants will inevitably become more competitive, in the face of unprecedented need, and as more organizations that have depended on events and other sources of presently-less-viable income turn to grants.
While the ground is not settled, the events so far of 2020 signal that institutional giving, specifically from foundations, remains vital to our sector, and that it may make up a larger part of the philanthropic pie in the months and years to come. We are hopeful that overdue changes like increased focus on giving operating dollars and larger investments to Black-led organizations are here to stay. The future of grant funding is sure to keep changing—but what will not is the importance for nonprofits of having a proactive grants game plan, now more than ever.
Dana is a member of the Executive Team at Grants Plus, a national leader in grant seeking consulting. Grants Plus has secured more than $165 million in grant funding for nonprofit organizations around the country since 2007. Prior to joining Grants Plus, Dana was a leader in major gifts fundraising, grant seeking, and fundraising strategy for major nonprofit institutions, including the ACLU of Northern California, NARAL Pro-Choice America, and the Rock & Roll Hall of Fame and Museum. She received her BA from The Ohio State University.