In Turbulent Times, Here’s How Foundation Program Staff See Key Issues in Philanthropy
There is a saying in philanthropy that “when you’ve seen one foundation, you’ve seen one foundation.” The variety of foundation priorities, operations, policies and practices is due to the overall lack of regulation and standardization in the sector. For some, this may be liberating, but it is frustrating for nonprofit organizations that depend on foundation funding.
In addition to the diversity of foundation practices and priorities, leadership and staff within a foundation can have diverging views. Most reports on foundation priorities and perspectives focus on executive leaders and board members. There has been relatively little insight into how staff — particularly those responsible for working directly on grant programs — think about their work and how it might differ from their leadership. (Among the exceptions is a 2017 survey of program officers by the Center for Effective Philanthropy.)
To help fill this void, last month, Inside Philanthropy conducted a survey of foundation program staff to gather their insights and opinions on several key issues and trends in the sector. For example, foundation program staff highlighted that the COVID-19 pandemic has caused them to adapt policies to be more flexible and foundations to be more responsive to community needs. Another theme from the survey results is that foundation leadership, board and CEOs are not always on the same page with regard to key issues facing the sector.
This article provides an overview of the survey and key findings. Successive articles will dive deeper into three topics in the survey: racial equity, participatory philanthropy, and mission-related investing.
First, a little detail on the survey itself: It was operational for two weeks, from August 13 to August 25, and we received a total of 235 submissions. Respondents represent several layers of responsibility in program departments at foundations: Sixteen percent are VP of programs (or similar), but the vast majority are program directors (27%), officers (38%), or associates/assistants (5%). About 45% are from private independent foundations, 21% from community foundations, and 20% from family foundations, while 5% are from public foundations and less than 4% from corporate or operating foundations.
They tend to work for relatively large funders, with 30% from foundations that grant more than $100 million per year, and another 25% from those granting more than $10 million. Foundations in the sample cover a diversity of funding priorities. About 60% fund in education, 48% in health, 43% in environment and conservation, 42% in community and economic development, and 36% in the arts.
How the Pandemic is Changing Practices
A timely issue explored in the survey is the response of foundations to the COVID-19 pandemic. According to Candid, foundations have awarded nearly $4 billion toward pandemic response around the globe. As the implications of COVID-19 were becoming clear, the Council on Foundations called on members and other funders to commit to increasing flexible funding and practices in the face of the pandemic, and nearly 800 funders have signed on to the pledge.
It is clear that COVID-19 has influenced foundation funding practices and policies. More than eight in 10 survey respondents say the pandemic has increased the likelihood of their foundations providing rapid-response grants and relaxing grant application and reporting requirements. More than six in 10 are providing relief funding outside of usual program areas, and nearly 70% are more likely to provide general operating support as part of their pandemic response.
Philanthropy has been setting up local funds to help with pandemic relief — over 800, according to a recent report from Candid and the Center for Disaster Philanthropy. Leaders in the sector are calling for funders to learn lessons that could lead to permanent, structural changes in the ways foundations connect with grantees.
For example, there have been growing calls to increase the required foundation payout of 5% due to dire heath and financial needs and the fragility of many nonprofit organizations, and a number of foundations have followed suit. About half of our survey respondents report that their foundations are more likely to increase payout as a result of the pandemic.
Traditionally, many foundations designed to exist in perpetuity have been hesitant to increase payout due to possible effects on their financial resources over the long term. About 15% of survey respondents share that their foundations are less likely to increase payout during this time.
As a program officer responded in the survey, there is a “tension between calls from the field to increase payout rates vs. hesitancy from board members about economic uncertainty/unwillingness to overextend the payout much into the future.”
These tensions are evident from outside and within foundations as boards and staff try to determine how best to respond to the many needs facing society. Subsequent articles in this series will explore these dynamics from the perspective of foundation staff responsible for researching, recommending and carrying out grant programs, but here are some of the key takeaways:
DEI and Racial Justice
Foundations have been grappling in recent years with diversity, equity and inclusion (DEI) in their ranks and racial justice in their grantmaking, and it is clear from the survey that the recent protests and Black Lives Matter movement have heightened the urgency. Foundations are making some strides in this process, and program staff in particular are committed to them. They are concerned, however, that foundation leadership is not as steadfast, given the white privilege and culture that dominates the sector.
Within the broader movements of equity and addressing power imbalances in philanthropy, a number of foundations have been engaging in participatory processes with grantees and communities. The vast majority of survey respondents get feedback from grantees, both formally and informally, and more than a third have advisory groups made up of grantees or community residents that provide input into foundation strategies and grants. Again, program staff are most committed to these processes within the foundations.
Given the 5% payout rule, foundations hold nearly $1 trillion in assets that are largely invested to garner returns that allow them to exist in perpetuity. A number of prominent organizations such as the Ford Foundation have been pushing mission-related investments (MRIs), market-rate investments from their endowments that also seek social/environmental impact. While still relatively small as a proportion of all endowments, about half of survey respondents say their foundations are “somewhat” or “highly” engaged in MRIs, and they would like to see more involvement by program staff in these processes.