Philanthropy and the long game: from stepping up to stretching out
The COVID-19 pandemic has rapidly disrupted how we live, work, interact and survive, like no other crisis in our lifetimes. Government — local, state and federal — has had to mobilize quickly to meet the health and basic needs of residents. Community organizations and residents are responding with heroism to the challenge, providing food, financial assistance, health care and housing to help slow the advance of the virus. Philanthropy, which can provide the most flexible type of funding needed by community organizations but is at times slow to respond to crises, has stepped up in a big way to use its resources to support government and community efforts.
More than 600 philanthropic organizations have signed on to the Council on Foundation’s pledge of action during COVID-19 to: contribute to emergency response funds, relax restrictions on grant funding and reporting to make funding as flexible as possible, and listen to and lift up the voices of partners and support their advocacy. Corporations, foundations and other donors are funding efforts to meet basic needs of people and also research into treatments for the virus, to date an estimated $6.7 billion globally ($1.1 billion in the U.S.).
Even with these positive immediate responses, history has shown that philanthropic funders tend to be fiscally conservative in the face of economic challenges. This is especially true for those who depend on investment returns for their giving, as argued by David Callahan of Inside Philanthropy in his April 5 reflection on philanthropy and the pandemic:
Endowed foundations tend to behave like most other institutions in society — often prioritizing their own interests over their stated missions.
A group of nine leading membership and advocacy organizations in the sector (BoardSource, Council on Foundations, Grantmakers for Effective Organizations. Hispanics in Philanthropy, Independent Sector, National Committee for Responsive Philanthropy, The Center for Effective Philanthropy, United Philanthropy Forum) recently issued a statement encouraging increased giving from philanthropy during the COVID-19 crisis:
We’ve been heartened that some foundations and corporate giving programs are increasing their grants at this crucial time. We call on all funders to consider joining them by significantly increasing their grant spending during this crisis.
Some funders are meeting this call by increasing giving and even dipping into their investment corpus during the pandemic, and the crisis is once again raising questions about the sacrosanct “5 percent payout rule” and whether foundations should exist in perpetuity.
Funders should be commended for responding quickly to the pandemic, especially as they provide support to meet the basic needs of people and keep nonprofit organizations afloat and leverage private innovation in the public health response. Given, however, that the effects of COVID-19 go well beyond the next few months and the health system, philanthropy needs to be working now on how to support a recovery that takes advantage of lessons learned during the crisis. One of the great privileges of philanthropy is that it can take the long term perspective.
The pandemic is clearly exposing the weaknesses and inequities in our health system, economy and society, leading to calls to reevaluate how we live, work, learn, shop and travel. With data showing COVID-19 affecting people of color (particularly African Americans) at higher rates and stay-at-home orders hitting low wage workers and families and people who are unhoused particularly hard, philanthropy should be thinking about how it could be part of a transformative moment, creating economic, political, cultural and social structures and practices toward a more equitable and just future. Below are several areas in which funders can stretch out, even uncomfortably, so that they are helping create this future over the long term.
Practices and Processes
Many funders are currently relaxing application and reporting requirements and providing more flexible funding during this challenging time for nonprofit organizations. Why can’t these become permanent? Grantees are the workhorses of the philanthropic sector, and funders should take this opportunity to simplify their practices and processes going forward so organizations can spend more time helping people and communities recover from this crisis, and less time responding to funders’ often arbitrary requirements. If you need some examples, check out Vu Le’s list of “10 archaic and harmful funding practices we can no longer put up with.”
Equity and Justice
As the pandemic reveals the deep inequities in society and their consequences on everyone, it is time that funders truly embrace and act on a framework of racial equity and justice. There has been growing interest in philanthropy toward equity-based approaches, but the current crisis is an opportunity to accelerate those efforts (and begin for those who haven’t). Funders who want to improve outcomes in health, education, housing or just about any social issue won’t make progress without tackling the systems that perpetuate racial disparities and discrimination. Partnering with grassroots, power building groups with flexible, grantee-centered practices and processes is an important step in moving toward a racial justice lens that will “unlock long-term transformational impact and strengthen the community-wide infrastructure needed to foresee, respond to, and avert potential damages from crises like the COVID-19 pandemic.”
Another trend in philanthropy over recent years has been more attention to “impact investing,” using investments outside of traditional grants to secure social and environmental benefits along with financial return. Foundations in the U.S. give out about $80 billion per year but hold nearly $1 trillion in assets. Traditionally, foundation investments seek maximum financial return, but a growing number of funders are engaging in mission related investments with their assets. With the disparate impacts of the current crisis raising questions about the sustainability of our economic system, foundations could use their wealth to invest “in local and regional efforts that replenish community wealth and build community assets.”
System and Structural Change
Philanthropy is stepping up to meet the immediate needs of people and communities. As we recover from the health, social, and economic consequences of the pandemic, philanthropy needs to address the root causes of how disruptive and inequitable the impact has been. This will require a hard look at internal practices and policies, as outlined above, as well as an orientation toward long-term, flexible support of organizations working to create more just structures that produce equity. It also requires an engagement with government and public systems, whose resources dwarf those of philanthropy, and even “politics.”
I’ve worked in philanthropy for more than 15 years and never seen people and institutions across the board so consumed by an issue with such a level of urgency. While the pandemic requires this attention, it is vital that funders begin to also turn toward the long game: how we can recover from the current crisis to create health, economic and social systems that work for all. Philanthropy should not go it alone; they need to exercise those collaborative muscles, working as true partners with other funders, government, grantees and other nonprofit organizations, and community residents. Our future depends on it.