Real Change or More of the Same? Foundation Leaders Look Beyond COVID-19

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Peering into the future and predicting trends was once the business of places like the RAND Corporation or writers like Alvin Toffler. Lately, however, the COVID-19 pandemic has turned us all into futurists. We find ourselves trying to imagine the “new normal” in business, work, education, sports, even just going out to dinner. 

How will philanthropy find its own proper place in the post-pandemic world? Foundations, like the rest of us, are being pushed and pulled by uncertainty right now. How long will the “first wave” last? Can we pick up where we left off—or should we try something new? What if there’s a vaccine in the not-too-distant future?

“Irrespective of the time horizon for discovery, the time to plan for a post-vaccine world is now,” says Krishna Kumar, director of international research for RAND. In other words, we need to prepare today for what tomorrow might bring, long before it arrives. 

Beyond the discussion over what the sector could have done better in response to this pandemic, or even what it should do to prepare for the next one, there’s a more fundamental question: In what ways are foundations truly changing, and how will they be different after the dust settles? How will this chapter in philanthropy influence the next one, and the one after that? Inside Philanthropy asked some foundation leaders to share what they see in the crystal ball. Without much certainty (about anything), how are they plotting the course for the next few years?

“We need to decide whether to look at it in a forward-looking or a backward-looking way,” says John Palfrey, president of the MacArthur Foundation. “This is the type of event that happens once every 100 years. It has to be a wake-up call to our interconnectedness.”

This virus has driven home the full meaning of globalization, and it’s a wake-up call that arrived earlier for some than others. Bill Gates started calling attention to the threat of a new pandemic in 2010 and stepped up funding for preparedness in recent years, well before the coronavirus emerged, as we’ve reported. It’s clear to a lot of people now that philanthropy should have listened more closely to Gates and others, and acted more aggressively. 

There were clear lessons to be learned from past health crises, too. The Ebola outbreak in 2014, for example, was not contained in West Africa—there were cases in the U.K., Spain, Italy and the U.S. Dr. Rajiv Shah was the Obama Administration’s point person on the epidemic. “What we saw was, when you focus on the things that matter—testing, contact tracing, data collection, data-driven isolation measures for those who are contagious—you can actually beat a pandemic effectively.”

More Collaboration

Shah is now president of the Rockefeller Foundation, where he’s helping to lead its hand-to-hand combat with the virus. His background in government makes him keenly attuned to the fact that grantmaking institutions both complement and work in partnership with other sectors in the wake of COVID-19. “Philanthropy should exist for the purpose of accelerating and solving problems in society that markets or governments don’t seem to be effective at solving alone.”

Shah’s view of philanthropy as a collaborator with the public and for-profit sectors is a theme that found agreement across the spectrum of foundation leadership. “I think we really need to be in partnership with government and business,” says George Irish, who heads the Hearst Foundations. “First of all, to understand, and then secondly, to see if there isn’t perhaps a role for us in helping to bring this country back economically… philanthropy just needs to step up to the table immediately and ensure that it’s involved. Perhaps it’s philanthropy inviting itself to the table.” 

Several foundations have played collaborative roles in responding to COVID-19. In Kansas City, for example, the Greater Kansas City Community Foundation launched its COVID-19 Response and Recovery Fund with guidance from the kind of “table” Irish envisions—area foundations, nonprofits, school boards and others. The Seattle Foundation is at the center of the area’s response fund, with partners including King County, the City of Seattle, Starbucks, Microsoft, Amazon and Alaska Airlines.

Mike Bloomberg is one prominent philanthropist who puts cross-sector partnerships at the center of his thinking. Bloomberg Philanthropies’ CEO Patricia Harris, who was also Bloomberg’s first deputy mayor, sees the pandemic as a trigger for more and better collaboration. “There’s no question that this crisis has sparked more of it within philanthropy,” she says, “and I hope that we all carry that spirit with us after we emerge from this crisis.”

Bloomberg’s approach to the immediate challenge has been focused on cities. He’s convened hundreds of mayors and brought big-name firepower into collaborative efforts (Dr. Anthony Fauci, House Speaker Nancy Pelosi and Maryland Gov. Larry Hogan, for example). Harris says, “Tackling [public health and economic] issues effectively requires government leadership, and that’s why we have always placed a big priority on working with governments—including on climate change and education, which are both economic issues at their core.... Those partnerships with governments will be even more important going forward.”

A Nimbler Sector

What else will foundations do more of, or perhaps do better, after the pandemic? Some think there will be fewer hoops to jump through and more flexibility in relationships with grantees. MacArthur’s John Palfrey says, “Absolutely, we have done that and we will continue…. The Chicago community has been putting money out the door in pooled funds. We are thinking about the prolonged problem and not just a moment in time. We are thinking about what we can do long term, not just in a moment of crisis. We should reflect carefully and see if there is any reason we can’t make this standard operating procedure when we can.”

Foundations have lived, by and large, on a regular and consistent cycle of issuing guidelines, accepting proposals, carrying out reviews, making funding decisions and sending checks. Has this COVID-19 experience shaken that rhythm? Possibly.

When the outbreak began, hundreds of funders quickly signed onto a pledge to waive their usual grantmaking procedures to better serve hard-hit nonprofits. Many also engaged in unprecedented rapid response funding, including the Hearst Foundations, which committed $50 million in emergency grants in April to more than 100 nonprofits. George Irish characterized Hearst’s pandemic response as “a very first time for us…. We don't require a novel, but we do require sufficient information for us to do our due diligence. Well, in this case, even with those we did not know, we were able to do quick due diligence, then we required nothing.”

Irish believes the pandemic has spawned a change across the sector. “We're nimble and want to stay that way and be responsive.” Patricia Harris agrees: “I do think there will be some lasting changes, because we’re seeing firsthand that extraordinary times like these require you to move more quickly.”

MacArthur’s Palfrey expects foundations will have to deal with major shifts within the sector and those coming from outside. “There are looming changes in the field of philanthropy itself and all the fields within which we work. Those include the ways in which we work with grantees and build communities.”

Foundations across the country are demonstrating what that change looks like. For example, like many other funders, the David and Lucile Packard Foundation has allowed program grants to be converted to general operating support. The Hartford Foundation for Public Giving and others are offering expedited payments of existing grant awards. The East Bay Community Foundation is among the many grantmakers that set aside RFPs and an application process, instead asking those in need to “contact us” and promising a response within a week.

Looming Challenges

Longer term, the pandemic poses much bigger challenges for philanthropy. One of the clouds in the crystal ball is the sheer magnitude of the global damage done by COVID-19. No matter how nimble or how flexible, philanthropy and its partners will have to contend with “an economic catastrophe on the horizon that is likely to push a hundred million plus people back into poverty and hunger,” Rockefeller’s Raj Shah says. 

“We’re likely to see a hunger pandemic take hold in large scale in Africa and parts of Asia. We know that commodity price collapse is coupled with a huge global economic slowdown. It’s going to mean that the access to foreign exchange for low-income economies is virtually sealed off. And in that context… the people who pay the biggest brunt of all of this are going to be the world’s 2 billion poorest residents.”

He’s putting a global lens on the reality of pandemic life in the U.S., where communities of color and low-income populations have also been disproportionately affected. 

“This pandemic has been devastating, not only because it has created new problems, but because it has also exposed the cracks in our society that had been hiding in plain sight for years,” Bloomberg’s Patricia Harris says. “Whether you’re talking about big-picture things like economic inequality or access to healthcare and high-quality education, there are so many issues that this pandemic did not create, but has made impossible for us to ignore.”

John Palfrey’s mother and father are both pediatricians and medical educators in Boston. “My parents often talk about the health disparities and the kinds of issues that the pandemic has laid bare… It is a call to action for all of us.”

In answering this call, though, it remains to be seen how far foundations will ultimately go. Many grantmakers have abided by a 5%-per-year payout provision, since it was made the legal minimum in 1969, based on the idea that the growth of their invested assets should fuel annual giving in perpetuity. Will the pandemic, and the resulting economic shock, upset those assumptions?

So far, a small number of major foundations have moved to substantially raise payout levels. For the Hearst Foundations—which has around $1 billion in assets—the 5% standard went out the window right away. George Irish reports that Hearst’s $50 million commitment (which actually turned out to be $55.5 million) represents “a year’s worth of our usual total expenditures.” Previously, the foundation had strictly limited payout to 5% a year. 

John Palfrey sees both sides. “There are good arguments for a variety of different approaches. On our impact investments, we are forgiving debt and principal payments—realizing that we are spending future grant dollars. For you not to think about it would be irresponsible.”

The Rockefeller Foundation made an emergency $50 million commitment to testing and contact tracing, as well as other priorities, in March. But it has given no indication that it plans to bust past its usual payout levels, and Rajiv Shah is candid about the limits of what foundations like his can do, no matter its level of payout. “Philanthropy cannot fill the gaps in this situation... Every month that we are socially distanced here in the United States and on lockdown, we lose $350 billion of GDP. Seventy-plus percent of American households have reported a significant loss of income on a permanent basis as a result of COVID-19. We have more than 30 million people on unemployment. And that's just in the United States.”

Like many foundations piloted by living donors, Bloomberg Philanthropies has never followed payout limits, not having to rely on a fixed endowment. It “operates under a different mandate,” says Patricia Harris. She says that Bloomberg “is a dynamic philanthropist who always wants to do more quickly, and believes there’s no time like the present.” Over the past six years, Bloomberg Philanthropies has nearly doubled its annual grantmaking, and it seems certain that its giving will jump again in 2020 as it pivots to respond to COVID-19. Of course, Bloomberg’s net worth has also expanded over that same period, from $38.6 billion in 2015 to $60 billion today, according to Forbes.

What’s Next?

So where do foundations go from here? Palfrey suggests that an equity lens will become ever more important in guiding the work of foundations—and pushing philanthropy to change.

“We rely on other people to bring us our mail and deliver our health services. From the perspective of philanthropy, as we observe racial, social and economic inequities, we need to adjust our practices appropriately,” he says. “We all should look at the people and communities who are experiencing the disproportionate effects and consider a broader range of communities that we engage. And we should do the work better next time.”

Rockefeller’s Raj Shah makes a similar point: “This is a time when American philanthropy, in particular, should stand up and be a bridge to bring people together around that common goal of serving those who are serving us, and serving those who are in need or are vulnerable. And put our politics aside, just get that done.”

It’s not just about serving those in need, says Patricia Harris. It’s about foundations doing a better job of listening to those communities and adapting their practices. “Our belief has always been that philanthropy should be constantly evolving and changing, because if you’re not listening to your partners about what they need and when they need it, you’re not making as big of an impact as you can and should be. That was true before this pandemic, and it will be even more true after.”