Ford Extends Its Experiment in Flexible Funding by $1 Billion—and Hopes Others Will Follow

Women leaders of Ford’s BUILD grantees attend a convening. Photo: Ford Foundation

In 2015, the Ford Foundation launched the Building Institutions and Networks Initiative (BUILD), a program that provided $1 billion in support through a combination of long-term commitments, flexible funding and institutional strengthening.

The initiative was a figurative shot across the bow, challenging other funders to loosen the reins and embrace general operating support and multi-year grants—notable coming from a sprawling foundation that historically gave mostly restricted grants. While Ford’s leaders hoped their peers would come around to the foundation’s way of thinking, they also characterized the program as a learning experiment. “We weren’t assuming that we’d renew it for a second phase,” said Kathy Reich, the program’s director.

Five years and over 340 grantees in 33 countries later, the results are in. Ford reports that this approach helped countless social justice organizations weather a tumultuous 2020, affirming that “multi-year, highly flexible support and real attention to strengthening institutions was what was needed during this time,” Reich said. More than 85% of grantees reported that their organizations were significantly stronger as a result of this support, and more than two-thirds of them leveraged BUILD funding into support from other donors.

For Reich, the next step was obvious. “To go back on the program now would be a tremendous mistake,” she said. “So we didn’t. We’re moving forward.”

This week, Ford announced an extension of BUILD. The second iteration will disburse another $1 billion spanning all of Ford’s programmatic areas and geographies, bringing the foundation’s total commitment to flexible, multi-year support to $2 billion since the program’s inception. The next round of five-year BUILD grants will be awarded starting in January 2022.

Ford’s announcement can also be seen as a reminder to other funders to follow through on the many commitments made over a year ago to operate in a more responsive and flexible manner. Whether sector leaders make unrestricted funding and multi-year support permanent fixtures of their post-pandemic grantmaking strategy remains to be seen. In the meantime, here are four takeaways from my chat with Reich concerning Ford’s announcement.

Ford is ramping up its flexible funding evangelization

Last March, Ford and some of its partners in the trust-based funding space drafted “A Call to Action: Philanthropy’s Commitment During COVID-19.” Over 800 funders signed on to the pledge’s action items, which included a commitment to “make new grants as unrestricted as possible, so nonprofit partners have maximum flexibility to respond to this crisis.”

Ford had been gravitating toward this model over the last half-decade. In 2015, only 36% of its grants were categorized as “general/core support.” Last year, that figure stood at 83%. That’s a remarkable shift and a departure from the philanthropic norm.

“A lot of that is BUILD,” Reich said, “but not all of it.” While most of the BUILD grants are for general operating support, Ford earmarks some of them for what it calls “core support for institutional strengthening.” The support is “still highly flexible,” Reich said. “Grantee partners are using it to strengthen the organization for the long term as they see fit.”

Add it all up, and Ford has three audiences in mind as it expands its BUILD initiative. The first, naturally, consists of its grantee partners, who enjoy unrestricted funding with the security of a five-year commitment. “Nobody would fund a start-up tech company one small project at a time,” Reich said. “Why do people think that’s the way to impact and scale in the social sector, where things are so much harder than bringing a new product to market?”

The second audience is Ford’s non-BUILD program staff who have seen the value in the initiative’s model across the last five years. “They really are moving to general operating support whenever they can, and I think that’s a really strong testament to the power of the approach,” Reich said. “Even when they’re not required to do it, they’re doing it.”

The third is the broader funder ecosystem. “We need to keep the pressure on other funders to step up,” Reich told me. “That’s something we didn’t do so much in BUILD’s first phase, but we’re very focused on it in the second—trying to move this field, which can be notoriously slow to move in the direction of larger, longer, more flexible grants.”

BUILD’s approach yielded important “soft” benefits

As it champions the program, Ford will be eagerly citing data points from its BUILD evaluation reports. But Reich cited many compelling “soft” benefits of the approach. For example, Reich highlighted how the model can help to dial back some of the notoriously fraught aspects of the funder-grantee relationship.

“The power dynamic is real, and I’m not sure it can ever be completely eliminated,” Reich said. “Whenever one party has the money and makes funding decisions, and the other party asks for the money, you’re going to get power dynamics coming into play.” This dynamic is especially acute for women leaders, leaders of color, and organizations lacking access to deep-pocketed funders. “I’ve seen those power dynamics really distort and hamper the impact that funders want to have,” Reich said.

BUILD’s five-year commitment attenuates this dynamic by ensuring that every conversation between staff and grantee representative isn’t about renewal or the rep trying to “sell” themselves. “Our partners feel like they can be more honest about what’s not working,” Reich said. “It’s not just good news stories.” 

Grantees had their share of problems beyond the pandemic, including unplanned leadership transitions and financial challenges. Some of BUILD’s non-U.S. grantees have had their digital and personal security threatened, while others operate under the constant threat of government harassment.

The initiative’s approach hard-wires a sense of security, collaboration and mutual commitment across the funder-grantee relationship. “It’s stunning that out of the 340 BUILD grants, less than 10 of them have ended early,” Reich said. “We are really in it for the long term.”

Ford pivoted to cohort-building during the pandemic

When the pandemic struck, Ford’s response was notable because of what it didn’t do. Reich’s team didn’t have to revise grant agreements, timelines and deliverables because there was nothing to revise. There were no strings to sever. Reich simply trusted that its grantees would use its unrestricted funding in whatever way would be most helpful to the organization.

That said, the pandemic forced Reich and her team to go above and beyond what they originally envisioned for the initiative. BUILD’s first iteration didn’t include learning platforms and cohort-building opportunities. Leaders simply wanted to get money out the door without strings attached. However, once the pandemic struck, its grantees told Ford they craved connection.

Last March, Ford organized a webinar for BUILD grantees. Over 150 people dialed in. Since then, Ford has held dozens of webinars and learning opportunities on issues like leadership during these turbulent times, financial sustainability and cybersecurity. “They are always optional, but always well-attended,” Reich said. Better yet, grantees can collaborate “knowing they’ve all got multi-year support and aren’t competing for the same resources.”

The future is (not surprisingly) uncertain

It’s always tricky to try to gaze into a philanthropic crystal ball, especially when it comes to funders’ adoption of general operating support. After all, in 2020—five years after Ford made its highly publicized $1 billion BUILD commitment—the Center for Effective Philanthropy (CEP) found that just 12% of pre-pandemic foundation grants were multiyear and unrestricted. (“I believe there is a time and a place for a good old-fashioned, single-year, project-restricted grant,” an incredulous CEP President Phil Buchanan wrote. “But 12 percent?”)

Nor has the pandemic meaningfully altered funders’ calculus. According to a recent Candid and Center for Disaster Philanthropy brief on 2020 COVID-related giving, flexible support reflected “only 9% of all dollars awarded to named recipients” once MacKenzie Scott’s grantmaking was taken out of the equation. The takeaway followed a December CEP report that found that 44% of foundation leaders were either “undecided” about permanently “making new grants as unrestricted as possible” (29%) or ruled out the idea completely (15%).

Reich has read the reports and is clear-eyed about the road ahead. “My worry is that in the next six months, as things start to open up, that a sense of complacency will set in,” she said. “There’s a risk that foundations will go back to business as usual, and there won’t be a spigot of federal support that organizations can fall back on.” Non-U.S. organizations will be even worse off. Some grantees are in countries that haven’t even rolled out vaccinations yet. “Those nonprofits are going to continue to operate in crisis for some time.”

We’re not out of the woods yet, and Reich hopes Ford’s $1 billion infusion will motivate other leaders who still aren’t sold on flexible, multi-year funding to move beyond their desire to control their resources and ensure that nonprofits are capitalized for the long-haul. “Because otherwise,” Reich said, “we’re not going to get very far.”