This story is part of TRACE (Toward Response and Community Equity), a year-long series that tracks how and where the region’s government, philanthropic, civic and private sector is working toward a more just recovery.
You don’t bite the hand that feeds you.
Because philanthropy runs on the goodwill of donors, the executive directors of the nation’s 1.5 million nonprofits hate to appear ungrateful, so they abide by this rule — usually.
However, the catastrophic nature of the pandemic has more people voicing discontent with philanthropic practices, including foundation executives themselves. They are questioning if traditional funding practices, which were helpful in blunting the most severe consequences of the pandemic, also buttress the same system responsible for creating the health, racial, economic, and other disparities in the first place.
“I am asking these same questions of my own organization,” said Joe Pyle, CEO of the Scattergood Foundation, who has consistently said the foundations didn’t do enough.
“We are not as good as we could be” Pyle said, calling his assessment as much a “sector evaluation as a self-evaluation.”
What no one questions is the outpouring of financial support from grantmakers throughout 2020. Last year more than $20 billion was contributed to COVID-19 relief efforts by corporations, foundations, public charities and high net-worth individuals.
“The philanthropic community in Pennsylvania and around the country really stepped up during the pandemic, as is reflected in the most recent Giving USA report, which shows that giving from foundations went up by 17% compared to 2019,” reported Anne L. Gingrich, executive director of Pennsylvania Association of Nonprofit Organizations (PANO).
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Jennifer Leith, executive director of the Douty Foundation, said she gave regional funders a grade of B/B+ for their giving efforts.
“From my conversations with funders, in the beginning weeks, almost all provided extra financial support outside of a grant cycle and/or switched program grants to general operating use if needed,” she said. “As the crisis moved into months, we saw collaborations among funders that probably wouldn’t have happened if not for the pandemic.”
According to the Center for High Impact Philanthropy, $40 million was distributed in the region.
“Funders in our region stepped up in ways and on a level that we likely have not seen before,” said Sidney R. Hargro, president of Philanthropy Network Greater Philadelphia. “For example, there were over 20 pooled funds created relatively early in the pandemic. For the 13 funds included in the COVID-19 Dashboard, over 4,800 grants totaling more than $40 million were made across 10 counties in the region between March 18 and June 29, 2020.”
In addition, Hargro added, many funders increased their payouts, offered flexibility for reporting and grant applications, and were responsive to changing needs as they arose. In fact, more than 800 signed a Council on Foundations pledge agreeing to this, including Brandywine Health Foundation, Chester County Community Foundation and the Foundation for Delaware County.
Scattergood’s Joe Pyle said as a result of his board’s self-reflection they have made several changes including approving a 10% spend — twice what is mandated by federal law, allocating more funds for participatory grant making like the Kensington Community Resilience Fund, the Community Wellness Fund and the COVID 19 Prevention and Response Fund. Scattergood is also going beyond that 10% by investing 5% of the endowment in local impact investing and program related investments.
“What we have done well is to recognize that our practices and policies could be disrupted to be more responsive. We quickly changed grantmaking procedures to address urgent needs. We quickly engaged the board to get relief of funds,” said Vanessa Briggs, president and CEO of Brandywine Health Foundation.
“The question is why did it take a pandemic for our traditions to be disrupted and for us to be responsive to and engaging of community, versus before [the pandemic],” Briggs said, “and I don’t want to speak for all funders, but not all led with community engagement. This is a national perspective. It is not unique to southeast Pennsylvania.”
Pyle questions whether foundations should continue to look at issues in isolation. “We’re not thinking of the interplay of issues,” he said.
Since March 2020 grantees have struggled to deal with a tsunami of need — according to the U.S. Census Bureau about 30 million households wrestled with food insecurity and 90 million households faced with overdue rent or mortgage payments.
And grantees struggled to keep themselves afloat. Six out of 10 nonprofits reported that they faced threats to their financial stability because of COVID. A report from Candid and the Center for Disaster Philanthropy estimated that the pandemic had threatened between 33% and 38% of 300,000 U.S. nonprofits with closure within the next 24 months.
Douty Foundation’s Leith said, “There is something about calling the challenges of COVID a moment of crisis’ that I don’t think is accurate.”
“The crisis exposed the deep, embedded systemic barriers and failures of our society and our economic systems,” Leith said. “And I hope that my funder colleagues are thinking deeply about why extra funding was needed, why the communities that we support didn’t have access to food or stimulus payments or testing and vaccines or stable housing or the internet. In the immediate, funding was and is good for nonprofits.”
Many funders themselves were flush with cash because they experienced record-setting returns because of the rise in the stock market. According to Inequalty.org , one-third of the $4.3 trillion in billionaire wealth gains since 1990 came in the last 13 months of the pandemic: “Between March 18, 2020, and April 12, 2021 the collective wealth of American billionaires leapt by $1.62 trillion, or 55%, from $2.95 trillion to $4.56 trillion.”This has been the source of additional friction as nonprofits have called for foundations to increase the traditional 5% payout.
“As The Douty Foundation sunsets this year, we are moving our remaining assets to movement building work that is happening now and will happen in the future. And I am incredibly proud of that! Imagine if every funder would use even an extra 1% of its assets annually for advocacy or movement building. Then, we can imagine real change together,” Leigh explained.
One of the biggest complaints is that funders maintain racial inequities. American foundations award about $60 billion a year to nonprofits and about 95% of that goes to white-led organizations. According to research from the National Committee for Responsive Philanthropy, a survey of several major cities between 2016 and 2018 concluded that community foundations cumulatively spent $78 per person but only spent $6 per Black person.
“The resource gap has real consequences: If community foundations invested in Black communities on a per capita basis like they invested in the general population, Black communities in these cities alone would have been the beneficiaries of $2 billion more in grant making since 2016,” the report stated.
As COVID response leads to recovery, the question is what is next.
Hargo said, “The more pertinent questions before us are to what degree will philanthropy continue to respond this year and in the coming years of recovery? Will increased assets lead to higher levels of giving and continued collaboration among funders? In what ways will the increased flexibility and responsiveness of 2020 become permanent? How will verbal commitments to racial equity lead to permanent changes in practices and grant investments in anti-racism and anti-oppressive efforts and investments in transformative change?”
For Pyle and others one answer is disruption. Dismantling the status quo and building a more effective grantmaking system that centers sharing power with nonprofits and developing policies such as replacing programmatic grants with multiyear operational grants that are nonprofit friendly.s
Leith added that foundation need to become advocates themselves.
“Funders need to advocate for fair, better and more robust systems that the crisis exposed in all their inglorious failings,” she said.
But the urgency brought on by the pandemic is already receding as more Americans are vaccinated and the economy begins to reopen.
“I do see atrophy setting in,” said Briggs, who added that embedding equity practices and a tremendous amount of work and effort and often leads to challenging conversations.
“When you are trying to dismantle racism it’s a commitment for the long haul. Do people have the fortitude, patience, resilience?” she said. “That’s what it requires. It is selfless work.”-30-
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