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November 29, 2020
 
Foundation Nonprofit Support Rose in 2020, but 2021 Is Unsure

November 13, 2020 — A newly issued report says foundations have loosened or eliminated grant restrictions on funding for nonprofits in response to multiple crises unsettling the nation, increased their spending levels, and placed a newfound emphasis on listening to grantees and the communities they serve.

“Foundations are often perceived as notoriously process-heavy and resistant to change, sometimes rightfully so,” says Ellie Buteau, vice president of the nonprofit Center for Effective Philanthropy (CEP), in Cambridge, and author of Foundations Respond to Crisis: A Moment of Transformation? “But the data we’ve gathered suggest that 2020 has indeed led foundations to work differently. Many of these changes are long overdue, and what remains to be seen is if they will continue after these crises abate.”

Compared to pre-pandemic practices, more than half of foundations surveyed for the report said they are giving a higher percentage of grant dollars to organizations created and led by the communities most affected, including Black, Latino, and lower-income communities, and 72% said they had or will increase grantmaking in 2020 beyond what was previously budgeted for the year.

However, “Looking ahead to 2021, especially as nonprofits that received forgivable loans through the federal Payment Protection Program spend down that funding, the question of whether foundation grantmaking levels will stay stable, increase, or decrease looms large,” the report noted.

About 60% of leaders interviewed for the report said the health, social, and economic crises of 2020 pushed them to accelerate change efforts already underway, CEP said.

Among changes foundations have implemented since the pandemic began in March include:

  • 66% loosening or eliminating restrictions on existing grants
  • 64% cutting down on what they ask of grantees
  • 57% making new grants as unrestricted as possible
  • 52% contributing to emergency funds

Many grant makers based in Massachusetts have implemented similar practices during the pandemic, including United Ways based in Pittsfield, Springfield, Worcester, New Bedford, and Boston, and community foundations based in Boston, Lowell, Danvers, New Bedford, and Springfield, among others.

In a year marked by public demonstrations for increased social and racial equity, 22% of the 427 leaders surveyed for the report said that they have started supporting organizations led by those from communities most affected by the pandemic. However, 67% said they were doing this before the pandemic.

In addition, 72% said they were listening to grantees and communities least heard before the pandemic erupted, and that another 24% have implemented this practice since the pandemic began.

Responses from foundation leaders suggest that it hasn’t been particularly challenging to loosen restrictions and be more flexible with grantees, the report noted.

CEP said the most frequent challenge, mentioned by about 20% of survey participants, “has been navigating the intense pace and volume of the foundation’s crisis response amid an adjustment to a remote work context.”

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