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October 27, 2020
 
Foundations Are Shifting Giving Practices to Nonprofit Grantees
Fundraising Up

September 26, 2020 — Responding to the seismic upheaval caused by multiple crises this year, most notably the coronavirus pandemic and the systemic racism it exposed, Massachusetts foundations, as well as others across the country, have increased their support of grantees while adjusting giving practices, according to a newly published report.

The report, Shifting practices, sharing power? How U.S. philanthropy is responding to the 2020 crises, produced by the Council on Foundations, Philanthropy California, and Dalberg Advisors, based on input from 250 foundations, notes that:

  • Approximately 60% of respondents are increasing giving beyond planned 2020 levels, with an average increase of 17%.

  • Respondents expect that 26–42% of their 2020 giving will go to Covid-19 response, racial equity, and the intersection of the two.

  • Less than one-third of COVID-19 funding is expected to go toward healthcare; respondents are instead prioritizing funding for broader economic recovery including community building as part of a racial equity focus.

  • More than 85% of respondents reported adopting flexible grantmaking practices for existing grantees.

  • A growing number of foundations have opted to move beyond the typical 5% payout rate.

More than 500 community foundations across the US have created relief funds, according to the report.

In addition, grantmaking by donor-advised funds surged in response to COVID-19, up 80% during March–May over the same period in 2019.

Community foundations said they expect their giving level to increase by 20% this year. For independent foundations, that number is 14%, while family foundations said they anticipate a 12% increase in giving during 2020, compared to last year.

Eighty-seven percent of respondents reported shifting operations for current grantees. For example, 19% provided “top-up” funding and 63% allowed grantees to redirect funds, while 12% delayed grant programs and 5% cancelled grants.

At the start of 2020, 38% of community foundations made racial equity a key or primary focus, the report noted, a number that increased to 48% this month. For independent foundations, those numbers were 58% and 67%, while family foundations reported 54% and 66%.

Additionally, community foundations have been found to have less diverse professional staff and leadership: 82% of community foundation professional staff are white, compared to 76% at family and 66% at independent foundations, and only 5% of community foundations have a person of color as CEO/president, according to the report.

Thirteen percent of respondents said they are making commitments to increase representation of Black, indigenous, and people-of-color.

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