Ford Foundation president Darren Walker. Photo: Wikimedia Commons.

Five Foundations Pledge $1.7 Billion for Nonprofits

The W.K. Kellogg Foundation, the John D. and Catherine T. MacArthur Foundation, and the Andrew W. Mellon Foundation are among the five major charities that have collaborated to establish a $1.7 billion fund to support nonprofits struggling with Covid-19-related financial losses, in an initiative spearheaded by the Ford Foundation.

With a pledge of $1 billion, the Ford Foundation has made by far the largest contribution, as well as the unusual decision to raise funds by selling thirty- and fifty-year bonds, in addition to giving $550 million in grants. The MacArthur Foundation (with a $125 million contribution) and the Doris Duke Charitable Foundation ($100 million) plan to also sell bonds, an uncommon practice for philanthropic organizations, but one that will allow them to avoid dipping into their endowments and take advantage of low interest rates. The Kellogg Foundation has pledged $300 million, and the Mellon Foundation $200 million. Each organization will determine fund distribution according to their own guidelines and priorities.

“For most foundations, the idea of taking on debt is outside of normative thinking,” Darren Walker, president of the Ford Foundation, wrote last month to the organization’s board. “Covid-19 has created unprecedented challenges that require foundations to consider ideas—even radical ones that would have never been considered in the past.”

Mellon president Elizabeth Alexander said: “The partnership that we’re announcing today happened with unprecedented speed and unprecedented scale. Many organizations don’t have any kind of endowment at all. Addressing that issue of longevity is a long-term structural challenge. But one of the things that’s extraordinary that we see in the arts sector is an unparalleled resilience.”

A study published last month by Southern Methodist University’s DataArts center and the data consulting firm TRG Arts estimated that the net effect of the Covid-19 pandemic on the United States’ nonprofit cultural sector will be a deficit of $6.8 billion, or the equivalent of 26 percent of the average operating expenses of arts organization over the course of one year. On average, arts organizations typically hold less than two months’ worth of capital to sustain their expenses without incoming revenue.

John Palfrey, president of the MacArthur Foundation, said: “This is unprecedented for us, but these are unprecedented times. We hope other foundations will join us in creating a different model where foundations step up more, not less, in the times of greatest need.”