Hi everyone. I hope you are doing OK amidst the Coronavirus pandemic. It’s scary. Take care of yourself while socially distancing. Most of us have never faced anything like this before, and we cannot take any chances. Cancel everything and stay home. I am in Seattle. My kids’ schools are closed for the next six weeks, possibly longer. It is going to be rough, but we are far luckier than most, as my partner and I both have flexible schedules.
A lot of folks are hurting right now. Small business owners, people without sick leave, gig workers, folks without childcare, those who have no emergency savings, incarcerated people, people experiencing homelessness, disabled folks, kids who rely on school for food, those who are undocumented—all face daunting challenges with no foreseeable end date. Meanwhile, nonprofits face drastic reductions in revenues because of canceled events and other factors, which means we are less able to help during a time when we are most needed.
Amidst all this, I got a message from a colleague saying that a foundation just informed its grantees that due to its corpus being affected by the stock market, in part because of the Coronavirus, it may cut down on funding, possibly not even be able to disburse committed funds.
Foundations, I am begging you, if there was ever a time for you to increase your payout rate and get more money out the door, this is it. Please do not do what many of you did in 2008, when the markets tanked and people were crying out for help and many of you lowered your giving instead of increasing it. I know that you mean well. In your mind, you are thinking of the future. You think that if you spend beyond the 5% minimum payout rate as required by law, you will whittle down your corpus to nothing. You think of the future crises that humanity will face, and you want to be adequately resourced to handle them. You think that you are being prudent, saving up so that when society needs the funding the most, it is there.
But the reality is that your prudence has perpetuated so many of the problems you are saving up to solve, creating a self-fulfilling prophecy. Imagine if there are wildfires raging—(you don’t need to imagine, we’ve had plenty and will get more)—and you have all this water available, but you only allow 5% of it to be used, so you can save the 95% of the water for future fires. But by not putting out the current fires, they continue to spread. The future fires are caused by the current fires that we do not put out.
This line of thinking, of saving your corpus for a rainy day, has had severe consequences. Because of the lack of funding to advance environmental issues over decades, our planet has ten years left before climate change is irreversible. Because of the lack of funding for advocacy over decades, we have few safety nets. You are saving for a rainy day, but how much more water must fall, how many more people and communities must be swept away in the flood, before you will admit that it is raining?
COVID-19 has already started changing everything. We already botched our chance to contain the virus, and are now on track to experience the horrors Italy is going through. Surviving, much less rebuilding, from this will take billions. During this time of fear, uncertainty, crumbling infrastructure, and the suffering of people across the globe, coupled with the lack of resources for nonprofits to do our work, we need foundations to go beyond the bare minimum that many of you are doing. We appreciate the flexibility of timelines and deliverables. It’s great that that some of you are converting project grants into general operating funds and gathering your peers to talk about how to be helpful to nonprofits as we struggle to meet rising demands at this time.
However, you also need to immediately increase your payout rate. Whatever amount you’re giving out this year, double it. Double it and get it out the door fast and with as few grantwriting obstacles as possible. Get the money out to nonprofits that are feeding kids while schools are closed, preventing evictions as people lose income and can’t pay rent, supporting folks experiencing homelessness who can’t self-quarantine, helping older adults get meals and supplies during this period of isolation. Get funding out to hospitals and health clinics. Get funding out to artists and gig workers. Get funding out to advocacy organizations who are fighting for paid sick leave, increased wages, universal healthcare. Get funding out to intermediary organizations that are coordinating relief efforts. Get funding out to nonprofits and people in general.
A silver lining of COVID-19 is that it is forcing us to question so many constructs that we take for granted. Why doesn’t the US have paid sick leave? Why don’t we have universal health care? Why are nonprofits scrambling to do so many things that should be done by a functioning government? I hope that when we overcome this pandemic, we will work to change these things.
Of foundations, I would ask you to examine why you still adhere to the 5% minimum legally required payout rate. If this pandemic is not the time for transformative action, then when is? Please increase your payout rate. By giving more now in the present, you increase the chance that there will be a future.
Be a monthly patron of NAF.
Write an anonymous review of a foundation on GrantAdvisor.org
Buy the book Vu co-authored, Unicorns Unite: How Nonprofits and Foundations Can Build EPIC Partnerships