Alexandros Michailidis/shutterstock
Alexandros Michailidis/shutterstock

Open Society Foundations is consolidating its programs and halting or reducing funding in several areas in the next step of a major restructuring that, although it will not reduce overall giving, will radically overhaul how the grantmaker functions and involve significant staff departures. The new structure will channel future grantmaking through six regional offices and a single global team in an effort to streamline the sprawling global institution and help it respond more rapidly and effectively to today’s challenges, according to internal documents obtained by Inside Philanthropy and confirmed by OSF officials.

The face of financier George Soros’ philanthropy will also likely look much different when the process is over: Roughly a fifth of eligible program staff—around 180 people so far—have opted into a buyout program, though departures are not yet finalized, and program staff will now be required to live in the regions where they work, according to Binaifer Nowrojee, vice president for organizational transformation. IP first learned of the latest round of decisions from sources at OSF who were granted anonymity because they were not permitted to speak to the press.

These details and several others are the latest to emerge from a two-year transformation underway at the grantmaker, first reported in Inside Philanthropy in January. The institution still does not plan to reduce its roughly $1.2 billion budget, Nowrojee confirmed, and it remains deeply committed to its core areas of work, but the dramatic shifts create new uncertainties for grantees in fields where OSF is a major presence, such as democracy, human rights, women’s rights and journalism. A memo sent by OSF President Mark Malloch-Brown in July termed the changes a “radical rethinking of our work and structure.”

“The intertwined challenges of today, such as the global pandemic and climate change, can no longer, in our view, be effectively addressed through 40 separate national, regional and thematic programs and foundations. We cannot remain the same, while the world and the context for our work change around us,” reads the memo.

The changes comprise a dramatic shift for a far-flung organization whose many areas of work have long defied easy summary. It is a change that some have feared and many have longed for as the philanthropic network grew in size and complexity over the past decade. Built as the fall of the Iron Curtain ushered in reforms, the grantmaker has been a champion for democracy and human rights work all over the world. But over time, it has developed an unruly structure that involved 1,680 staff managing dozens of programs across more than 120 countries. George Soros is now 91 years old, which raises big questions about what is next for an institution with such a large global presence.

More details in hand, the restructuring appears, in part, to return to Soros’ early goal of putting grantmaking power in the hands of local communities, though some staff said they fear the change will end up concentrating power in fewer hands within the foundation. Sources speaking anonymously also spoke of very low morale at the institution, concerns about how the buyout process would impact staff diversity (something OSF has struggled with), and high anxiety among grantees. Many grantees are receiving what may be their final funding as part of the process and the board has identified a long list of areas where funding will be ended or significantly reduced.

In any case, the new structure will be relatively simple compared to its current form. There will be six regional programs: Africa, Asia Pacific, Europe and Eurasia, Latin America and the Caribbean, Middle East and North Africa, and the United States, according to the memo and Nowrojee. Separate from regional portfolios, there will be a single global programs team focused on three overarching themes: justice, equity and expression. It will be led by Salil Shetty, vice president for global programs, who was hired in June and started September 1, along with directors for each issue area. “We want to bring more resources to bear on fewer issues to have greater impact,” said Leonard Bernardo, executive vice president, in an interview.

The new global program will have several additional elements beyond the three core themes, according to the memo. One team will manage up to 10 time-bound initiatives and advocacy campaigns. Two directors will be responsible for ensuring climate and intersectional justice are funded across priorities. In addition, existing teams dedicated to strategic litigation and impact investment will serve both regional and global programs. OSF also plans to maintain its strategy unit, whose responsibilities will include analysis, evaluation, and fellowships, as well as set up advocacy and communications departments.

How these changes will impact the balance between regional and global work in OSF’s roughly $800 million grantmaking budget—an additional $400 million typically goes to operations and reserves—is not yet finalized, according to Nowrojee and Bernardo. But there are some preliminary numbers. The global programs budget is projected to be $150 million annually, with each of the three directors overseeing an estimated $50 million budget, according to the memo and Nowrojee. Both regional and global teams can also access a $100 million reserve fund. The various other global bodies are tentatively slated to split a $50 million budget, she said.

“To have a greater impact globally, we need to focus on fewer key priorities, be more integrated in our approach, and have the capacity to pivot quickly,” wrote Malloch-Brown in the memo.

How the restructuring will change OSF’s giving

Under its current structure, OSF gives mostly through seven regional programs and 10 thematic programs. The latter include topics like democratic practice, economic equity and justice, equality and anti-discrimination, human rights movements and institutions, and justice reform and the rule of law. The grantmakers’ thematic programs have historically included not just global grants, but also regional and national grants.

Following the restructuring, all global giving will run through the new global program team. Existing thematic work will now be carried out through that simplified structure, but the topics will remain central to the grantmaker’s priorities. “We are fundamentally committed to continuing Open Society’s enduring commitments,” Bernardo said.

Regional programs, reduced from seven to six, will absorb about $75 million of the $87 million in national and regional work previously carried out by OSF’s thematic programs, according to the memo and Nowrojee. Regional budgets will grow by the amounts transferred, though figures vary widely. Regions taking in the most include Europe and Eurasia ($25 million) and Africa ($17.2 million), while much smaller amounts were transferred to the Middle East and North Africa ($3.9 million) and the United States ($3.8 million). Europe and the United States will likely continue to have relatively larger budgets than other regions, Nowrojee said, given Soros and his family’s greatest interests lie there. But there will be shifts. “We want to redress some of this balance,” she said.

Many grantees will see funding come to an end. The institution has recommended $200 million in tie-off grants based on a review of all global work, according Nowrojee. “It’s a natural part of philanthropy, but it’s a big amount this year,” she said. “It’s still painful, it’s still hard.” Most of those tie-off grants are one year to 18 months, according to two anonymous sources at OSF. Both said the cuts and funding uncertainties had caused widespread anxiety among grantees.

Certain areas of work will be ended entirely, according to Malloch-Brown’s memo and confirmed by Nowrojee. “The Global Board made the difficult decision that, subject to required consultations, we should discontinue or significantly reduce certain work at the global level,” he wrote. The areas mentioned were public health, education, the care economy, cities, undocumented migrant workers, the future of capitalism, the future of work, and non-litigation work by OSF’s Justice Initiative. And some are already shuttered: OSF closed its early childhood program last year and its scholarships program this year, Nowrojee said. However, in all cases, regional program teams can choose to continue such funding within their new portfolios.

OSF’s health and rights program, for example, had a $47 million budget in 2020 and a roughly 80-person staff, according to Nowrojee. Such work will be reduced, particularly public health projects, but it won’t be eliminated, she told me. Bernardo was emphatic that the foundation’s broader commitment to the topic will persist, saying “OSF has a fundamental, unalloyed and enduring commitment to public health.” For instance, the foundation is working on an “exceptionally large investment in the area of vaccine justice” with other foundations, he said.

The grantmaker also plans to give more multi-year grants and larger grants. OSF’s median grant size was $86,000, according to an internal evaluation conducted in part by the consulting firm Bridgespan Group. By contrast, Ford Foundation’s median is roughly $200,000 and the Bill and Melinda Gates Foundation’s is approximately $700,000, based on the analysis, which was shared with Inside Philanthropy. Similarly, 71% of OSF’s grants are less than $250,000, while about half of Ford’s are of that size.

In the July memo, Malloch-Brown presents the restructuring as an effort to do both more locally guided grantmaking while also bringing more coordination to OSF’s international projects. It reflects “our vision for our regional programs to lead our response to local challenges and our aspiration to undertake larger, more integrated investments focused on major global challenges,” he wrote.

How the transformation is impacting OSF’s staff 

OSF is offering a voluntary buyout package with wide-ranging benefits to most staff, and plans to follow up with layoffs if necessary, according to an FAQ provided to staff members and two staff sources. Program staff are eligible in the first phase and 180 have opted in, though the deadline to finalize participation has not passed for all offices, Nowrojee said. She did not specify how many were eligible during the first phase, but two anonymous sources said between 700 and 800. Operations staff will be eligible in the second phase.

“OSF accepts that it may lose employees with skills and experience as part of the VSP process, but its priority is to allow employees the agency to make the best decision for them,” reads the FAQ.

Morale at OSF is very low amid the changes, according to three sources who requested anonymity. Staff are profoundly concerned for grantees, particularly those in countries or working on issues that have limited philanthropic support outside of OSF. Staff who are staying are also concerned for their job security and the potential shifts in workload following the planned departures, said two staffers.

“Our impression so far is that very few within the organization, including our members, managers, and senior staff, are happy with the process,” said Gloria Middleton, president of Communications Workers of America Local 1180, which represents OSF staff, in a statement. Middleton wrote that the union is “concerned on multiple fronts” with the restructuring process, which “seems well intentioned, but poorly executed.”

Two staffers at OSF shared concerns that the departures could reduce diversity at the grantmaker and contribute to long-standing equity issues. Each said the majority of the people they know who are leaving are women or people of color. Nowrojee said OSF does not yet have data on the impacts on diversity—and as a voluntary program she noted there was no way to control who departs. The grantmaker’s international workforce, covering many countries with varying rules about the collection of such data, also makes such analysis a challenge.

The two staffers also were concerned that the changes will centralize power at the grantmaker by putting more decisions in the hands of fewer directors, moving to greater use of discretionary reserve funds and disempowering program officers. For instance, both said OSF was ending a practice known internally as delegated authority, which gave program officers substantial control over the funds in their portfolio.

Bernardo said the delegated authority practice is still in place, but will be evaluated along with others in the coming months. Nowrojee pointed out that shifting more power to regions, particularly in the Global South, will begin to remake OSF on several levels. She acknowledged that the grantmaker now has a disproportionate number of staff from Europe and the United States, particularly in leadership, but said the new residency requirement for program staff would shift both representation and who holds decision-making power.

“We’re trying to change so we have a global reflection of staff,” she said, adding that might include opening a hub office—the current five are in New York, D.C., London, Berlin and Brussels—in the Global South. “We have a disproportionate number of Americans and Europeans parachuting in to make decisions.”

However, there are no plans for changing the global board. It has historically been a “set of people who are friends of George Soros,” Nowrojee said. “Most of them are 60-plus in age, they are white, and it will be that way until George passes,” she said, but to provide a counterbalance to the lack of diversity at the top, OSF has hundreds of global boards. She said there have also been preliminary discussions about what foundation governance will look like in the future.

Will OSF reduce its overhead?

A globe-spanning philanthropy is an expensive operation. While OSF officials say it is not a driver of the restructuring process, cutting costs is likely to be an outcome, and appears to be a lower-tier goal. OSF puts about 30% of its $1.2 billion budget toward operating costs: salaries, benefits, offices, travel and other expenses. “We spend $350 million a year before we even get out of bed, before we do anything,” Nowrojee said. The team is looking at “where is it that we’ve gotten fat, where is it that we’ve gotten slow,” she said.

OSF has also suggested to employees that staffing cuts would bring the institution in line with peers. The PowerPoint presentation Nowrojee shared with Inside Philanthropy presents data showing other top foundations have smaller staffs than OSF relative to their grantmaking. However, one staffer told IP that multiple employees contested the analysis and conclusions presented in the PowerPoint.

Nowrojee said OSF has no desire to mirror their peers. But she does anticipate savings, whether from having program staff work in the region they cover, from the residency requirement reducing travel budgets, or longer-term grants reducing transaction volumes. “Of course, there needs to be a degree of concern. Not parsimony, but concern,” Bernardo said.

Getting closer to the ground

When Pedro Abramovay joined OSF in 2013, the foundation didn’t have a single office in Latin America. “The Latin American program was all based in D.C., most of the staff was from the U.S., and many didn’t speak Spanish or Portuguese,” he said. Over the following years, Abramovay, who is now the regional director of Latin America and the Caribbean, helped open an office in Rio de Janeiro—where he is now based—and later, others in Bogotá and Mexico City.

He told me that when he arrived, the team’s portfolio was dominated by U.S. organizations working in Latin America and international NGOs with mostly white staff and offices in the region. Establishing a physical presence helped OSF support more groups located outside the region’s capitals and lacking the international connections often necessary to securing international funding. It also “dramatically increased diversity” among the region’s staff, which didn’t have a single Afro-Latino member when he joined, he said.

He sees the restructuring as the next step in that move toward local representation. “We’re kind of doubling that bet,” he said. “This is clearly, I think, a change that is empowering the regions, but more than that, it is empowering the Global South,” he added.

His region will also get a lot more money. While numbers are not yet final, Abramovay expects his grantmaking budget to double, from a previously expected $20 million to $41 million. The increase is made up of $17 million in work transferred from thematic programs and $4 million in regional support for new campaigns, such as OSF’s climate initiative. The staff will increase 50%, he predicts, and now all will be based in the region.

In his time at OSF, Abramovay has seen the institution, beginning under past president Chris Stone, transfer more authority to program officers. He felt that brought decision-making closer to the ground, but also created fragmentation in the institution. Program officers responsible for narrow programs are liable to pursue their specific indicators without always considering broader goals, he said. Someone working on homicide reduction, for instance, may not have an incentive to cooperate on migration work, he argued. He believes the restructuring will preserve some autonomy, while reducing silos and funder myopia.

“I think what we’re trying to find right now is the right mix,” he said. “It’s really easy in philanthropy for the tail to wag the dog,” he added.

What comes next

It could take several years to see the full impact of the restructuring, particularly in the institution’s budget priorities. Nowrojee said this year’s budget has been dominated by one-off costs, such as the tie-off grant fund. Evacuating staff from Afghanistan is another significant and unexpected line item. And major long-term projects, such as the $1 billion Open Society University Network, will conclude over the next five years.

Soros famously declared at the outset of his giving that he never wanted to create an institution. With these changes, however, it seems that is finally happening. Intended as a spend-down foundation when he set it up, OSF has added offices and programs for years, and simply expanded the budget to make everything work. The succession of leadership changes starting with Chris Stone have further complicated its evolution. As Nowrojee put it, “This whole machine was never built to last. It was never built as an institution,” she said. “It’s almost like we’ve changed prime minister three times, and the civil service marches on.”

But one question is whether this new iteration will stick—particularly with a leadership transition looming. Other large foundations have reinvented themselves, such as Ford Foundation pulling back from its regional offices in the 1990s and moving more power to its New York headquarters, said Stanley Katz, a philanthropy expert at Princeton and co-founder of the philanthropy blog HistPhil. OSF, however, is a unique case.

“More than most large foundations, it is in a constant state of evolution,” said Katz. “I think they’re constantly looking around for the most flexible ways to behave.”

You can reach Michael Kavate at [email protected] or via Signal or WhatsApp at +34 657 164 086.