The Ford Foundation went public with plans to sell a historic $1 billion in social bonds in early June, just as millions of Americans took to the streets calling for racial justice. Ford’s move was enthusiastically received as a means to turbocharge grantmaking in a time of intersecting crises. Council on Foundations CEO Kathleen Enright called the decision a “shot heard ’round the world,” and referred to debt financing as a “creative, groundbreaking innovation” in the world of big grantmaking.
Ford wasn’t the only bellwether legacy funder to issue bonds at that time—the MacArthur Foundation sold $125 million worth, and the Doris Duke Charitable Foundation issued another $100 million. But Ford’s commitment to the unconventional tactic was by far the largest, and its promised payout increase equally sizable: up to 10% over the next two years. At the time, we discussed how Ford’s decision, although still protective of the foundation’s sizable assets, may signal a shift away from foundations’ typically staunch dedication to the minimum annual payout required by law. In response to the pandemic and heightened demands for change, other funders have also responded with increased payout commitments, some digging deep into their endowments.
Whether or not such changes are afoot, Ford’s huge bond sale offers another reminder of the disparity between big foundations’ financial heft and the precarious positions of underdog grantees. But the storied grantmaker has been moving money with a greater sense of urgency. A total of $85 million has already gone out to arts groups serving communities of color via the America’s Cultural Treasures initiative, catalyzing at least $80 million in additional support from other funders. Earlier this month, Ford announced that it will double its racial justice and civil rights grantmaking using proceeds from the bond sale. A minimum of $180 million in new general support funding will reach litigation, policy advocacy and grassroots organizing efforts, bringing Ford’s planned funding for racial justice efforts up to $330 million through 2021.
In a news release, the foundation called attention to Candid data showing that only around 5% of U.S. racial equity funding supports grassroots movements. Ford is among the top sources of that support, and it’s doubling down. “Our most urgent priority for this infusion of funds is to meet activists and litigators where they are, and ensure groups on the ground at this historic moment of racial reckoning have the resilience and resources they need,” Ford’s President Darren Walker said.
Next-Gen Racial Justice Organizing
The largest component of Ford’s $180 million racial justice funding boost will be $125 million specifically devoted to “a new generation of Black-led organizing.” This will expand on the foundation’s already-sizable support for racial justice advocacy organizations, many of which are listed here. It will also likely take cues from Ford’s much-discussed BUILD program, which has seen the foundation lean into longer-term, flexible capacity support—just the kind of funding nonprofits have been calling on for years, and which is more crucial than ever during a pandemic.
Well before this summer’s protests, Ford also adopted an intersectional approach to racial justice, applying it as a lens across all of its program areas. That has manifested in grants to established players like the NAACP Legal Defense and Educational Fund, the Leadership Conference on Civil and Human Rights, and the Mexican American Legal and Educational Fund, all of which are recipients of this new funding.
Ford is also looking to support new organizations it hasn’t funded before, likely under the heading of next-gen Black-led organizing. As we’ve seen, newer groups associated with the Movement for Black Lives were vital to this year’s racial justice groundswell. But philanthropy could be doing a whole lot more to back underfunded Black-led groups, advocates say, and that starts with interrogating ingrained prejudices about what constitutes a “worthy” grantee, especially in terms of budget and leadership.
One newer Ford racial justice grantee is Black Youth Project 100 (BYP100), founded in 2013 to convene young Black activists across the country. This year, BYP100 got $800,000 in general support from Ford. Another example is the Black Voters Matter Capacity Building Institute, focused on civic engagement, which has received $1.5 million from Ford in 2020. In many cases, Ford channels its movement-building support through progressive intermediaries like Borealis Philanthropy, NEO Philanthropy and the Proteus Fund, which can fiscally sponsor racial justice efforts like Law for Black Lives at NEO.
Though Ford isn’t involved, the just-debuted Democracy Frontlines Fund’s slate of Black-led movement organizations provides a good sense of the kinds of groups Ford and other progressive grantmakers may be looking to fund as they roll out racial justice grants over the next year or so.
The Gift of Stability
Ford appears increasingly committed to this new era of general support-centric social justice funding, a definite evolution from a pre-BUILD status quo that saw the grantmaker award only around 24% of its grants as general support. The idea that progressive funders need to nurture a movement—rather than just back specific projects—has caught on big time, although time will tell if this recognition heralds a substantive shift in the sector. The pandemic has also focused philanthropy’s attention on grantee vulnerability. Discussing America’s Cultural Treasures, Darren Walker pointed out how quickly some smaller arts organizations would have to close shop without a cash infusion. “If we don’t help them, they will be gone,” he said.
Ford’s urgency and attention to BIPOC-led movements and arts groups makes a difference, not just because of the funding, but because people pay attention to what this funder does. For Inside Philanthropy’s recent survey of philanthropy professionals, respondents cited Ford as one of the most important sources of new funding right now—perhaps not surprising, but indicative of its enduring prestige.
Ford’s recent moves are significant. The fact of the matter is that Ford is using the proceeds from its social bonds to fund two categories of grantee that face structural—and, frankly, racial—barriers to raising money. It’s using the leverage of its secure financial position to give away that money quickly in the knowledge that it won’t take much of a hit in the long run.
“We’ve rarely seen investors, both in the U.S. and around the world, respond with such enthusiasm to a designated social bond offering of this kind,” Sally Bednar of Wells Fargo Securities remarked about the sale. “The low yields and the successful, rare, 50-year maturity achieved through the bond sale are a strong indication of investor confidence in the Ford Foundation’s stature in the private foundation space,” she said.
It’s the same kind of thinking that animated Kresge and a number of other philanthropies to set up the Community Investment Guarantee Pool early this year. Like Ford’s social bonds, that effort capitalizes on investors’ and banks’ confidence in the secure financial position of foundations, essentially giving away that confidence as an asset instead of cash.
While Ford’s social bonds do pay for cash grants, the underlying dynamic is the same. In our society, wealth begets wealth, and the power to access more money at will. As institutions that are wealthy by definition, philanthropies need to start thinking more creatively about the spectrum of powers that position affords them. Even if they have no intention of spending down, those powers are assets that can be turned to grantees’ advantage.