In a bold joint effort, five major US charitable foundations have come together to pledge more than $1.7 billion to support nonprofits around the world that have been battered by the looming financial crisis.
The Ford Foundation, which is leading the initiative, has promised $1 billion for the endeavor, and is joined by the W.K. Kellogg Foundation (which is pledging $300 million); the Andrew W. Mellon Foundation ($200 million); the John D. & Catherine T. MacArthur Foundation ($125 million); and the Doris Duke Charitable Foundation ($100 million).
“This is a story of something that doesn’t happen enough in philanthropy: collaboration,” Ford Foundation president Darren Walker said in a press call announcing the initiative. “I don’t think there’s been a greater day for American philanthropy than today.”
The Ford Foundation has also made the exceedingly rare decision to raise its $1 billion by selling 30- and 50-year bonds. (The organization also plans to separately give $550 million in grants it was already planning to distribute this year.) The MacArthur and Doris Duke foundations also plan to issue bonds.
Debt financing, which is common practice in for-profit sectors, is unusual in philanthropy, but the foundations say that unprecedented times call for unprecedented measures. The organizations are looking to take advantage of low interest rates, which also allows them to spend more money without digging more deeply into their endowments.
The five organizations will individually handle the distribution of funds according to their own grant-making guidelines and priorities, and hope that their bold initiative will inspire others to act similarly.
“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,” MacArthur president John Palfrey said. (At least two organizations that were approached to join the effort, the Carnegie Corporation and the Rockefeller Brothers Fund, declined to participate, according to the .)
The effort comes at a crucial time for nonprofits around the world, which are struggling under the weight of closures, staff reductions, and damaged investments. Many arts organizations have only two months of cash reserves, and cultural institutions are on track to lose a total of $6.8 billion this year. Even more dire, the American Alliance of Museums predicts that up to 30 percent of American museums could close permanently.
“The partnership that we’re announcing today happened with unprecedented speed and unprecedented scale,” Mellon president Elizabeth Alexander said. “Many organizations don’t have any kind of endowment at all. Addressing that issue of longevity is a longterm structural challenge. But one of the things that’s extraordinary that we see in the arts sector is an unparalleled resilience.”