A Growing Tide: Creating New Channels for Change

Carmen Rojas, Ph.D. President and CEO, Marguerite Casey Foundation

Rickke Mananzala President, New York Foundation

1. Where has Cal Wellness challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

Cal Wellness has never been particularly interested in doing something simply because that’s how foundations have always done it. Since 2020 our annual charitable output has far exceeded the minimum-required 5% of our endowment. At the same time, we’re looking beyond grantmaking to put the full power of our resources to work, committing our $1-billion endowment to mission-aligned investing to multiply our impact. And today we’ve aligned 99% of our assets with conditions that support community health, including the fact that 92% of our assets are invested with firms with significantly diverse leadership (at least one-third women or people of color as owners or leaders).

For us, firm diversity is a key strategy for spotting investments more traditional money managers may not see, in communities that have too often been overlooked — and giving those communities the economic opportunity to build healthy lives. Our standard is simple: the dollars we invest shouldn’t undermine what we’re trying to accomplish with the dollars we grant. That means looking at return as more than a financial question and asking whether all our resources are helping create healthier, more equitable communities.

2. Why has Cal Wellness chosen to put more of its endowment to work in these ways?

We’ve been rethinking what fiduciary duty means for a foundation. Our money is the people’s money. Our job isn’t to grow our endowment simply for the sake of having a bigger endowment; it’s to steward those resources so they can have the greatest possible impact on our mission to improve people’s lives. 

That means grants are only one tool: our endowment can also help finance affordable housing, expand access to health care and good jobs, strengthen climate resilience, and build a more inclusive approach to supporting entrepreneurs and fund managers. And when we are shareholders, we can use that position too, engaging companies to change practices that undermine the health and wellness of communities we serve. By using the same mission-driven lens that guides our grantmaking and applying it to our investments, we are working to ensure every dollar moves in the same direction — strengthening communities, not undermining them.

3. How did Cal Wellness get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

We didn’t get here overnight. We are still learning, testing ideas, bringing different perspectives to the decision-making table and giving our board and staff opportunities to see what is possible. My advice is to find your co-conspirators: taking a risk feels a lot less risky when you aren’t doing it alone. It’s been wonderful to see and learn from how Marguerite Casey, New York Foundation, Surdna, Nathan Cummings, Russell Family, and AJL Foundations are advancing this work.

And most importantly, stay close to the communities you serve. Think about how your board does or does not reflect those communities; if you see a gap, get to work in closing it. And create more opportunities to learn alongside community partners; visit them where they are and invite them to help question not just what you fund but the rules, assumptions, and systems that shape how you operate in the first place. It’s brave work, and it’s a privilege to be doing it.

1. Where has Foundation for Child Development challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

We needed to shift how we approached spending from a math calculation (5% of assets) to a strategic decision. We were inspired by Dimple Abichandani’s article, A ‘Balancing Test’ for Foundation Spending, and the Board adopted a new spending policy that enabled strategic decision-making based on both external conditions and the foundation’s mission. We reviewed numerous foundation spending policies and ended up adopting the structure of the California Wellness Foundation’s policy.

There’s also a myth, anchored in fear, that if a foundation increases its spending, they will deplete their endowment. Looking at the data and comparing different spending scenarios, we came to understand that this is not necessarily the case. Time-limited increases in spending wouldn’t have an appreciable impact on our endowment. The significant impact is only seen if we consistently spend higher than what the market is making year over year. A time-bound increase does not have the same impact. 

In 2025, when this new policy was adopted, the Board voted to double our grant spending for three years, which increased our payout to about 9% of our endowment in the current fiscal year. The long-term impact on our endowment is estimated to be marginal. 

2. Why has Foundation for Child Development chosen to put more of its endowment to work in these ways?

We are the Foundation for Child Development, which means that we put children at the center of our concerns. When the new federal administration took office in January 2025, it became immediately clear that this was no ordinary moment for kids. Within days and months, we faced a coordinated assault on the most vulnerable children in our country: executive orders denying birthright citizenship and rescinding protections against ICE raids in schools and childcare centers, and a sweeping budget bill that gutted Medicaid — the largest source of health coverage for children — along with deep cuts to nutrition assistance. 

Civil society, more broadly, was also under attack: our grantees were physically threatened, targeted by Congressional probes, and operating under the chilling effect of government investigations designed to quash dissent. We recognized this as an authoritarian moment requiring an extraordinary philanthropic response. We could not meet the scale of the crisis with business-as-usual grantmaking. We needed to protect the young children at the center of our mission and uphold our democracy for them.   

3. How did Foundation for Child Development get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

The increase in spending did not happen overnight, nor did it happen in isolation. We invested heavily in the pre-work that grounded our board and leadership in our mission and values. Starting in March 2024, well before the election, we anchored every board conversation around a critical question: what does it mean for FCD to “meet this moment?” We continued this assessment at every meeting, building collective understanding and board-CEO trust. Then came the reframing of risk itself. When the new administration took office, we moved away from the abstract and toward the concrete: our greatest risk is not to our endowment, but to the young children marginalized by racism, xenophobia, and economic inequality that we have pledged to center. For them, a four-year presidency can fundamentally alter their early development. That reorientation of risk changed everything. 

With that foundation in place, we tackled the technical and strategic barriers head-on. We rejected the idea that foundation spending decisions should be driven by mathematical formulas — 5% or 6% payout rates. Instead, we adopted a strategic framework grounded in mission alignment, drawing on Dimple Abichandani’s balancing test approach and adapting the spending policy model from Cal Wellness Foundation. This framework forced us to ask: What does our mission require? What is the timeline? What are the spending scenarios, and how do they actually impact our endowment over time? The data was liberating. A time-limited increase in spending does not significantly deplete the endowment; sustained increases do. We committed to a three-year increase that would deploy resources to the people and organizations at the frontlines of our mission. We directed every additional dollar toward grants — not overhead, not communications firms or legal risk management — because that is where the need is. 

For other foundation boards considering this path, here is our advice: Start with mission and values, not with numbers. Build board alignment through candid, repeated conversations about risk – particularly the risks borne by the communities you serve. Replace rigid payout formulas with strategic frameworks that ask whether your current spending level actually matches your mission needs at the moment. Commission research or gather data on endowment scenarios: the myths around spending will not withstand scrutiny. And finally, be deliberate about the timeframe for increases and transparent about how you will deploy the capital. Boards need to know that they are not choosing between the endowment’s health and their mission. They are choosing whether to deploy their mission capital when and how it matters most.

1. Where has Freedom Together challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

In response to a code red moment for multi-racial democracy, Freedom Together decided to spend at or above 10% of our endowment for a five year period, at which point we’ll reassess our spending targets.

For too many institutions, the 5% minimum spend prescribed by the tax code has become a zombie default policy — one that marches on, regardless of circumstances. 

The underlying logic behind our decision is simple: if you believe this is really a time of rupture in which decisions taken today will shape life for generations, then you have a fiduciary as well as moral responsibility to spend accordingly.

2. Why has Freedom Together chosen to put more of its endowment to work in these ways?

Is the ultimate north star for private foundations to serve their own perpetuity or the welfare of humanity? In a time of existential threat, our resources can be the difference between entrenched autocracy that makes it impossible to make progress on any issue and a thriving multi-racial democracy in which all voices get heard. There is no benefit to having a larger endowment decades from now if we failed to act when our resources could have made a meaningful difference.

3. How did Freedom Together get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

This is a time that demands bold leadership — and every leader in a position of power should ask themselves how future generations and their future self will regard the choices they made today. If foundation leaders deeply believe that bold action in spending is needed, then they must share their reasoning and the stakes of non-action with their boards and other stakeholders and ask them to lead too. Peers who have taken steps to change their spending policies can provide critical support and role modeling.

1. Where has Mary Reynolds Babcock challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

MRBF has repeatedly moved beyond standard payout in moments of crisis and opportunity, suspending its spending policy from 2009 to 2011 rather than pulling back during the market downturn when grantees needed it most, spending 13.46% in 2020 for COVID, doubling spending again in 2021, and extending its 11% commitment through 2031 even knowing it may reduce the endowment. Our first commitment remains with our people, not the money. 

Tactically, this meant that in 2008, when markets crashed, MRBF spent at the same rate, no cuts to grant dollars or staffing, because that moment called for showing up for people, not pulling back. A family member on the board put it directly: why would we pull back now, when our grantees need us most? In 2020, facing another crisis, the Foundation recognized it had both the resources and the responsibility to keep investing. Even after losing approximately $75 million in 2022, nearly 30% of our endowment, we maintained our spending at record levels. Both moments built directly toward the current 11% commitment on spending and mission-aligned investing, now extended through 2031. In this way, we are intentional philanthropic practitioners of care and courage — standing in our privilege and power in service to our communities. 

Guided by grantees, MRBF also moved to a 100% ESG portfolio by 2017 and, since 2019, has extended a racial equity lens to its investment management. In 2014, MRBF worked with nine investment managers, none of whom were people of color or women. Today, the Foundation works with more than 30 managers and funds, including 22 managers who are people of color and/or women, representing 26 funds. The endowment is treated as a tool to move resources to and with communities, not simply as an asset to protect for its own sake.

2. Why has Mary Reynolds Babcock chosen to put more of its endowment to work in these ways?

MRBF’s spending policy and endowment strategy are driven by need, moment, and conditions, not by protecting the resources. The endowment is a tool to move resources to the community, not an asset to preserve out of fear; that requires understanding exactly how much the foundation has and being strategic in the marketplace, and it has required building real capacity centered on investment strategy. 

This extends to its holdings: years ago MRBF discovered it held a stake in a coal company its own grantees were organizing against, a lesson that shaped its belief that the endowment should reflect the same values as its grantmaking. The investment committee also views the shift toward more diverse managers and stronger ESG practices as sound, long-term investment strategy, not solely a values-based choice.

3. How did Mary Reynolds Babcock get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

Intentional, deep learning is part of MRBF’s DNA, the kind that brings the board of directors closer to the work. Hence, we are able to function as thought and strategy partners, not solely stewards of compliance and control, and build real relationships with staff. Our team, guided by our board of directors, has deliberately created opportunities for board members to connect to our mission, bring their personal values, and build relationships with the staff they work alongside. 

It also matters that we are a family foundation that intentionally has a majority practitioner board — deeply informing practice and navigating power dynamics. We advise other boards and leaders to invest intentionally in that same closeness and shared learning rather than going it alone, and to learn from peer foundations that have already done this work. Don’t wait: endowments afford us the duty to make generational bets that make real the promise democracy and racial equity demand right now.

1. Where has Northwest Area Foundation challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

Our grants budget based on our normal spending policy is roughly $17.5 million per year, which positions us to meet the 5% IRS payout requirement. However, in 2025 we decided to double our grantmaking to $35 million to respond to the extraordinary challenges faced by the communities we serve amid changes in federal policy. Because these challenges are ongoing, we’ve continued at that same heightened level of grantmaking. 

We’ve also made an ever-deepening commitment to impact investing since the early 2000s. At present, about 36% of total assets are devoted to impact investments, both program-related investments and market-rate mission-related investments. We plan to continue our forward progress in the years ahead. Impact investing allows us to use our endowment assets to invest in organizations and businesses connected to the communities we serve so we can support them with our financial returns and our grantmaking.

2. Why has Northwest Area Foundation chosen to put more of its endowment to work in these ways?

Sticking to the 5% payout requirement allows us to honor the clear intent of our donor, who established the Foundation in perpetuity. But we also want to maximize the change we can support through the rest of our endowment. Impact investing allows us to earn strong returns while also supporting social impact for the communities we serve. Our decision to double our grantmaking payout also dips into the remaining 95%, but in a different and more temporary way. We’ve done the math, and increasing our grantmaking for several years to respond to urgent needs allows us to stand with our grantee partners while still preserving the endowment for the long haul.

3: How did Northwest Area Foundation get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

One key fact behind the scenes is that our board looks every quarter at the relationship between the current market value of our assets and the inflation-adjusted value of the original corpus. Because of effective stewardship in the decades since we were founded, we’re hundreds of millions of dollars to the good. So, in this time of crisis and challenge for the communities we serve, we can dig deeper without jeopardizing our perpetuity mandate. 

I would urge all of our peers to do a similar assessment. Perpetuity does not require complacency or timidity. 

I also think a strong focus on learning and relationship building for staff and board is essential. We’ve been on a 10-year, organization-wide journey around justice, equity, diversity, and inclusion. One of the most important, but often overlooked, aspects of this kind of journey is that it fosters a true understanding of our mission and values, the communities we serve, and how both relate to our work and interactions with each other. Our commitment to this focus made the decisions to double our grantmaking and to continue to increase our impact investments feel like natural extensions of who we are as a foundation.

1. Where has the Scherman Foundation challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

One of the reasons I agreed to join Scherman’s board in 2025 was because we questioned the rules and rhetoric most foundations don’t; that’s a spirit I intend to carry forward as president and CEO. For years, the foundation paid out 6% — above the 5% the law requires — and in 2025, when the political climate shifted dramatically, my predecessor Mike Pratt, the staff, and board went even further to bolster our grantee partners. We approved a two-year, 10% payout — double the 5% required for private foundations — to support grantees dealing with budget deficits from canceled government contracts, shifting funder priorities, and deliberate attacks to harm and hinder historically marginalized communities. We were deliberate about keeping that commitment time-bound. The goal was to meet the moment in a meaningful way without giving up our long-term flexibility. We knew that there were urgent needs that required additional resources, and we calculated that over time our endowment would recover. 

We’ve also spent significant time examining the endowment itself. That’s very important to me because it doesn’t make sense for a foundation’s money to work against or exacerbate the inequality grants are meant to help rectify.  That’s why we continue to codify our commitment to investing our endowment for impact, including catalytic investments. Moving forward, I’m focused on a big question: Is every dollar we have in service of the racial justice mission we’re working to advance?

2. Why has Scherman chosen to put more of its endowment to work in these ways?

Again, I was drawn to Scherman — first as a board member and now as president and CEO — because of its vision. At a moment when so many foundations held back, our foundation had the clarity to increase spending — and to do so quickly.  I am so grateful for my predecessor Mike Pratt, the staff, and the board for their collective leadership on this.

Sitting in the president and CEO seat hasn’t changed my position. The way I see it is simple: Our partners need us right now, and our mission demands we act accordingly. As I mentioned, the organizations we support are dealing with intense and potentially crippling budget cuts while working to defend communities of color and fight policies that weaken civil society. Our democracy is at stake. 

Scherman wasn’t willing to sit on its hands while that happened. That’s exactly why we’ve also committed our endowment to mission-aligned investing, including catalytic investments. To me, this is what it means to confront the traditional way philanthropy operates and to be the partner our grantees deserve. The next step is figuring out how to do even more in partnership with grantees and communities facing continued peril. These are turbulent times and we’ll face them together with unrelenting hope.

3. How did Scherman get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

My advice to other boards starts with dropping the all-or-nothing mindset. You don’t have to choose between a 5% payout forever and spending down. Scherman committed to 10% for two years, which let us show up in a big way without jeopardizing our future. A time-bound step is still a significant step. I also think it’s important to get clear on organizational purpose. That starts with framing and asking hard questions. Is your foundation an investment management firm that does some grantmaking, or is it a charitable organization that leverages its resources in pursuit of its mission? 

Do the mission work first, because that clarity allows a board to move quickly without worrying that it’s being reckless. Ask other questions: What is your fiduciary duty, and to whom are you duty bound? Is it the organization? Or are you duty bound to the mission? If you are duty bound to the organization, then you are also duty bound to its mission and purpose. Be honest about whether your governance helps you act or just slows you down; if it’s the latter, work to fix that. Trust between board and staff is critical to moving money out the door. 

Keep risk in perspective. Foundations must grapple with complex regulatory, legal, compliance, portfolio, and liquidity risks, to name a few, but that’s different from what frontline grantees face every single day. Many put their safety at risk, and those are different stakes.  

Finally, don’t stop with the grant budget. Your endowment is your biggest tool, and putting it to work as a mission-aligned, long-term institutional investor is part of the job.  At Scherman, we’re going to keep showing up. We’ll continue to go above and beyond to support our grantees and the communities they serve. 

1. Where has Walter & Elise Haas Fund challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

The Walter & Elise Haas Fund is a 74-year-old family foundation in a period of renewal; We have been actively examining longstanding practices and asking whether they still serve our purpose and the communities we exist to support. 

We began with grantmaking. Upon review, for example, we found that the Fund mostly awarded annual project support grants in modest amounts relative to our grantmaking capacity. Today, all of our core grantmaking initiatives provide general operating support in either 5-year or 7-year grant periods, and for substantive amounts. 

During the global pandemic and in each of the past two years the Fund’s trustees have also approved significant spending above our normal payout because we believed the circumstances facing our communities and the nonprofit sector called for more of the institution’s resources to be put to work. We have not yet extended that renewal to mission-aligned investing, but the endowment and our investment practices are next among trustees’ governing priorities. 

A blog published by CEP in March 2026, “Rethinking the Spend-Down Debate: Mission First, Timeline Second” by Tracy McFerrin and Ben Zeno, provided helpful framing for the trustees’ conversations about the endowment’s purpose. Our aim is not change for its own sake, but to develop a more intentional philosophy of capital stewardship that connects how we invest, preserve, and deploy the Fund’s resources to our purpose.

2. Why has Walter & Elise Haas Fund chosen to put more of its endowment to work in these ways?

We keep coming back to a deceptively simple question: What is the corpus for? We believe the resources entrusted to the Fund exist to advance community well-being, and stewardship requires us to consider both the needs and opportunities of people living in the Bay Area today and our responsibility to future generations. That means there may be moments of extraordinary threat or extraordinary possibility when responsible stewardship calls for deploying more capital rather than preserving it. 

For us, responsible stewardship also means being willing to revisit inherited practices rather than allowing convention, or simply the way we have always done things, to make those choices for us. We’ve come to believe that though perpetuity can describe an institution’s time horizon, it should not freeze our practices in time.

3. How did Walter & Elise Haas Fund get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

Our experience has taught us that longevity and evolution are not in tension; for a 74-year-old institution, the willingness to learn and change is part of responsible stewardship. We began our renewal by getting clearer about our values, vision, purpose, and beliefs and then examining our grantmaking practices through that lens; now we are beginning to bring the same questions to the stewardship of the endowment. 

My advice to other foundations would be to start with the deeper governance conversation not “What should our payout rate be?” or “Should we pursue mission-aligned investing?” but What do we believe our endowment is for, and what would it mean to steward it in a way that is fully aligned with our purpose?” The answers may lead different foundations to different practices, but the questions themselves are worth asking periodically. 

1. Where has Woods Fund Chicago challenged conventional foundation practice in how it manages and deploys its endowment, particularly through spending policy and payout and through mission-aligned investing?

At Woods Fund Chicago, we have been willing to question some of the practices philanthropy treats as rules. For years, we operated with a 6% payout and the assumption that preserving the foundation in perpetuity was part of being a responsible steward. We began challenging that during COVID and have steadily increased our payout to 15% today. For us, fiduciary responsibility cannot only be about protecting the corpus. It also has to include our responsibility to the organizations and communities we exist to support.

We are now bringing that same thinking to the assets that remain invested. In 2025, we hired Bivium Westfuller, a partnership of two Black-owned investment firms, as our outsourced chief investment officer (OCIO) and began a deeper process of aligning our investments with our mission and values. That means looking at what we invest in, what we want to avoid, who manages our money, and where catalytic capital might help strengthen the organizing ecosystem and communities we support. The work is still evolving, but the basic question is simple: if racial justice shapes our grantmaking, why wouldn’t it also shape how we invest the rest of our endowment?

2. Why has Woods Fund Chicago chosen to put more of its endowment to work in these ways?

Our commitment to racial justice and trust-based philanthropy pushed us to look at the whole institution, not just our grantmaking. We have tried to embed those values in how we work with grantees, how we staff the foundation, how we govern, and how we use our corpus. COVID made the tension particularly clear. Foundations often say they are preserving resources for a rainy day, and we had to ask ourselves: if a global pandemic, deep racial inequities, and chronically underfunded organizations are not the rainy day, what are we waiting for?

We also fund organizing and movement building, which are consistently underfunded even though they are essential to creating systemic change. We know from our grantee partners that this work requires sustained resources and strong organizations, not funding that appears in a moment of crisis and disappears afterward. That is part of why we have increased payout, moved toward multiyear unrestricted funding, and begun exploring catalytic investments and other ways the endowment can strengthen the broader ecosystem. We want more of the foundation’s resources working toward the purpose for which the foundation exists.

3. How did Woods Fund Chicago get there, and what advice would you offer other foundation boards and leaders considering changes to spending policy or mission-aligned investing?

We did not get here all at once. COVID was the catalyst for increasing payout, and then our strategic planning process gave us an opportunity to interrogate assumptions we had inherited about the foundation. One of those was that Woods was legally required to exist in perpetuity. When we actually investigated it, we learned that was not true. That experience reinforced something I have seen repeatedly in philanthropy: practices can become accepted as rules simply because we have been doing them for a long time.

Board composition also mattered. Between 2021 and 2022, more than half of our nine-member board turned over, and we intentionally brought in more people who were organizers or closer to community organizing. That changed the conversations we were able to have about risk, payout, and our responsibility to community. 

My advice to other foundations is to start by questioning your assumptions, understand what your governing documents actually require, and make sure the people closest to your mission are part of decisions about the endowment. On investing, bring staff, board, and investment partners into the conversation together, be clear about your values and financial needs, and understand that alignment is an ongoing process of learning, not a one-time change to an investment policy.

“The conventions of grantmaking were set up to mitigate risk and to prioritize perpetual endowments over partnership with community. Level Up instead puts community first, and the additional resources donors are providing are allowing organizations to respond powerfully to what is an incredibly challenging moment for our nation. More people are being served. More doors are being knocked on. More harmful narratives are being challenged. We expect many of the signers will continue to pay out above the minimum long after the commitment for the pledge is over.”
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