Spend Now or Spend Later: A False Choice?

This post originally appeared on Hilary Pearson’s blog.

I participated this week in an important discussion facilitated by Tides Canada and Future of Good on the need for foundation philanthropy in Canada to step up its giving in response to the COVID emergency. The spark for this discussion was a call to action by Give5, a new movement dedicated to encouraging foundations to give 5 percent of their assets this year to meet urgent needs.

I agree with this call to action. It’s a way to signal the fundamentally new and prolonged crisis that we are all experiencing, and the enormity of the need that has been created by the necessary shutdown. If there was ever a time to do more public good, now is the time to do it, regardless of whether your mission statement does or does not include support for the neediest and most disadvantaged.

This being said, philanthropy is facing, as has been noted by philanthropic leaders, a “major reckoning with philanthropic obligation to the present and to the future.” What must we do today and what are we obliged to consider for the future?

In the present, we can begin by considering the capital that is at the disposal of foundations.

Foundations are not just granting instruments. They are deployers of social capital, which can take the form of money but also can be represented through knowledge, brains, and networks.

How best to deploy that capital for today’s emergency? Give5 is promoting the opportunity to make more money available by spending down more assets. It’s focusing on one part of the capital, money (arguably the most visible part), and one aspect, quantity. The target of 5 percent focuses our attention on an easily measurable standard. It’s a demanding commitment especially as assets diminish in value. Yet it is powerful as a quantifiable token of willingness to step up.

But what about quality? In other words, how effectively to spend that extra money? There are three important questions that foundations could ask themselves to ensure that quality matches quantity as they ramp up spending.

Targeting, timing, and type.

Targeting: How can we best direct our extra dollars? To local collective funds that are able to distribute the funds where there are greatest gaps or needs? What about getting additional money to nonprofits that help other nonprofits, such as Imagine Canada or other sector-specific umbrella groups? What about supporting underfunded advocacy groups needed more than ever as the crisis exposes inequalities in our society? And what about funding global efforts to fight the pandemic through data, and development of therapies and vaccines?

Timing: Do we spend this all at once? Spread it over time in this coming year?  Everyone is telling us this will be a marathon not a sprint. It’s not about throwing lots more money at the emergency today but perhaps about spreading it over time, in the way that only foundations with a longer-term view can do.

Type: What form should the extra money (and perhaps other forms of social capital) take? Should it be all grants? Unrestricted? Cash? General operating support? What about offering guarantees for credit?  What about seeding community reinvestment funds? Can we put more funds into convening activities or sharing information?

These are not easy questions. But there was arguably never a better or more necessary time to be creative in deployment of capital.

Foundations are great counter-cyclical engines. We can’t afford not to think about what is needed in a world that is changing before our eyes. The present is truly present.

And yet…what about the future? Aren’t foundations built for keeping their eyes on the future, given their endowments and their long-term perspective?  In the context of this emergency, as Beth Breeze of the University of Kent put it recently in The Guardian, foundations must think about relief for now and think about the future through funding research and rebuilding efforts.

It’s a false choice to think that foundations must either throw it all into the rescue today versus saving for the fight tomorrow. It’s not just about spending down today versus saving for the future. Big issues are still on the horizon. Climate change hasn’t disappeared. Disparities in the world aren’t going away. Investments are needed today in work that will bear fruit only in the future.

In the end this is a call on foundations to increase their spend this year, of all years, but not to neglect the funding that will lead to systemic changes in the future. The pandemic crisis has highlighted as never before the cracks and outright gaps in the systems of our society. Foundations can help provide social capital to support the work that will change systems for the better in the future.

Hilary Pearson is a strategic advisor and facilitator for family foundations and formerly the founding president of Philanthropic Foundations Canada. Follow her on Twitter at @hilarypearson20.