Nonprofits and funders alike have long called on foundations to be more flexible and responsive; to provide more unrestricted funding; to reduce what they ask of grantees; and to build stronger, more trusting relationships with grantees. These calls for change have only intensified in response to 2020’s crises.
In the new report CEP is releasing today, titled Foundations Respond to Crisis: Towards Greater Flexibility and Responsiveness?, we explore the extent to which foundation leaders say they are making changes across these dimensions. This is the final report in our three-part series about how foundations are responding to 2020’s crises.
All of the foundation leaders we interviewed said that this year’s crises have compelled them to reevaluate their overall strategies and grantmaking approaches, as well as their administrative processes. Indeed, most foundations say they have become more flexible and responsive. Notably, these are new practices for more than half of those we surveyed.
More specifically, we learned:
- Almost all surveyed foundation leaders are loosening or eliminating restrictions on existing grants, across most or all of their program
- Three-quarters of survey respondents report that their foundation is providing more unrestricted grant dollars now than they were before the pandemic.
- Almost all surveyed foundation leaders are reducing what is asked of grantees, across most or all of their program areas.
- Among foundation leaders we interviewed, about 40 percent report being more focused on the need to build trust, listen, understand, and work in deep partnership with grantees.
Some leaders hope that this year’s crises spur more transformative changes inside foundations. As one leader said, “We treat our processes like they came down from the mountain with Moses, like they’re embedded on tablets. They’re not. They were made up by us. And this moment has called those processes into question.”
Our findings indicate positive progress. But there is still ample opportunity for improvement.
Importantly, we found that foundations with more racially diverse boards were slightly more likely to offer flexibility to more of their grantees, in comparison to foundations with less racially diverse boards. Yet, more than half of the foundations represented in our survey data reported that less than 25 percent of their board members are people of color. And, as we noted in the second report in this series, only 12 percent of leaders we interviewed for this research proactively raised the need for their board to be more racially diverse.
Even as three-quarters of foundations say they are providing a higher percentage of unrestricted funding than they were prior to the pandemic, we found that few foundations are increasing their provision of multiyear general operating support in particular. This is despite the majority of foundation CEOs being in favor of increasing the percentage of grantees receiving multiyear GOS, as we found in a recent study.
We’re in an exceedingly challenging time for nonprofit organizations. Many, particularly direct service nonprofits and those serving historically disadvantaged communities, are facing the twin challenges of increased demand and decreased revenue. There’s no doubt that multiyear GOS grants would allow these organizations to respond to crisis, focus on their work and evolving needs, and plan for their future.
It is also noteworthy that more than half of leaders that began these practices in response to the pandemic report that they will continue them in the future — yet most of them say that they will do so to a lesser degree than their current pandemic practice. Further, about 30 percent say they are unsure whether they will continue these practices at all.
This sizeable proportion of foundation leaders unsure about their future practices leads to the million-dollar question: is this increased flexibility and responsiveness merely a momentary adjustment, or will the crises of 2020 catalyze substantive, long-term change in how funders approach their work?
Only time will tell. Our team at CEP will undertake a second phase of this research in the coming months as we continue exploring how foundations are responding to these crises — including which changes they plan to make permanent in their post-pandemic practices.
In the meantime, though, it seems fitting for funders to consider this question, posed by a foundation leader we interviewed: “How do we use this moment as a proof point that funders can do rigorous, intentional grantmaking without burdening grantees?”
The data for this study was collected through surveys of 236 foundation leaders (mainly CEOs) and interviews with leaders at 41 foundations. You can download Foundations Respond to Crisis: Towards Greater Flexibility and Responsiveness?, along with the first and second reports in the series, here.
Naomi Orensten is director, research, at CEP.