ESG Investing

Foundations Set New Path in Answering the Call for COVID Emergency Funds


As the coronavirus pandemic steamrolled the globe in 2020, the need for relief aid of all types quickly became apparent. Fortunately, the initial response was swift. Congress directed $1.89 trillion toward federal domestic assistance programs between March 2020 and March 2021, including about 43% into the Paycheck Protection Program. This push helped ease the shock of the pandemic’s economic impact for many US households.

The private sector’s response was equally bold—and essential. During 2020, $15.4 billion in philanthropic aid was channeled toward COVID emergency funds, according to Philanthropy and COVID-19: Measuring One Year of Giving by Candid and the Center for Disaster Philanthropy. The outpouring contributed to what Giving USA 2021: The Annual Report on Philanthropy for the Year 2020 calls an all-time high in charitable giving.

In addition to illuminating the most urgent points of need, the crisis spurred a shift in the giving landscape that may linger.

“The conversations quickly moved to, ‘What other things are we thinking about for communities, and what other areas should we start to support?'” said John Church, Glenmede’s director of endowment and foundation impact portfolio management. “As foundations think more holistically about the issues, that could lead to longer-term changes in mission, with a reprioritization of funding choices.”

Making Adjustments on the Fly

The Giving USA Foundation’s full-year tally of philanthropic efforts totaled $471.4 billion, a 5% increase over the $448.7 billion recorded in 2019. Individuals accounted for nearly 69% of charitable giving, followed by foundations (19%), bequests (9%), and corporations (4%).

On the receiving end, public-society benefit organizations saw a 16% increase in donations in 2020. Those tied to the environment and animals experienced a 12% rise, and human services organizations posted a 10% increase in charitable donations.

Conversely, arts, culture, and humanities organizations saw charitable funds decline 8%. Health-related nonprofits experienced a 3% drop, which the Giving USA Foundation concluded largely stemmed from the cancellation of many in-person fundraising events.

During the pandemic, ties between inequities in navigating COVID-19 and long-standing social justice issues came to the fore.

Tracing Foundations’ Responses

Regardless of the recipient, funders recognized that the pandemic restricted many organizations’ resource pipelines. This prompted more than 800 foundations and individuals to sign a pledge with the Council on Foundations to streamline giving efforts, including:

  • Loosening or eliminating restrictions on existing grants
  • Making new grants as unrestricted as possible
  • Postponing reporting requirements, site visits, and other demands on grantees
  • Contributing to community-based emergency response funds
  • Listening to partners and communities to understand where funds are most needed

Church added that many foundations took advantage of a June 30 fiscal year-end date, following increased late-fiscal 2020 giving with accelerated fiscal 2021 grantmaking decisions. Rallying financial markets eased the decision to boost outlays beyond the required 5%.

Specific responses by foundations varied widely and evolved as the pandemic’s ripple effects became clear. For example:

  • Many organizations reached out to grantees and partners to assess immediate and longer-term needs. For instance, The Lemelson Foundation modified budgets, timelines, and expected outcomes to meet the new realities.
  • During the pandemic, ties between inequities in navigating COVID-19 and long-standing social justice issues came to the fore. Foundations such as the Clara Lionel Foundation stepped up funding for COVID-related mental health, domestic violence, and food and shelter programs. Racial justice causes became a focus in many of the same communities.
  • Recognizing that the pandemic’s impact would linger longest among children, the Kresge Foundation steered much of its COVID-19 response funding toward education and youth mental health initiatives.

Influencing Future Decisions

Such rapid reactions to the progressing effects of the pandemic served a purpose—to get more funding where it was needed. However, these efforts could complicate the path ahead.

“It can be easy to make the decision to spend more, especially in such urgent circumstances, but it is usually extraordinarily difficult to peel back those spending levels,” Church said. “All foundations come to and go away from certain grantees over time, but weaning away from certain areas can lead to tough conversations and hard decisions at some point as to how that evolves.”

One of the lingering impacts of the pandemic could be a further recasting of the relationship between philanthropists and impact investors. United Arab Emirates money management firm Grosvenor Capital cofounder Zahara Malik took to Entrepreneur to explain that the two camps discovered common ground in:

  • Achieving measurable, lasting, and sustainable impact with their funds
  • Balancing efforts between global and local issues
  • Working alongside fellow philanthropists, investors, governments, and the public sector

The trend manifested in the creation of the Global Impact Investing Network’s Response, Recovery, and Resilience Investment Coalition, which pulled together prominent impact investors and foundations to coalesce efforts around optimizing COVID emergency funds.

Considering Which Standards Will Stick

Within months of the COVID-19 outbreak, McKinsey & Company compiled a list of attributes exemplified by responsive, engaged, and nimble foundations. It urged these become standard as the long, hard work of recovery plays out:

  1. Simplify the process of seeking and managing grants, especially for small, community-based organizations.
  2. Make giving levels that were temporarily expanded in answer to COVID-19 permanent, and continue to emphasize complicated issues such as racial inequity, weak public health and education systems, and the climate crisis.
  3. Pool resources and expertise with other philanthropists to deploy funds rapidly through collaborative funding platforms.
  4. Bolster the strength and resilience of local communities.
  5. Turn to the public sector and support efforts to build capacity and improve the efficacy of government efforts at local and state levels.

“Similar to a period like 9/11, people might have had personal differences on issues—but in a time of great need, they can reconcile those pretty quickly and agree to get money back out to the community,” Church said. “But as we get COVID a little bit more behind us, foundations will need to have conversations about grantees that have come to rely on funding, where to set the payout level, and how investment decisions will reflect the mission. The questions aren’t new, but the discussions won’t be easy.”

COVID delivered a shock to the status quo; now, the staying power of the pandemic mindset remains to be seen.

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