Q1: What role can private foundations play in supporting frontline health workers during the COVID-19 pandemic? How we can help at the local level?
A1: In this situation and every other, one of the most important roles that a private foundation can play is that of listener. Rely upon relationships with current and former grantees. Nonprofits at the forefront of this pandemic and the economic hardships that are ensuing know best what their needs are, and they can tell you what they are struggling to accomplish and what resources will help most.
When it comes to assisting hospitals and health care workers, funders can work directly with individual hospitals or larger hospital groups. Many hospitals have established COVID-19 funds as a seamless way for funders to provide support without creating an administrative challenge for an already-overtaxed hospital staff. Contributing to these funds enables hospitals to direct resources to their most pressing needs whether it is the procurement of Personal Protective Equipment (PPE) or additional, temporary staffing. Financial support allows the hospital to make the choice and offers them the greatest degree of flexibility.
Everyone is eager to help, but few of us are in a position to manufacture sterile medical equipment, produce it at scale, and deliver it to a hospital’s loading dock. Some funders have made in-kind contributions. By tapping into their personal and professional networks, they have identified mask producers, purchased those supplies and had them sent to a designated hospital (with advanced consultation with the recipient entity). Others with manufacturing and logistics capabilities have coordinated the production of medical equipment and ensured its delivery to health care providers. While innovative, these are exceptional responses and many hospitals indicate that their strong preference is for financial support. Another route is to identify nonprofit intermediaries that specialize in assisting during global health crises and are experienced in supply procurement, transport and delivery.
Q2: What if a foundation doesn’t have a disaster response strategy? What can they do in the middle of a disaster like COVID-19?
A2: Foundation support is always pivotal in supporting communities and even more so during a disaster. As we mentioned above, when a disaster is as widespread as COVID-19, all communities and the organizations that support them may be affected. Recognizing the secondary impacts of a disaster can, at times, be even more important than addressing the top line needs that are well covered in the media. In this regard, engaging current grantees who are struggling and may be fighting to remain open is a concrete response to the effects of the pandemic.
In situations where your foundation may not specialize in the needs created by a particular disaster (health care, supply procurement, scientific research, policy development, etc.), consider contributing to a pooled fund that is directed by a group of experts. This can be an efficient way to maximize the impact of your foundation’s grant and benefit from the expertise that will inform the fund’s distributions.
Q3: Given the current economic downturn and the impact this might have on the value of a foundation’s portfolio, how can foundations balance the protection of their assets and the needs of their grantee partners? What about exceeding the 5% payout requirement?
A3: This is truly a question of balance. Funders recognize that the economic downturn may threaten the very existence of some of their grantee partners (particularly grassroots, community-based organizations). Many are choosing to give generously and even exceed their 5% payout in response to the dire needs of the nonprofit organizations and the communities they serve.
If a foundation makes qualifying distributions in excess of their Minimum Distribution Requirement (MDR) in 2020, that amount can be carried forward and applied to future MDRs for up to five years. If portfolios are down in 2020, the MDR will be lower in 2021 and any carry forward amount will ease the pressure on foundations to spend down assets.
Q4: How does a foundation balance the choice between giving to a large, national organization (e.g., Red Cross, CDC) vs. a smaller, more targeted, local organization?
A4: This question depends largely on the type of grantmaking that a foundation and its board have adopted. If they want to distribute their funds across a wide swath of organizations and sectors, they might donate smaller amounts to a number of organizations that are national or global in scope. If they are inclined to be more involved and want a close understanding of the impact of their support, it may make sense to make a larger grant to a smaller organization with a local footprint. The foundation board’s time and expertise are also a factor. If they have limited time and are not experts in a particular field, giving to well-established organizations that are leaders in their field can be a way to ensure that foundation funds are going to effectively address local needs.
As mentioned above, a pooled fund in an area of interest may be a good option for small funders who want to leverage their resources for greater impact.
Q5: Many response funds have popped up to address COVID-19. How do we evaluate these funds?
A5: Consider the board of directors of the organization that has established the fund and also the fund’s advisors. Do they have skillsets that pertain to the core purpose of the fund? Understand who will make the distribution decisions and what criteria they will be using for selecting grantees. Ask about the organization’s experience in managing past funds. They may have additional information about past work available on their website or in their annual report. This can provide a good sense of how the organization operates and how well they have distributed pooled funds in the past.
Q6: When is foundation funding most important following a disaster? When will our foundation make the most difference?
A6: There are some startling trends in the timing of disaster response following a one-time event, such as a hurricane or earthquake. Contributions from the general public often peak on the fourth day following the disaster, which coincides with the height of most media coverage. And, after six months, nearly all public support has stopped. Meanwhile, the arrival of government support can take months and sometimes years following a disaster. In these events, private foundation support can be an essential bridge between the initial public response and the longer term government support.
The full impact of the COVID-19 pandemic will not be understood for a long time. In this period of uncertainty, foundations can employ a multi-phase response: phase 1—immediate and urgent needs (1-4 weeks following the onset of the disaster); phase 2—midterm needs (1-6 months following the disaster); and phase 3—long term effect (beyond 6 months). Planning for a sustained and multi-faceted response will enable foundations to schedule their distributions, learn as new information emerges, and determine where their support can have the greatest impact.