Ford Foundation Takes Action to Increase Grantmaking for Nonprofits by $1B
In response to the threat caused by COVID-19 to nonprofit organizations, the Ford Foundation and its board of trustees announced in a press release the intent to offer for sale $1 billion of taxable Social Bonds — the net proceeds of which will be used for grantmaking to help sustain and strengthen mission-critical social justice and creative expression organizations. Ford will be the first nonprofit foundation in history to offer a labeled Social Bond in the U.S. taxable corporate bond market. The net proceeds of the bond sale will enable the foundation to pay out more than 10% of the value of its total endowment in 2020 and 2021, which is double the level of grantmaking required by law.
The Ford Foundation joins the Doris Duke Charitable Foundation, MacArthur Foundation, W.K. Kellogg Foundation and Andrew W. Mellon Foundation in a collective effort to increase their annual grantmaking. The five foundations anticipate over $1.7 billion of increased funding above normal payouts over approximately two years.
The Ford Foundation's Social Bonds, Series 2020 (taxable), will be underwritten by joint lead managers Wells Fargo Securities and Morgan Stanley. There will also be a group of diverse co-managers who will participate in the offering. Wells Fargo Securities is additionally serving as the Lead Sustainability Structuring Agent related to the Social Bond designation. The foundation's Social Bonds have been assigned Aaa/AAA credit ratings from Moody's Investors Service and Standard & Poor's, respectively. Sustainalytics has provided a Second Party Opinion on the alignment of the foundation's Social Bond Framework with the International Capital Market Association's Social Bond Principles.
"We are facing a once-in-a-century crisis, and we must respond in unprecedented ways to sustain organizations that are advancing the fight against inequality at a time when the need is more pressing than ever," said Darren Walker, president of the Ford Foundation. "The nonprofit sector will be fundamentally upended and diminished by the economic fallout from COVID-19. The proceeds of the Social Bond sale will support and stabilize social justice, human services, arts and cultural organizations who must be essential voices in influencing the recovery and reimagining a new normal that is more just and inclusive."
"The market is increasingly focused on socially responsible investing, and the Ford Foundation's bond offering is an excellent opportunity for investors to put money to work in a high-quality credit with an impactful mission," said Sally Bednar, managing director at Wells Fargo Securities. "Wells Fargo is honored to bring this ground-breaking financing to market, particularly as it reflects our company's dedication to supporting organizations that support underserved communities."
The foundation's primary goal will be to fortify and strengthen key organizations that are advancing the fight against inequality at a time when communities who are most vulnerable have been hit hardest by the pandemic. Offering multi-year, general operating support — which is a signature of the kind of grants Ford provides — to these organizations will help build resilience, durability and sustainability now and in the future.
Editor's Note: This press release was provided by a company unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO and its staff.