The landscape of the philanthropic sector looks very different as it emerges from the worst of the pandemic and multiple other crises that defined this past year.

Nonprofits suffered economically while having to shift resources and readjust programming as they attempted to meet historic levels of need. Funders had to learn to respond quickly and with more flexibility. Foundations across the U.S. increased payouts, relaxed grant restrictions and recognized the need for listening to their communities in new and deeper ways.

Now that we have a year of hindsight, the question becomes: Which of these new foundation practices will endure, and what still needs to be done?

When nonprofits simultaneously began to lose funding, volunteers, employees and their ability to serve and connect to constituents in person, funders were forced to reconsider their typical grant requirements. Not only for funds already in use, but also for the constant new requests demanding urgent attention. Recognizing the need for leadership, collaboration and information sharing among funders, national organizations such as the Council on Foundations (COF), one of the largest nonprofit membership organizations serving foundations and other grantmakers, quickly established guidelines to help funders navigate the uncertainty. Over 800 foundations and other philanthropic organizations signed the COF’s pledge of action, which outlined recommended responses to the unique challenges that funders’ communities and nonprofit partners were facing, including:

  • Loosening or eliminating restrictions on current grants, including the conversion of project-based grants to unrestricted support
  • Accelerating payment schedules
  • Making new grants as unrestricted as possible, giving nonprofit partners maximum flexibility in responding to crisis
  • Reduction in or postponing of reporting requirements, site visits and other demands on a nonprofit’s time
  • Contributing to community-based emergency response funds
  • Committing to listening to nonprofit partners and especially to those communities least heard

One of the most important commitments included in the pledge might be the one that asked signatories to commit to learning from these emergency practices as they consider which adjustments should be carried forward into more stable times. Particularly, what crisis response taught them about the effectiveness of their partnerships and philanthropic support.

With regard to deliberating and adopting change, donors who give through family foundations often have the distinct advantage of minimal staff and bureaucracy compared to larger philanthropic players. The lack of multiple organizational layers and the ability to call ad hoc family meetings allows them to respond quickly and nimbly to needs within their communities. There are several conversations that families can have about ways to capitalize on lessons learned this past year:

  • Should we increase our annual payout, and should we adopt policies that allow us to speed up the giving process?
  • How can we better listen to and strengthen relationships with our nonprofit partners? Are we soliciting the right input and feedback from our grantees that could help guide funding decisions?
  • What areas in our community were disproportionately impacted by the challenges of this past year? Do we need new strategies to invest more in those areas?

If you are interested in starting a family foundation or have questions about foundation best practices, Westwood can help. Please contact your Westwood Private Wealth Advisor.

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