IMMEDIATE FOLLOW UP: What Should Philanthropy Do Now?

With peace and love to the MacArthur Foundation (and other large foundations...)

Can I be a bit provocative?

When you tell people that you are stepping up during a crisis, please make sure that you are actually stepping up during a crisis.

Photo by Jason Leung on Unsplash

Some of you may have seen the important announcement from the MacArthur Foundation. In their own words, MacArthur says “This is a major crisis for our sector and it’s a time when those of us who can do more should do more.”

I read the quote and thought to myself, “Wow, this could be big.” And, just a few paragraphs down the page we learn:

“...the [MacArthur] foundation would increase giving from 5% of its endowment, which is the minimum required by the Internal Revenue Service, to at least 6% for the next two years. The foundation reported it had $8.7 billion in assets in 2023 and it pays out around $400 million annually. Palfrey said he expected to grant out around $150 million more over the next two years.”

Let that sink in. With nonprofits anxiously anticipating billions in federal funding cuts, MacArthur plans to dole out $150 million more of the $8 billion it stewards over the next two years. That's it.

Look, I have been called an “extremist,” “ungrateful,” and even a bit “wacky” by my critics (and, frankly, the last one wasn’t just about philanthropy - that may have been my wife), but is “at least 1% increase for the next two years” really responding to a crisis?

What do you think?

With peace and love for a fellow progressive funder, I say… nope.

But it wouldn’t be fair to call out MacArthur as unique among large foundations for this behavior. In 2020, the Ford Foundation made big headlines when it launched its “Social Bond to Strengthen the Social Justice Sector.”

With this program, the Ford Foundation deemed that they were using an “extraordinary solution” to invest in the social sector. Using their substantial balance sheet and relationships with other large funders, they were able to issue a bond that would allow them to deploy up to $1B more per year to social justice causes. They framed this as taking action in extraordinary times. Their intention and action were admired and appreciated far and wide.

Like MacArthur’s “up to 1% more giving over the next two years,” Ford received enormous attention for a few days for this action. And, I have to say that it was pretty effective for energizing the sector.

But underlying the bond fund was something that made me uncomfortable. Whatever they were doing, one thing remained: they were doing just enough to do more, but not enough to threaten the assets held in their sizeable endowment (relative to the size of the rest of our endowments). Like MacArthur’s announcement, I ask myself, is this all just an effort to look like you are doing something while you are really just protecting your endowment?

Look, given that I have pasted my opinion all over the place I understand if this post sounds like someone with a tiny platform railing against others who get a front page story because they woke up safely that morning. But… I really believe that there is something very important in constructively questioning the actions of large foundations in the midst of a crisis.

Most importantly, large foundations set the tone for how others behave. Many of us with relatively smaller endowments like the Stupski Foundation look to our bigger brothers and sisters for guidance, inspiration, and leadership. When you are in a less influential position but are still truly endeavoring to respond to the crises of our time (while being highly self-critical about how you are doing it), you hope to see larger, more powerful foundations set the path.

And, crises are where you would think they would show up accordingly.

Defining the Crisis (the setup)

What makes a crisis in philanthropy all the more attention grabbing is how large foundations characterize it. Consider this description from Ford’s press release when they launched their bond…

“what’s become evident is the incredible peril facing the social organizations working to address its sweeping impacts. These are the countless organizations fighting for the rights of essential workers, responding to the needs of low-income communities affected by the disparities laid bare by the virus, and reimagining the systems and structures that are critical in ensuring a fair and equitable recovery.”

Those are some major league phrases “Incredible peril,” “disparities laid bare,” reimagining systems.”

Similarly, MacArthur stated in their recent blog that…

“[t]he social sector in the United States is in a time of crisis. The cliff of funding from federal programs has sent budgets underwater in field after field, and people and communities in the United States and abroad will suffer.”

“Time of crisis,” “cliff of funding,” “budgets underwater,” and “suffer.” Again, big, powerful, foreboding phrases. And, based on the little sleep I am personally getting these days, I have to say that I totally align with their characterization. The Stupski team engages daily in discussions about what more we can do, and we are working with others to identify more as well.

In a phrase, I get what MacArthur is saying. And, I want to see more in their response..

The Response to Crisis (the big announcement)

Responding to the crisis is the punchline. How large foundations respond will 1) model how others should act, and 2) reassure the broader social sector that we have your back.

Here again, they prime us for powerful action…

“The need for a surge in funding is plain. Philanthropy needs to step up. We at MacArthur believe it is time to tap our reserves to get more money flowing.”

Heck yeah! Count me in! We are talking unprecedented, right? Stuff is falling off of cliffs! Things are going underwater!

Let’s go! Let’s use the reserve—let’s be there for the frontline actors who need us now!

When I hear their characterization of the crisis and the response, I expect to see the following:

“[Large foundation], therefore, has made the determination that PERPETUITY BE DAMNED! We are moving unprecedented amounts of money. We see the peril that you are in, and we want to throw our full support behind you.

Therefore, [large foundation] has made the decision to give away all we can to ensure that the sector is protected - EVEN IF IT MEANS THAT WE COULD GO OUT OF EXISTENCE. We are putting aside our self-interest in the brand and institution we have so carefully built over the decades and are moving all of our assets immediately. Open up your bank accounts people—we are dumping ours in!”

Did I mention that some call me an extremist?

I know that no one expects a large foundation to take such an aggressive approach. But, in some ways, isn’t that the problem?

Does it really make sense to say these things about a crisis and respond by saying that we might give an additional $150M of the $8B we hold in our accounts? Or that we have no plan to touch our endowment and instead we are going to set up a large bond account with Wells Fargo to manage in a time when people need our assets now?

Is this the best response we can expect from billionaires battling other billionaires in a time of crisis?

An Alternative Response to Crisis

Last week I posted my perspective on where we are today. I am but a tiny voice among giants, but I still hoped that one giant, maybe, would read what I posted. I kind of hoped that maybe, just maybe, one of the bigger voices in the sector might act accordingly.

I asked all of us in the foundation sector to do three things:

1. Redefine Legacy

2. Live with a Lesser Version of You

3. Listen to What Community Leaders Actually Need

Now, I barely know MacArthur’s leadership, so I had no expectation that they would read my blog post. But, I hadn’t imagined that MacArthur’s (and I expect other large donors’) response would be total disregard for what I am recommending.

While their leadership comes up short given the impact of the crisis we are now in, if you govern and/or work at a foundation, I implore you to consider my alternative response to crisis.

If this crisis is as serious and unprecedented as the large foundations claim, then let’s combine forces—our full forces—and act differently from them.

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I’m excited to share that Stupski Foundation’s limited series, “Break Fake Rules,” is no longer limited.

We’re back for a second season!

Now is the time to question everything. Here’s a glimpse of what’s in store this season.

🎧 Listen to full episodes on your preferred podcast platform.
📺 Watch abbreviated episodes on YouTube.

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Tune into the season premiere with Robert Reich, former U.S. Secretary of Labor, and Heather Lofthouse, Executive Director of Inequality Media out now.

“It has become far more important, even than it was 10 years ago, for people to cause good trouble, to poke the bear, to be courageous, to take on the powers that are now dominating America.” 🎙️Robert Reich

When we launched the podcast last year, we set out to challenge the self-imposed rules that hold philanthropy back. Then, our country elected a new president who has since ushered in a new set of “rules” to reshape our communities and alter the course of our shared future. As we collectively brace for the impact of Trump’s new “rules” and see what actually sticks, we believe it’s critical to resume these conversations to challenge the rules that stand in the way of a more just and equitable future.

Join me each month to hear from change agents in philanthropy, nonprofits, government, media, and more as they share the fake rules they’ve had to break to build a better world. This month, we’re kicking things off with an inspiring discussion with Robert Reich and Heather Lofthouse of Inequality Media to explore the challenges of polarity and the corrosive forces of wealth and power on democracy. What still gives them hope in these challenging times?

Tune in to find out!