The Ford Foundation will raise $1 billion on Thursday through a combination of 30- and 50-year bonds to help nonprofits struggling to stay afloat during the coronavirus pandemic, according to a report by the New York Times.
“For most foundations, the idea of taking on debt is outside of normative thinking,” Ford Foundation President Darren Walker said in a letter to the nonprofit's board last month. “Covid-19 has created unprecedented challenges that require foundations to consider ideas — even radical ones that would have never been considered in the past.”
The Ford Foundation, which reportedly has a $13.7 billion endowment, plans to distribute the money over the next two years, increasing the percentage paid out annually from its endowment from nearly 6 percent to about 10 percent.
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According to the Council on Foundations, charitable foundations must pay out 5 percent of their assets in a given year, the minimum requirement for tax-exempt organizations under federal law.
According to the New York Times, four organizations have pledged to increase their giving by at least $725 million as part of the Ford Foundation's effort: the John D. and Catherine T. MacArthur Foundation, the W.K. Kellogg Foundation, the Andrew W. Mellon Foundation and the Doris Duke Charitable Foundation.
“This is unprecedented for us, but these are unprecedented times,” MacArthur Foundation President John Palfrey told the paper.
Palfrey added that his foundation will issue a $125 million bond offering, while Doris Duke Charitable Foundation President Ed Henry said his foundation will distribute $100 million worth of 30-year bonds by 2022.
Andrew W. Mellon Foundation President Elizabeth Alexander told the Times it will increase giving this year to $500 million from $300 million, around 8 percent of its total assets, while the W.K. Kellogg Foundation has pledged to increase grants by a total of up to $300 million over the next two years.
A spokesperson for the Ford Foundation told FOX Business in a statement that foundation leaders will provide more details about the announcement during a press call on Thursday at 9 a.m. ET.
The Ford Foundation was founded in 1936 with a $25,000 grant from Edsel Ford, a son of the Ford Motor founder Henry Ford. In this year alone, the Ford Foundation has provided 557 grants to 500 organizations worldwide totaling more than $136 million.