Foundations took on $2.925 billion in long-term debt in 2020 to fund their response to the COVID-19 pandemic and accelerate social justice initiatives in the wake of George Floyd’s murder and are far along in their distribution of the funds, the Associated Press reports.

In June 2020 several foundations announced plans to increase their grantmaking by $1.725 billion over two years and fund that effort through the issuance of social bonds or other debt, including commitments from the Doris Duke Charitable Foundation ($100 million), the Ford Foundation ($1 billion), the W.K. Kellogg Foundation ($300 million), the John D. and Catherine T. MacArthur Foundation ($125 million), and the Andrew W. Mellon Foundation ($300 million). Other foundations followed suit, including the Bush Foundation ($100 million), the California Endowment ($300 million), and the Rockefeller Foundation ($700 million).

As of June 2022, Ford has spent more than 90 percent of the funds it raised in its environmental, social, and governance (ESG)-qualified social impact bond offering, with 70 percent of grants going to organizations led by people of color and 87 percent allocated to general support. Rockefeller has committed to spending $650 million of its bond issue over five years through Rockefeller Foundation Catalytic Capital—the social impact investment vehicle it launched in 2020—enabling the foundation to pool funds with other donors and make bets on initiatives including an institute focused on preventing pandemics and another collaboration focused on the transition to renewable energy.

While the unusual financial moves took advantage of favorable market conditions and allowed the foundations to increase funding without reallocating funds from their endowments, it has also increased pressure on financial performance as the bonds are repaid over the next 30 to 50 years. “Now, it’s not just the foundation’s money, said Dominick Impemba, Rockefeller Foundation treasurer and CFO and a board member of Candid. “It’s all those investors that have put their faith in us. And I’ve got to answer to Moody’s and S&P Global every year on what we’re doing, what’s happening with those funds,” Impemba said. The Ford Foundation indicated that largest purchasers of its bonds include insurance firms CNA and TIAA, investment funds PIMCO, J.P. Morgan, and Blackrock, and the New York State Common Retirement Fund.

The issuance of long-term bonds “…let us put on steroids something that we wanted to do anyway,” said Ford Foundation executive vice president of programs Hilary Pennington. “If we can’t swing for the fences at a time like this and use every aspect of our resources to try to make a difference in an existential moment, what are we here for?”

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