Giving Compass' Take:

• At Stanford PACS, Catherine Crystal Foster urges philanthropists to analyze whether their payout policies during COVID-19 truly reflect their giving capacity.

• Have you adjusted your payout policies during COVID-19? What can you do to make sure your giving is getting to the right communities throughout the pandemic?

• Read more about the importance of adjusting your payout policies for more impact during COVID-19.

If you established a Donor Advised Fund (DAF) or a foundation, at some point, you made the choice to dedicate significant sums to the public good, and to cede some control by irrevocably putting those funds in the public trust. You knew then that philanthropic dollars have unique utility as fast, flexible, risk capital that can flow where needed most and in ways that can offer models for governmental scaling. Whether through careful planning, trial and error, or default, you set a policy for spending those funds. But now, the good intentions and plans that shaped a spending policy in the “before times” may simply be inadequate in the face of the challenges before us.

For foundations, the rigorous adherence to a 5% payout to preserve corpus indefinitely is often treated as gospel. But why? What if being prepared for a “rainy day” to come turned out to be the limiting factor on truly transformative impact? What if dealing with today’s health and economic tsunami and tomorrow’s storm were not only good enough, but much better — even if that might mean the rainy day 50 years from now would need to be addressed by donors yet to come? After all, this country mints millionaires and billionaires at a remarkable clip. Today’s DAFs and foundations will hardly be the sole sources of tomorrow’s philanthropy.

This is the time for every foundation and philanthropist to truly question what payout policy actually makes sense for them, given the impact they have the capacity to make. There is no single correct answer, but in the face of unprecedented challenges and opportunities for transformative social innovation, it is wrong to fail to ask the questions.

Read the full article about analyzing payout policies during COVID-19 by Catherine Crystal Foster at Stanford PACS.