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I gained a first-hand view of the scourge of domestic violence during law school, when I worked for the Los Angeles Bar Association helping survivors secure temporary restraining orders. What struck me most as a young law student was their courage. People of all walks of life who had endured terrible trauma trusted me, a stranger, to help them in their pursuit of safety.
In the foundation world, it is time we embraced vulnerability — or in philanthropy-speak, risk — and started giving more courageously to meet urgent needs. As we begin a new year and look ahead to how and what we will give in 2023, I encourage my fellow foundation leaders to model courage through giving that is generous, trusting, and responsive.
First, let’s be more generous.
Since the onset of the pandemic, more attention (and scrutiny) has been paid to the 5 percent minimum annual payout required for foundations to stay compliant with the IRS. I believe this giving requirement should be considered a floor and not a ceiling, and here’s why: unless you’re working with a very small endowment, you can keep an eye on growth while making a meaningful impact and giving well beyond the minimum.
In times of crisis, like the onset of the coronavirus pandemic, we often see a spike in giving as people respond to an acute issue. Unfortunately, the reverse is also true. When uncertainty affects the stock market — as it is now with high inflation and global political instability — foundations get nervous and prioritize preserving principal, giving just enough to satisfy the 5 percent requirement. Those dollars that are withheld and invested might earn money to be used later, but those dollars could also help solve critical problems today — problems that are acute, persistent, and pervasive across our country right now.
Our mission at Pinpoint is to address inequities and mitigate harm, and importantly, to do so in a way that respects the knowledge and discretion of the organizations doing the work. When we started out, we didn’t know about “trust-based philanthropy” — I first heard the term last year — but for us, that approach just made sense from day one. We started our giving with deference to our nonprofit grantees, and with a focus on general operating grants and unrestricted support.
This is not news in the nonprofit sector, but more funders need to hear it: flexible funding is essential. Not everything an organization needs fits within the categories prescribed by a foundation or government contract. Many donors want to see quantifiable proof of impact for their dollars, like the “number of people served,” but organizations can’t make an impact if they don’t have the space, materials, or infrastructure to function. Organizations get hit with unexpected building repairs, they need gas money, and especially for front-line providers, they need funds for simple necessities to serve their clients. And nonprofits that are largely sustained by government aid, including many domestic violence shelters, may not seem to need support as much as other social ventures, but the restricted nature of those contracts is precisely why supplemental unrestricted funding is so critical.
Responsiveness means being flexible enough to understand complex, emerging needs and fill gaps, even if it requires shifting or expanding your giving strategy. When the killing of George Floyd heightened the national focus on persistent racism in the United States, many foundations rightly revised their giving strategies to prioritize anti-racism and support for Black and Brown communities and BIPOC-led organizations. Similarly, the coronavirus pandemic activated a wave of more responsive, less formal giving to meet pressing needs.
Read the full article about courage in giving by Amanda Peiffer at The Center for Effective Philanthropy.