I remember my mother—long-time board member of the Mary Reynolds Babcock Foundation board—commenting on periods of decline in the stock market brought by the stock trading apps: “we don’t give out an extra 10% when the markets are up, so why would we cut our grantmaking when the markets are down and our grantees need us the most?”
So as it began to be clear that COVID-19 was going to have a devastating impact on the people and communities in the Southeast—communities that the Babcock Foundation has been investing in for decades—we knew we had to act quickly, generously and imaginatively to support our grantee partners. Every philanthropic entity should be asking itself, what more can we do to help our grantees get through this difficult time?
In early March, our staff began to talk with grantees to assess the potential impact, look at some early responses from other funders (both good and bad ones!) and engage our board leadership in these discussions. By mid-March, we had developed a list of initial actions and their financial impact which were adopted enthusiastically by the board in an emergency meeting on March 23.
So what did we do?
Provide immediate cash for short-terms needs. We sent all current board-approved grantee partners (about 70 organizations) a $10,000 grant to be used however they wish: upgrading technology, providing childcare to their staff, whatever. There are no proposals or reporting requirements for these grants.
Extend most grants by one year and front loading payment. With few exceptions, we are adding one year to each grant, so a two-year grant automatically becomes a three-year one. We are sending them payment with the full amount of the additional year NOW, as well as any remaining payment on a current grant. We are cancelling due diligence visits for returning grantees and simplifying reporting. This will reduce the time that grantees spend on paperwork and meetings and provide an additional year of resources to meet the demands of this crisis.
Support place-based responses across the South. Many local philanthropies are creating funds to assist those people who will be most affected by this crisis. For example, the Winston-Salem Foundation created a COVID-19 emergency response fund. The Babcock Foundation does not normally fund organizations providing direct services but we knew we had to do something to help individuals who were going to be most severely impacted. We will provide up to 10 grants of $25,000 to pooled funds providing direct relief services, and insuring that these funds target the most needy, including undocumented people.
Bolster community development financial institutions (CDFIs). The Babcock Foundation has had a long-term strategy to help build these financial institutions which are mission-bound to expand economic opportunity in underserved low-wealth and rural places. These are often the first line of defense against predatory lending. For these partners we will eliminate interest on existing program-related investments, extend some loan maturities, and convert 20% of our loan investments in CDFI loan funds into grants to provide operating support and strengthen balance sheets for CDFIs that may need to borrow new resources.
These actions will effectively double our 2020 payout through a combination of new spending and accelerated payments on future probable grants. This also requires us to sell investment holdings while the market is low (which does not make our investment consultants happy!).
While the board had discussions on all these issues, I had no doubt that we would take these steps. We have done so in the past both in times of need—such as post ’08 when we maintained our grant budget in spite of lower endowment—and in times of opportunity such as a potential large grant with significant impact that exceeds our spending policy.
This is why we are so lucky to have endowments; not just to fatten them in the good times but to spend them in the lean times. To me, this is the essence of good stewardship. It also creates an important model for future generations of our board—both family and community members—to learn from. In extraordinary times, the Babcock Foundation steps up.
These are only our initial actions. We will continue to monitor the ripple effects of this strange time and learn from our grantee partners and other funders as they navigate this crisis. I welcome any ideas, comments or actions you have taken across the family philanthropy field.
Let’s be generous and bold, y’all!