Moving Beyond 5 Percent: A Values-Based Funding Shift

Earlier this year, our board made the decision to increase our annual payout from 5.7 percent to 7 percent for 2026, with a commitment to review the increased distribution rate for the coming three years. This decision was unprecedented for the foundation and was not made in a vacuum. It was deeply rooted in the Cricket Island Foundation’s (CIF) twenty-five‑year history of practicing grantee‑centered, relationship‑driven philanthropy. We decided to increase our payout because we understand that the moment calls on us to step up and into our grantee partnership. More than words, our financial resources are the best tool we have as funders to let our partners know that we stand with them.

Our Values and History Shape Our Decisions

In 2000, the Welles family came together around a shared vision: to practice philanthropy collectively, with every generation helping to shape the foundation’s priorities. This vision was built on partnership, transparency, and ensuring that every family member came to the table with an equal voice. These internal values (collaboration, open communication, and integrating diverse perspectives) became the bedrock of our external grantmaking approach.

Over more than two decades, CIF has mirrored these internal values in our relationships with grantee partners and the field, consistently prioritizing trust and equity in support of youth leadership. Since 2005, we have provided multi-year general operating support, and in 2008, we adopted a regional cohort model to strengthen local ecosystems and build peer networks among youth-led social change organizations. These longstanding partnerships helped shape our response in 2025 when federal policy shifts disproportionately affected our youth organizing grantees.

Understanding the Moment

Ahead of our April 2025 annual board meeting, reports from media and philanthropic networks showed the growing impact of developing federal policies on funders and nonprofits. In preparation for a larger discussion about how CIF could support our partners at this moment, we gathered both quantitative and qualitative data directly from our grantee partners to help us understand the real fiscal impact of the policy shifts. We knew this was an emotional topic and that we needed to have a conversation grounded in real data.

With this in mind, and our deep commitment to transparency, we sent a brief survey to our grantees asking them to share any changes in their annual revenue with us. We were transparent about why we were asking and how the information would inform our decision making. The data was compelling. Over 70 percent of our partners saw their revenue decrease, either from federal government cuts or foundations pulling back because they deemed the work “too risky.” We fund over the long haul to build strong, resilient organizations because we believe in the work and impact of our partners. The revenue losses threaten to their continued existence, so we knew we needed to respond in a way that aligned with our commitment to our partners. 

When asked what our partners needed from CIF, grantees shared three requests:

1. Continue our multiyear commitments
2. Stand with them through the uncertainty
3. Increase funding, if possible, to offset sudden losses

Exploring our Options and their Impact on Foundation Lifespan

With this data in hand, the board weighed several options:

• Continue to fund as planned, at the 5.7 percent level
• Increase funding 
• Spend down

We immediately recognized that spending down was not a viable option because it would go against one of our foundational purposes: to provide a space for multiple generations to practice philanthropy collaboratively and steward resources responsibly over time. Spending down would deprive future generations of that opportunity. What also became clear was that this didn’t need to be a binary choice—there were plenty of options between staying the course and spending down. The first thing we did was lay the framework for a conversation that was not about shifting our spend policy in perpetuity but rather for three years, which made it easier to discuss.

My goal for the conversation was to allow each board member to participate and share their opinions and concerns without judgment to enable us to work through conflicting opinions with respect. I started with a quick show of hands from those who thought we should increase our giving and then those who thought we should not. With that as a starting point, I began to probe folks on both sides to better understand their perspectives. I came from a place of genuine interest, valuing the perspective each family member brought to the conversation.

The family expressed real concerns over the long-term impact of this shift on our endowment and whether it would impact future generations’ ability to be a part of the foundation. For many in the family, the board table has been a place to learn about philanthropy as well as a unique opportunity to do good as a collective, exactly as the founders intended. Rather than ignore this real concern, I knew we had to explore the long-term impact on our grantmaking ability if we decided to increase funding above 5.7 percent for a few years so we could lead the conversation with data. We contacted our investment managers, who quickly modeled scenarios and found that temporarily raising our payout to between 7 and 8 percent sustained over the next few years would only have modest long-term effects on endowment growth. At those levels, the increase would not undermine our ability to take on future cohorts or intergenerational involvement.

After a thorough discussion, the board unanimously and enthusiastically voted to increase our payout with certain caveats. It is worth noting that this was the most impassioned board vote I can remember. Some board members felt that acting too quickly would be reactive, acknowledging feelings of powerless and being mindful not just to ‘do something’ without fully evaluating whether it aligned with our values and strategies. Others felt strongly that our core responsibility as a funder is to be good partners. Though board members expressed a variety of opinions during deliberations, once the vote took place, everyone felt a shared sense of gratitude for the opportunity to stand beside our grantees without hesitation, embracing our role as funders by offering the most valuable resource we have, money. We charged the grantmaking committee—a subcommittee of the board comprised of two generations of family members—to explore our options from maintaining our existing spending levels to increasing funding up to 8 percent for up to three years. The board felt we needed to move quickly to deploy the funds, so we encouraged the committee to meet within two weeks of our board meeting so the full board could finalize the increase within one month. 

Ultimately, the committee recommended increasing our payout to 7.5 percent by offering one-year bridge grants to current partners, capped at 20 percent of each grantee’s annual budget. While these grants are for one year, they come with an agreement that we will continue to explore the context in which our grantees are operating to determine the best path forward in future years

Why This Moment Requires More

Unlike previous crises that affected the nonprofit sector more broadly, this was acute and targeted. This current landscape uniquely and disproportionately impacts our youth organizing grantee partners, the majority of whom are from immigrant, low-income, or communities of color. Stepping into the fray to stand with them felt like the only right choice, and one we felt compelled to make. As a family foundation that believes that young people should be at the center of shaping their own communities, being on the sidelines was never an option for us. We have been investing in young leaders, their organizations, and the ecosystems that support them for twenty-five years. The decision to increase payout was not just a financial one. It was also an affirmation of our identity as a partner that is committed to their long-term resilience.