Two years on, foundations stand by issuing bonds in pandemic

Aug 11, 2022, 5:06 PM | Updated: Aug 12, 2022, 5:12 am
FILE - Police and National Guard block Los Angeles City Hall as protesters hold a signs and chant d...

FILE - Police and National Guard block Los Angeles City Hall as protesters hold a signs and chant during a Black Lives Matter protest in Los Angeles, on June 2, 2020, over the death of George Floyd. Responding to what the MacArthur Foundation called the “twin pandemics” of COVID-19 and systemic racism, the foundations mostly issued social bonds ranging from $100 million to Ford Foundation's $1 billion. The move allowed them to increase their donations and take advantage of favorable market conditions, instead of dipping into their endowments. (AP Photo/Richard Vogel, File)

(AP Photo/Richard Vogel, File)

NEW YORK (AP) — When the Ford Foundation took the unprecedented step in June 2020 of issuing $1 billion in debt to help stabilize other nonprofits, it delighted investors and inspired several other large foundations to follow suit.

Two years later, the foundations all stand by their decisions to take on long term debt, allowing several to essentially double the amount of their grantmaking. But they also caution they are unlikely to repeat the move any time soon.

Responding to what the MacArthur Foundation called the “twin pandemics” of COVID-19 and systemic racism, the foundations mostly issued social bonds ranging from $100 million to Ford’s $1 billion. The unusual moved allowed them to increase their donations and take advantage of favorable market conditions, instead of dipping into their endowments.

As of June this year, the Ford Foundation has spent more than 90% of the funds it raised in its only bond offering, with 70% of the grants so far going to organizations led by people of color and 87% going to general support, meaning the funds could be spent any way the organizations wanted.

“It just let us put on steroids something that we wanted to do anyway,” said Hilary Pennington, an executive vice president of the Ford Foundation.

Greg Ratliff, senior vice president at Rockefeller Philanthropy Advisors, said issuing bonds was an innovative use of the foundation’s assets.

“It allowed them to double their annual investing in their organization, which is kind of amazing,” said Ratliff.

Ford’s bonds also met the requirements to be social bonds, which are attractive to investors who want more ESG investments and are looking to show they have provided some benefit to their local communities. Ford will have to repay investors with interest over either 30 or 50 years, depending on which bonds they purchased, in exchange for having had access to the extra cash.

Ford’s board of trustees approved the move in the face of extraordinary circumstances, Pennington said.

“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?” she said.

Following Ford’s lead, the Rockefeller Foundation issued $700 million in bonds. The Bush Foundation used the $100 million from its bond issuance to launch two new community trust funds focused on closing racial wealth gaps. The California Endowment worked with partners to develop plans to support movement building and health care infrastructure with the $300 million they raised through bonds.

The foundations were welcome entrants to the bond market, said Heather Lang, a senior vice president at Sustainalytics, which conducted outside reviews of the bond offerings for several of the foundations.

“We were excited about foundations coming into the space and think it’s a great fit,” she said.

But she noted that there have not been any new issuances since that initial round. That may be because several foundations issued the social bonds to respond to the pandemic and George Floyd’s murder without having to reallocate funds from current grantees, Ratliff said.

“That’s really the dilemma that this sort of social impact bond helped them address because it gave them more resources to push money into some racial justice and racial equity kinds of activities,” Ratliff said.

For its part, Rockefeller decided not to seek certification of their bonds as social bonds because some funds will go toward the renovation and construction of their offices in Washington, New York and Nairobi. Those projects represent only about 10% of the $700 million in debt, but make it more difficult for the debt to meet the social bond criteria.

The foundation committed to spending the remaining funds over 5 years and has put a significant portion into a vehicle called the Rockefeller Foundation Catalytic Capital.

Between its regular spending and the bond, Rockefeller has moved $650 million into the public charity that allows them to pool funds with other donors and to make different kinds of investments from what the foundation makes.

The funds represent a massive bet on several initiatives including an institute focused on preventing pandemics and another collaboration focused on the transition to renewable energy.

Catalytic capital is another way for foundations to take on risks for projects they believe are incredibly worthy but that mainstream investors can’t or won’t support, Ratliff said.

“Catalytic capital is the little wake up call to say, ‘Let’s not abandon the the highly valuable charitable investment opportunities that we have as foundations, because they’re the only ones that can really do this,'” Ratliff said. (Rockefeller Philanthropy Advisors is run separately from the Rockefeller Foundation, though they were founded by the same family.)

Rockefeller Foundation’s treasurer and chief financial officer, Dominick Impemba, said the bonds increase pressure on the foundation’s financial performance.

“Now, it’s not just the foundation’s money. It’s all those investors that have put their faith in us. And I’ve got to answer to Moody’s and S&P every year on what we’re doing, what’s happening with those funds,” he said.

Ford said some of the largest initial purchasers of their social bonds were insurance companies like CNA Insurance and TIAA-CREF, investment fund managers like PIMCO, JP Morgan and Blackrock and the New York state public pension fund. It invested because the bonds met their sustainable investment goals as “the net proceeds target supporting nonprofits impacted by the COVID pandemic,” a spokesperson for the New York State Common Retirement Fund said.

Rockefeller would not disclose the initial buyers of their bonds.

Proponents of impact investing, like Ratliff, see the bonds as another way for foundations to position the bulk of their assets to align with their mission.

Pennington of Ford acknowledged that paying back the bond puts pressure on the endowment’s earnings, but said the foundation ultimately decided it was worth the risk.

“It just kind of shows you how much value we leave off the table that people don’t actually imagine how much more we could do if we just thought a little bit more creatively,” she said.



These foundations made the unusual move of issuing social bonds or other debt during the pandemic:

Bush Foundation, $100 million, 2020

The California Endowment, $300 million, 2021

Doris Duke Charitable Foundation, $100 million, 2020

Ford Foundation, $1 billion, 2020

MacArthur Foundation, $125 million, 2020

Mellon Foundation, $300 million, 2020

Rockefeller Foundation, $700 million, 2020

W.K. Kellogg Foundation, $300 million, 2020


Associated Press coverage of philanthropy and non-profits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit

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Two years on, foundations stand by issuing bonds in pandemic