In this series, we take a look at the current news impacting the nonprofit sector, specifically fundraising. Our intention is not to be reactive, but to be proactive in our analysis of the news and consider how fundraising and philanthropic efforts can improve outcomes and adapt to meet the times.
In this week's roundup: Bond Financing is Impacting Philanthropy, Netflix CEO Gives $120M to Historically Black Colleges, Corporate Giving to Black Lives Matter.
Don’t Look Behind That Curtain: Bond Financing and Philanthropy (Via NonProfit Quarterly)
On a technical level, bonds as a financing mechanism allow foundations to issue more grants at lower cost. Since the going interest rate for corporate 30-year bonds as of April 2020 is 3.24 percent, borrowing through bonds is a good deal. By contrast, stocks have an average return over the past 50 years of eight percent. And “alternative investments” typically outperform stocks, which is why the Ford Foundation and Harvard University invest in them.
Analysis: Larger foundations are committing to longer-term solutions for philanthropy as the stock market remains volatile in the wake of the COVID-19 pandemic. Some argue that by using bonds to issue grants, these larger organizations are sitting on piles of cash that could otherwise be distributed. However, as market uncertainty grows, financial stability is more enticing for smaller nonprofits that rely on these foundations.
Netflix CEO Gives $120 Million to Historically Black Colleges (Via MarketWatch)
Reed Hastings, the chief executive officer of Netflix, and his wife Patty Quillin, announced they would donate $120 million split evenly between the United Negro College Fund, a scholarship foundation for black students and private historically black colleges and universities, and Spelman and Morehouse colleges, two private HBCUs in Atlanta. At a time when the nation is focused on systemic racism in our society and institutions, Hastings and Qillin said in a statement that they hoped the gift would encourage others to pour money into HBCUs, “helping to reverse generations of inequity in our country.”
Analysis: Tech leaders are stepping up to help disadvantaged communities in ways we have never seen before. This also shows that major donors are willing to give to causes they believe in - not just their alma mater or to organizations they have previously given. Hastings and Quillin join an expanding list of tech leaders that are making major gifts to social justice causes.
Many corporations, big and small, have joined the conversation, issuing statements vowing to stand with the Black Lives Matter movement. Some tech behemoths -- like Apple, Amazon, Microsoft, and others -- have followed up on their supportive words with major donation pledges, too. Other companies have yet to put their money where their mouth is.
Analysis: Beyond the growing generosity of individual gifts from tech leaders, companies are also tying their names to the causes they support. While corporate giving has historically been overshadowed by individual gifts, consumers are holding companies to a higher moral standard by expecting brands to back vocal support for a cause with financial support as well.
Have a fundraising story you would like to share? Let us know how you've seen frontline fundraisers rise to the challenge and make an impact in their community.