COVID-19 case study: Changing funding practices in Europe
The COVID-19 crisis has shined a spotlight on the value of philanthropy and, for this reason, many foundation representatives believe society at large will expect philanthropy to address global distress in the future. Based on Philea’s recent analysis of surveys, in-depth interviews, and meetings with European foundations, we’ve seen how the pandemic has had significant implications for the way philanthropy operates in Europe. Many European funders have seen their ability to focus on a longer-term perspective to target systemic change as a strength, as opposed to operating in a crisis mode. But in the face of the epidemic, European philanthropy, which does not typically work in humanitarian emergencies, had to step in due to these extraordinary circumstances.
As a result, some foundations have started thinking about giving in a crisis before it even begins and developing a strategy to make sure that their funds have the most impact. They are now adding new subject areas to their portfolios, like public health, mental health, food security, use of technology, and democracy, as just a few examples. The goal is not only to alleviate immediate needs but also to be a catalyst for a more equitable and just future. Here we share some top-level takeaways from our research.
First, we learned that during the pandemic, European foundations engaged in both local and cross-border giving in new ways. Some foundations that lacked experience in local giving began investing more in communities, while others engaged in cross-border giving to show European solidarity. International giving was not limited within the borders of Europe, however. Some foundations, in their public statements, stressed the importance of global partnerships and a shift of resources from wealthy countries to low-income countries. They intentionally sought to promote a sense of solidarity across geographies in times of division and polarization.
After a steady decline in extreme poverty rates over the past two decades, inequalities between countries have been on the rise again as a result of COVID 19. Two years after the start of the pandemic, vaccination rates still vary from 0.6% in the DRC and 1.4% in Yemen, to around 80% in most European countries. In addition to addressing the inequality gap, ensuring global equitable access to COVID-19 has become a moral responsibility. A few foundations expressed their concern with “vaccine apartheid,” which means a slower recovery for many countries in the Global South, and safety for no one. One of them said: “As the rich get vaccinated, the poor remain exposed to the virus. With increasingly international employee relationships, outsourcing and supply chains, this leaves donors exposed to reputational risk if they do not directly support communities along their footprints.”
We also saw significant philosophical changes in how foundations operate. While some funders were already cultivating trust-based and flexible practices before the pandemic, more began to re-think their practices. Some realized that many of their previous constraints and rules were quite arbitrary, and they have become much more flexible. A few ways funders have modelled this is by loosening deadlines, converting grant funds from restricted to unrestricted funding, and simplifying processes.
Additionally, in our research, foundations communicated how much they care about well-being, sustainability, and resilience of grantees—and they made specific arrangements to support these concepts. Foundations also demonstrated their willingness to support experimentation and learning by actively listening to grantees and communities; giving them more visibility; amplifying grantees’ voices; connecting more with the lived experiences of their grantees and community members; and making their grantmaking more participatory.
In the face of critical changes in the social and political environment, funders are no longer only asking grantees to apply certain principles—they are also applying those principles in practice within their own organizations. For instance, foundations’ efforts to address climate change are not only limited to creating a climate portfolio and increasing climate funding, but also to applying a climate lens to existing grant programs and mobilizing capital from other sources. The philanthropic community is becoming more open to discussing the origins of endowments, how they are invested, and how they can better align with their mission and the work of the grantees they support.
The same thinking also applies to European foundations’ efforts to address racial injustice. In addition to funding racial justice work, some funders have started to grapple with their own historical links to the slave trade. The pandemic has challenged European foundations to assess to what extent they represent the racial diversity of the individuals, communities, and geographies they serve.
Overall, our study showed that the new realities brought on by the pandemic gave foundations a window of opportunity for rethinking, reimagining, and transforming a previously broken system. Many foundations framed the pandemic as an opportunity to hit “reset,” realizing they could no longer operate under current parameters but instead must seek recovery strategies that are more equitable and sustainable.
More detailed results can be found in the full report, Future-proofing foundations for a post-Covid-19 world.