The Ford Foundation announced yesterday a plan that would involve issuing more than $1 billion in debt so it would be able to give substantially more right now. Four other large and established foundations – the John D. and Catherine T. MacArthur Foundation, the W.K. Kellogg Foundation, the Andrew W. Mellon Foundation, and the Doris Duke Charitable Foundation – are joining Ford in this effort to make a large amount of aid available immediately to support those struggling during the pandemic.

To raise the money, the Ford Foundation plans to issue a combination of 30- and 50-year bonds, a financial move common in the government and corporate world, but rare in the non-profit sector. MacArthur, Kellogg, Mellon, and Doris Duke are planning to use the same method to increase their giving by at least $725 million collectively.

Since the onset of the COVID-19 crisis, philanthropy has been facing a major dilemma as need is increasing, but the slowing economy has caused endowments to shrink. For Ford, issuing debt seemed like a way to give more, while also maintaining its endowment. According to a statement made to the Chronicle of Philanthropy, Ford President Darren Walker said he expected the debt to carry and interest rate of three to four per cent, far lower than the foundation’s historical returns on its investments.

Ford has a $13.7 billion endowment and plans to distribute the newly raised money over the next two years, which would effectively increase its payout percentage to ten per cent, up from six.