This Is No Fleeting Crisis—It’s the New Normal. Are Foundations Ready to Get Serious?

On the opinion pages of philanthropy sector publications, a debate has raged about the right foundation payout rate for “this moment of crisis.” Since the 1970s, the received wisdom among many of the largest, most influential foundations is that the best approach is to allocate just over 5% of the institution’s assets for grantmaking and overhead each year. The actual annual payout rate for American foundations is somewhere in the neighborhood of 7 to 8% when smaller foundations are included. Some prominent philanthropists and activists have urged their colleagues to “overspend” in light of the country’s compounding crises. Some have even called for new legislation temporarily mandating payout rates as high as 10%. That means, since March, the range of what is considered responsible foundation payout has, in the most optimistic scenario, expanded a whopping 2 to 3%.

Read the entire article in Inside Philanthropy.