Today, I’m excited to announce that the Ford Foundation’s two-year transition is over. In this message, I share a number of major decisions and offer details on FordForward – our blueprint for changes in our culture, our programmes, and our assets. I invite you to read about these decisions and my reflections on them below, and to explore the details of Ford’s programmes throughout our new website.

Challenging inequality

Back in June 2015, I shared the news that we would focus on combating inequality and that we had landed on a set of thematic areas aimed at addressing what we have identified globally as the five key drivers of inequality.

The rationale underlying this focus on inequality is simple and powerful: Inequality, in all its forms, represents the greatest impediment to just, fair, and peaceful societies that offer opportunity for all.

This is because inequality, in its broadest sense, can be found at the root of nearly every injustice. It stacks the rules of our systems to favour the privileged, and in that way it compounds itself.

Addressing inequality requires a more nuanced understanding of how it operates. We are continuously striving to see its workings as both global and local, immediate and long term, affecting people’s lives as well as distorting the systems it infects.

We also are striving to be as inclusive as possible, because no one entity – not government, or the private sector, or civil society, or philanthropy – can meaningfully address inequality on its own.

What does this mean for our work? It means we must concentrate our efforts in ways that build on our deep and established strengths, while optimizing and consolidating for impact.

Consolidating for impact

Before today, we had 35 initiatives. As of this writing, we instead have 15 lines of work. Throughout the rigorous process of reorganising and consolidating our work, we were ever mindful of why we’re changing – of why we must change.

With respect and admiration for all of the foundation’s past work, we need more integration. Thus, we’re breaking down silos so that programme officers join interdisciplinary teams with flexible assignments. You can also expect more collaboration in the spirit of the Detroit Grand Bargain, NetGain, and our new impact investing partnerships. And you can count on a genuine institutional commitment to learning and adapting.

We will be pushing forward with a more coherent and interconnected grantmaking programme – one that seeks to do fewer things better, rather than more at less than our best.

Each of our new lines of work represents our commitment to directing resources toward where we can make positive inroads. Each reflects our commitment to ensuring that the whole is greater than the sum of its parts. Each takes place at the intersection of disciplines.

While these lines of work target specific drivers of inequality, they have also been designed to have collective impact. We hope that, together, they will set in motion a multiplier effect.

I encourage you to explore more details about our new programmes and lines of work here on our website.

Making difficult choices

One of the realities of our new strategy is that we’ve had to make difficult choices. Candidly, there are several areas in which the foundation will no longer be supporting important work. This means that some outstanding organisations and fields will be receiving final grants. I recognise that for some of you, this is difficult news to hear.

For my colleagues and me, it is of course difficult news to deliver, particularly to such worthy and deserving partners. Our decision making, however, remains grounded in specific criteria. In every piece of our portfolio, we looked at the centrality of the work to addressing inequality, the progress made toward each partner’s goals, and the other philanthropic resources that are available.

As you can imagine, some of the areas from which we are stepping back have seen measurable progress, or are benefiting from a new cadre of donors that have arrived since the Ford Foundation first started funding.

For example, organisations working on Lesbian, Gay, Bisexual and Transgender (LGBT) issues in the United States have experienced impressive gains in recent years. As a gay man, I am acutely aware that there is much more work to do on LGBT rights in the United States (US) – and I hope that changes at Ford do not send the signal that victory can be declared in this country. That being said, outside the US, the LGBT community desperately needs resources and allies, and so, as a global foundation, we’re adapting and recalibrating our focus where the greatest need exists.

We have also decided to wind down our work in other fields, some of them deeply embedded in our history. These include conditional cash transfers in Latin America, microfinance, and, in the US, our initiatives extending the school day, building arts spaces, engaging religion in the public sphere, and more.

Given this, it would be disingenuous to pretend that FordForward brings welcome news to everyone. In fact, in addition to explaining that we will be leaving certain areas of work, I need to be equally clear that our new strategy means that we will be making fewer grants as well.

In recent years, the foundation has averaged over 4 000 active grants annually in our portfolio. As we transition away from some areas, we expect that, during the next two years, we are likely to reduce that number by up to 20 percent.

While this new reality may be challenging in the short term, we believe that in the long run these choices – like the decisions made by my predecessors – will strengthen us.

They will increase our ability to have impact in the 21st century and enable us to fulfill our ongoing mission in pursuit of social justice.

Recognising that institutions matter

At the centre of the history of the Ford Foundation has been our investing in what I think of as the three I’s – groundbreaking ideas, leading individuals, and institutions and networks.

We remain committed to all three, but for starters, we’re leaning into the importance of institutions and networks. Building durable institutions and networks will be among our highest priorities because, as we’ve seen throughout our history, they represent the infrastructure on which movements for change are built.

Institutions are hubs for gathering and aggregating talent; they provide the platforms that help accelerate and sustain social change. Networks are fulcrums for creativity and dissent, beacons of stability, scaffolding for aspiring change makers, and connectors for social innovators.

This is why we’re excited to reaffirm that, over the next five years, we will dedicate US$1 billion for building institutions and networks through our BUILD programme. This programme will be fully integrated into the grant making of our seven thematic areas, operating both within the areas and across them.

Addressing the overhead fiction

At the same time, even outside the BUILD portfolio of grantees, we are rededicating ourselves to strengthening the partners and grantees that are recipients of our project support.

All of us in the nonprofit ecosystem are party to a charade with terrible consequences – what we might call the ‘overhead fiction’. Simply put, because of this fiction, foundations, governments, and donors force nonprofits to submit proposals that do not include the actual costs of the projects we’re funding.

I recently learned of one local government request for proposals that gave extra points to applicants that submitted proposals with lower overhead, resulting in the winning groups receiving overhead payments of 5 percent – an absurd and self-defeating outcome.

The overhead fiction also results from well-intended metrics developed by nonprofit watchdog groups that have equated lower overhead with organisational effectiveness when, in fact, the opposite may be true.

At Ford, we have been willing participants in this charade. Our policy of 10 percent overhead on project grants in no way allows for covering the actual costs to administer a project. And to be honest, we’ve known it.

This number does not reflect what it takes to actually manage a project; nor does it help those we support to effectively run robust organisations capable of executing projects. Thus, beginning 1 January 2016, we will double our overhead rate on project grants to 20 percent. We hope to encourage more honest dialogue about the actual operating costs of nonprofit organisations working in the US and internationally.

Confronting the endowment question

I am mindful of another elephant in the room at most large foundations, one that represents a major opportunity for impact: the investment policy for our endowments.

Reflecting common practice at most large legacy foundations, the Ford Foundation has maintained the position that our policy is to maximise endowment returns, except in our screening out certain industries.

This position, that we maximise returns, has been a source of questioning, discontent, and frustration among those we support, as well as among staff at Ford.

My own view on this subject has evolved, and I no longer find it defensible to say that our investment strategy is only to maximise the value of our endowment – just as it’s no longer defensible for a corporation to say its only responsibility is to maximise shareholder value. There is growing evidence that it is possible to find impact investing opportunities that deliver financial and social, double bottom-line returns.

In light of new regulations from the Obama administration, which encourage mission-related investment, now is an opportune time for foundation boards to confront the endowment question. For our part, the trustees and I are interested in taking up this question responsibly, thoughtfully, and based on evidence. We expect to promulgate a specific impact investing policy in the coming months. 

We are grateful to learn from the path being blazed by Clara Miller of the F.B. Heron Foundation, Rip Rapson of the Kresge Foundation, Stephen Heintz of Rockefeller Brothers Fund, and others, who are already exercising bold leadership in the sector to demonstrate successful approaches to impact investing. 

Risk, reinvention, and renewal

When I shared my thoughts last month on a new gospel of wealth, I offered a few reflections on the history – and the promise – of philanthropy. It will likely come as no surprise, then, that I have been thinking a great deal about the role our institution has played in this larger story, and about the privilege of supporting so many courageous visionaries in the vanguard of the fight for social justice.

When I look back on the ways this foundation has contributed to change, and changed itself, over the past eight decades, I am struck by a number of moments: moments of risk, reinvention, renewal, and reward.

The first came as a result of the Gaither Study Committee, whose extraordinary 1950 report created the modern Ford Foundation. In the years that followed, Henry Ford II implemented that blueprint, moving the foundation to New York, commissioning the historic building we’ve occupied since 1968, and transforming a local family foundation into an international institution.

Through the 1960s and ’70s, McGeorge Bundy, led another fruitful shift. The foundation seeded dozens of influential institutions across the world and funded the work of leading change makers like Dr. Martin Luther King Jr., Gloria Steinem, Muhammad Yunus, and so many others.

When Franklin Thomas assumed the presidency, he inherited an institution in need of reform. To save the foundation from financial ruin, Frank took bold and courageous action, which positioned the foundation for a quarter century of remarkable achievement, including critical leadership on the issue of apartheid.

Susan Berresford took the helm of Ford and provided vital leadership on women’s issues (playing a seminal role in the much-heralded 1995 World Conference on Women in Beijing), the arts (creating United States Artists), and education (launching Ford’s International Fellows Programme, which has provided advanced degrees to more than 4,500 social justice leaders from the Global South).

Luis Ubiñas’s arrival coincided with the financial crisis of 2008 and an unprecedented loss of value in our endowment. The foundation benefited from his expert knowledge of management practice, which resulted in major improvements in investment operations and administration, as well as in streamlined and strengthened programmes. 

With thanks

Which brings us to this moment – a new and urgent moment for risk, reinvention, and renewal. Two years ago I was honoured and humbled when the foundation’s board entrusted me with leadership of this institution. I want to be clear that the changes manifest in FordForward would not be possible without the stewardship of our chair, Kofi
Appenteng, and our dedicated, passionate, and energetic trustees. I am enormously grateful to them for encouraging us to be ambitious and take risks, and for their willingness to engage in candid, honest, and sometimes uncomfortable conversations.

The trustees are committed to Ford being a learning organisation, and so while they are gratified to hear about where we have succeeded, they are equally – if not more -interested in learning about where and why we’ve faltered. And they believe steadfastly that the foundation must take the long view of social change, knowing that short-termism is cancerous for philanthropy.

I am also immensely grateful to Ford’s remarkable staff around the world, whose commitment moves the foundation forward every day. Across our organisation, my colleagues bring fierce intelligence, good humour, and a sense of urgency to their work, and they participated in our two-year transition with the same spirit. Their contributions and questions have been essential to this process and will continue to guide the next generation of our work. 

Moving forward

On a cold, snowy winter day last year, I visited the Eastern Correctional Facility, a prison in rural Ulster County, New York. There, I experienced a most astonishing and inspiring phenomenon: incarcerated men studying Latin, debating Aristotle, and speaking fluent Mandarin. They recited the poetry of Langston Hughes and the essays of James Baldwin.

These men looked just like me – they were mostly black and brown, from underserved and disadvantaged backgrounds. But they had determination and hope in their faces – a look of authentic confidence that follows only from hard-earned achievement.

They were participants in the Bard Prison Initiative, the brainchild of Bard College’s brilliant president, Leon Botstein, and led by the courageous Max Kenner. It is a pioneering degree-granting programme for incarcerated women and men and has been the recipient of Ford Foundation support for many years.

As I visited with these men – as I spoke with them about their wrenching accounts of bad luck, bad choices, and a criminal justice system that seems designed to rob them of their humanity – I felt heartbroken but also inspired.

In their stories, I was reminded of why our support for visionaries working on the frontlines of social change matters so profoundly: Yes, inequality and injustice persist. But they are no match for the human spirit.

In the complicated, sometimes confounding times in which we live, FordForward embodies faithful hopefulness in the future. Together, we will rise to the challenge of tackling inequality and its consequences – just as our predecessors met and mastered the challenges that defined their own times.

We’re ready to get to it!

As always, we welcome your questions and feedback. Please add your comments below.

• Darren Walker is president at Ford Foundation.

Photo Courtesy: NDTV.