After years of austerity, the William and Flora Hewlett Foundation decided to reward grantees that stuck it out when the grant maker’s budget was tight.
In January, the California foundation created the Duration Fund, a $21-million pool it plans to distribute to current grantees over the next two years.
Beginning in 2008, the foundation cut spending on most of its grant priorities by about 40 percent and shortened many grants from three years to one year. Moving to one-year grants increased the foundation’s administrative costs and placed a burden on program staff, while drastically reducing grantees’ ability to operate, says Larry Kramer, the foundation’s president.
“You were way past fat and muscle and bone,” Mr. Kramer says. “You were into vital organs.”
He expects that as many as 200 nonprofits that had their budgets cut will benefit from the cash infusion.
The creation of the fund is just one sign that the foundation has emerged from the financial downturn on sound footing.
In 2014, grant making at the foundation vaulted 80 percent over the previous year, hitting $434 million, as its assets jumped about $300 million, to reach $8.9 billion.
The jump in grant making occurred in part because market gains required Hewlett to spend more to avoid paying a 2-percent excise tax on investment gains. Foundations qualify for a lower tax rate of 1 percent if their grants exceed average distributions measured over the previous five years. Flush with cash, the fund increased spending on a new grant program to promote cybersecurity from $4 million to $45 million; sent $5 million to groups seeking to curb the spread of the Ebola virus last fall; and created a new $50-million grant-making program, the Madison Initiative, designed to reduce dysfunction in Congress.
This year, with the creation of the Duration Fund, and an internal effort to streamline the grant maker’s bureaucracy, the foundation’s “hands are full,” Mr. Kramer says. No new major grant-making programs are planned for 2015.
Mr. Kramer says his focus is not just on the causes Hewlett supports but its efficiency. The foundation now has 63 grant-application templates — something he says confuses smaller grantees and wastes staff time.
Says Mr. Kramer: “Our whole process has gotten more complicated than it needs to be.”
