Ford Foundation Prepares $1 Billion Social Bond Offering
The Ford Foundation has announced its intention to offer for sale $1 billion of taxable Social Bonds, in response to the existential threat caused by COVID-19 to nonprofit organizations. The net proceeds of the offering will be used for grant-making to help sustain and strengthen mission-critical social justice and creative expression organizations. The offering will make Ford Foundation the first nonprofit foundation in history to offer a labeled Social Bond in the U.S. taxable corporate bond market.
The foundation’s primary use for the proceeds of the offering will be to fortify and strengthen key organizations that are advancing the fight against inequality at a time when communities who are most vulnerable have been hit hardest by the pandemic. According to the foundation, social justice and nonprofit organizations play a vital role in organizing and advocating on behalf of these communities, but they are already experiencing significant harm from the economic repercussions of Covid-19.
With the proceeds of the offering, Ford will join several foundations to increase their annual grantmaking over the next two years, in response to the crisis caused by the COVID-19 pandemic. Along with Ford, the Doris Duke Charitable Foundation, MacArthur Foundation, W.K. Kellogg Foundation, and Andrew W. Mellon Foundation announced a collective effort to increase funding by $1.7 billion above normal levels over this period. The Ford Foundation announced that the net proceeds of the offering will enable it to pay out more than 10 percent of the value of its total endowment in 2020 and 2021, which is double the level of grantmaking required by law.
Wells Fargo Securities and Morgan Stanley will underwrite the offering and act as joint lead managers, and will be joined by a group of diverse co-managers who will participate in the offering. Wells Fargo Securities is serving as the Lead Sustainability Structuring Agent related to the Social Bond designation.
Moody’s Investors Service and Standard & Poor’s have assigned the Ford Foundation’s Social Bonds Aaa and AAA credit ratings, respectively, and Sustainalytics has provided a Second Party Opinion on the alignment of the foundation’s Social Bond Framework with the International Capital Market Association’s Social Bond Principles.
Commenting on the bond offering, and on the current challenges facing the non-profit sector, Darren Walker, President of the Ford Foundation, said:
“We are facing a once-in-a-century crisis, and we must respond in unprecedented ways to sustain organizations that are advancing the fight against inequality at a time when the need is more pressing than ever. The nonprofit sector will be fundamentally upended and diminished by the economic fallout from COVID-19. The proceeds of the Social Bond sale will support and stabilize social justice, human services, arts, and cultural organizations who must be essential voices in influencing the recovery and reimagining a new normal that is more just and inclusive.”
Sally Bednar, Managing Director at Wells Fargo Securities, added:
“The market is increasingly focused on socially responsible investing, and the Ford Foundation’s bond offering is an excellent opportunity for investors to put money to work in a high-quality credit with an impactful mission. Wells Fargo is honored to bring this ground-breaking financing to market, particularly as it reflects our company’s dedication to supporting organizations that support underserved communities.”