We are pleased to share that we are in the process of issuing $100 million in social bonds. This is another way we are thinking bigger and differently about how we can have more impact.
We intend to use the proceeds from the bonds to increase our grantmaking in the next 24 to 36 months. The bonds received a Aaa rating from Moody's Investors Service.
Our board voted to take this action to put more money to work in the community more quickly during this extraordinary time. In the challenges our region is facing, we see great opportunity for transformative change. We want to be ready to help drive and support that change.
What is a Social Bond?
A social bond a type of debt that raises funds for projects with positive social outcomes. Money borrowed through a social bond must be used for projects that provide clear social benefits. Sustainalytics, an independent research and ratings agency, has reviewed and issued a second-party opinion that our bond offering aligns with the core components of Social Bond Principles.
What led the Foundation to take such unprecedented action now?
We are in a time of unprecedented events and unprecedented needs. The economic situation is worsening for individuals, households, businesses, nonprofits and governments. At the same time these needs are increasing, many organizations that provide critical services are struggling. And the current reckoning on racial justice has created the conditions for bigger thinking and bigger actions for making systems work better for everyone. It has called many more leaders to action who need support to be able to translate that inspiration into lasting change. We see enormous opportunities for impact. We hear the call for foundations to do more. We agree and we are responding.
Why $100 million?
$100 million represents roughly 10% of the Foundation’s assets, and is the most debt we felt was prudent to take on from a stewardship standpoint. It is about double what we distribute in a year and will represent a big boost to our giving.
Is this an unusual action for philanthropy?
It is uncommon for foundations to issue debt for grantmaking purposes. This is the first time the Bush Foundation will be assuming debt for any purpose. We are not alone in this. In the last few months, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, Doris Duke Charitable Foundation and others, have issued bonds to address the extraordinary needs our communities face in this time. It is an innovation in our field. We are grateful to our colleagues at these foundations who have generously counseled us as we have followed their example.
Why borrow money instead of just spending money you already have?
The Foundation’s assets belong to the community. For this and any financial decision, we consider the interest of the communities we serve. We analyzed a lot of scenarios for how we could give more now. Because interest rates and terms are so favorable at this moment, we believe that the community is better off in the long term if we borrow through bonding. Whether we borrow or not, any Bush Foundation spending does ultimately come from the assets we are stewarding for the community. The question is whether we pay now or in 30 years when the bonds come due. We believe that over the life of the bonds (30 years), we should be able earn enough to cover the cost of borrowing. Therefore this approach means the community will benefit from increased spending now and also ensure the most possible resources will be available from the Bush Foundation for future needs and opportunities. (The exact term of the bond will be determined based on market conditions at the projected offering date of October 16.)
Who are the underwriters for the bond issue?
RBC Capital Markets is serving as bookrunning senior lead manager, with Loop Capital Markets and Siebert Williams Shank and Co. LLC as co-managers.
What will these funds be used for?
These funds will allow us to dramatically increase our payout to the community during this time of great need. The specifics on how we will grant them are TBD. We are working now to make sure the bond issuance is successful and will keep you posted.
When can I apply for this funding?
We are just at the stage of issuing bonds and there is no change to what funding is available right now. For more information view our current programs.