Ford Foundation Announces Sale and Pricing of Landmark $1 Billion Social Bonds

Philanthropy

Ford Foundation Announces Sale and Pricing of Landmark $1 Billion Social Bonds
Ford’s mission, financial health and stability drove investors to buy first labeled social bond by a nonprofit foundation in the U.S. taxable corporate bond market
23 June 2020
New York, NY – The Ford Foundation announced the pricing and sale of a $1 billion aggregate principal Social Bond (taxable), the net proceeds of which will help support and strengthen nonprofit organizations hit hard by COVID-19 pandemic. This Social Bond is the first-ever such offering by a U.S. nonprofit foundation in the taxable corporate bond market.

The foundation’s bond offering includes 30-year and 50-year maturities, with $300 million maturing in 2050 and $700 million maturing in 2070 at a fixed rate of 2.415% and 2.815%, per annum, respectively. The closing date of the sale is June 25, 2020.

The Ford Foundation Board of Trustees endorsed the social bond issuance as an innovative solution that achieved both objectives of increasing resources for grants and not taking capital out of the endowment at a critical time of market volatility.

“We’ve rarely seen investors both in the U.S and around the world, respond with such enthusiasm to a designated social bond offering of this kind. The Ford Foundation’s Social Bonds began gaining momentum as a “must have” for mission-driven, ESG investors in the U.S. bond market resulting in nearly $3.5 billion of orders during the first week of the marketing process,” said Sally Bednar of Wells Fargo Securities. “The low yields and the successful, rare, 50-year maturity achieved through the bond sale are a strong indication of investor confidence in the Ford Foundation’s stature in the private foundation space, its mission and investors’ appetite for securities with a positive ESG and, in particular, social impact. The 50-year bond maturity is a first of its kind for a U.S. private foundation.”

The net proceeds of the Social Bonds sale will enable the foundation to pay out what equates to 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. The foundation’s primary goal will be to stabilize and strengthen key organizations that are advancing the fight against inequality when communities that are most vulnerable have been hit hardest by the pandemic.

“We’re thrilled with the phenomenal response to our offering which generated an initial subscription rate of 5.8X the value of the initial $1 billion social bond issuance. There are 114 investors, many of which were socially mindful, and recognize the economic and societal ramifications of COVID-19 for the nonprofit sector, and Ford Foundation’s unprecedented effort to help sustain these organizations at a critical time in our nation’s history. The proceeds from this offering will help build the resilience and durability of nonprofits who will influence the recovery and reimagine a more just and inclusive society,” said Darren Walker, president of the Ford Foundation.

The Ford Foundation’s Social Bonds, Series 2020 (taxable), were underwritten by joint lead managers Wells Fargo Securities and Morgan Stanley…