George Soros is making changes at his foundation while he still can

The mass email that went out to Open Society Foundations’ grant recipients in the United States in March began with an upbeat note about “how resistance is translating into real progress.”

The bad news was buried farther down. The left-leaning foundation — started by billionaire investor George Soros and today the second-largest private charitable foundation in the United States — was beginning a transformation, as officials there refer to their restructuring plan. So, the email said, “the nature of many partnerships will shift.”

What that actually meant in practice only became clear amid a flurry of phone calls between concerned nonprofit leaders and foundation staff in the days that followed. Many of the nonprofit groups that relied on support from Open Society were getting what were called “tie-off grants,” a final year or so of funding to ease the blow of getting cut off. The foundation set aside an enormous $400 million for what amounted to severance payments to organizations around the world, and more than 150 foundation employees took buyouts as part of the restructuring.

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Grant recipients in public health said they were stunned to be told during a global pandemic that they would be losing funding. Others supporting refugees were similarly surprised given the worldwide needs of the refugee population and the fact that Soros himself was a refugee from communism.

For years, Soros watched the world march in fits and starts toward the vision of open, pluralistic democracy that he has embraced since he was a young Hungarian Holocaust survivor studying philosophy.

The changes at the Open Society Foundations are a painful but necessary adjustment, its leaders say, because that march has halted. Now, with its founder in his 90s, the foundation — and the world — confronts rising authoritarianism and deeply divided civil societies. In the United States, that means that Soros’ work on progressive causes has made him a target of right-wing conspiracy theories.

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And in 2018, in his native Hungary, Open Society was forced to close its office under intense pressure from the government of Prime Minister Viktor Orban, a onetime recipient of a grant from the group.

“From a high-water mark in the early 2000s, we’ve really seen a recession of democracy and human rights,” said Mark Malloch-Brown, the president of the foundation. “We’ve been a little bit peacetime generals at a time where, actually, we’re in a war again.”

The announced funding changes set off months of recrimination and criticism within the sprawling Open Society Foundations, a patchwork of separately constituted national organizations, regional offices around the world and thematic programs based chiefly in New York. Those tensions erupted at an all-staff meeting in early May, when some Open Society employees demanded to know why staff members had not been more closely consulted and accused the foundation’s leadership of “gaslighting” them. Several argued that the changes did not address internal problems with racism and sexism that the organization needed to deal with.

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Lurking in the background of every discussion is the fact that Soros just celebrated his 91st birthday. He is a year older than Warren Buffett, who recently stepped down as a trustee of the Bill and Melinda Gates Foundation. The sprawling foundation Soros has funded for decades wants to refocus while he can still weigh in on the question that many large philanthropies face, which is how to keep the vision of the founder alive after he or she is gone?

Soros declined through a spokesperson to be interviewed for this article. Malloch-Brown, 67, who is also a veteran of the United Nations, the World Bank and the United Kingdom’s foreign office, is steering the organization through the transition period.

“In its early days, the foundation was much better at adding things than closing things. That was the luxury of what, then and now, remains a very generously funded foundation,” Malloch-Brown said. “We’d lost that more strategic purpose and sharp edge of ‘Hey, the stuff we really care about is under assault all around the world and we just need to get a lot more strategic about addressing it and confronting it.’”

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Some staff members, including many associated with the employees’ union in the United States, have come to view the changes as not just about Soros’ priorities, but also those of outside consultants with a more homogeneous vision for what has always been a uniquely complex institution. They described a corporate-style streamlining recommended by the Bridgespan Group, the Bain & Co. nonprofit spinoff. The revamping included little input from people working directly with grantees, employees said.

On Thursday, more than 150 employees, nearly 1 in 10 at the foundation worldwide, saw their buyouts go into effect and some were already cleaning out their desks.

“Why not consult those closest to the work on the front line about what the transformation should look like?” said Ramzi Babouder-Matta, a program administrative specialist at Open Society Foundations who is among those leaving. “It feels like a small group of leaders making top-down decisions without meaningfully engaging staff.”

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The Legal Action Center, which works on criminal justice and drug policy reform and received $350,000 a year from the foundation, about 5% of the center’s overall budget, got its tie-off in July. “It’s very hard to find that funding in the areas that we work in because there’s so few philanthropies that support it,” said Paul N. Samuels, the center’s president.

Like many groups funded by the foundation, the center, and Samuels, remain in limbo, hoping that when the restructuring is over, they will begin to receive grants again. “Losing one of the pillars of the philanthropic world’s support would really be a major loss, which we’re very hopeful would not happen,” he said.

Those hopes may not be in vain. Some grantees will be picked up again by other parts of the organization when the restructuring is completed. Indeed, the foundation said it expected to spend more on public health and on refugees this year than last. A spokesperson added that it was able to evacuate 270 of the group’s Afghan employees and their families in recent weeks.

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But Samuels and others acknowledged that the very nature of relying on funding from foundations is uncertain and the advanced notice and tie-off grants eased the process significantly.

Rank-and-file staff members and leadership agree that some kind of reform was almost certainly necessary for a fragmented and even duplicative operation that sprang up over decades in somewhat unplanned, ad hoc fashion. Malloch-Brown says the transformation will put the philanthropy, which spends over $1 billion on causes annually, on a stable footing moving forward.

“This is a task which the board, George Soros, myself, none of us felt could wait,” Malloch-Brown said. “Time is lives when you’re in the business we’re in of human rights and democracy.”

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The plan is to concentrate bigger philanthropic bets at the global level. The restructuring will give more power to the regional offices, in places like Africa and Latin America, including $75 million in additional funding.

In comments to staff on a call earlier this month Soros’ son Alex, 35, the deputy chair of the global board and his father’s heir apparent, acknowledged the difficulty of the transition but said the foundation would be stronger for it.

The younger Soros was asked on the call whether the board would become more diverse and representative of the communities where the foundation worked. He said that diversity on the board was “very important” to him but that he needed “to acknowledge that my father has chosen his direction for the board, and I just need to say off the bat, I work for him, he’s my boss,” Soros said, according to a transcript of his remarks. “And this organization is founded and maintained on the money he made, and his vision and the ideas he holds true.”

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None of this was quite what people expected when the news emerged in 2017 that George Soros had transferred $18 billion of his fortune to the Open Society Foundations, making it the second-largest private charitable foundation by resources in the United States after the Bill and Melinda Gates Foundation.

In addition to the more than 150 staff members who have accepted buyouts, others, like Babouder-Matta, who works on the discontinued scholarship program, are being laid off.

The tensions boiled over at the all-staff meeting in early May. On the eve of the voluntary buyouts, executives took part in a video call, in which staff members shared their misgivings and grievances.

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After looking at a series of slides prepared by Bridgespan, which painted the organization as less streamlined than Gates or the Ford Foundation, with large numbers of staff approving lots of small grants, employees called out executives for their handling of the restructuring, according to several staff members who participated in the call and transcripts of both the video call and the simultaneous chat, where things got even rougher.

One commenter in the group chat called the process “unaccountable, and unscientific.” Another referred to the “frustration with respect to racism and sexism and other forms of oppression that are alive and well within the institution.” Yet another wrote, “disorganized processes do not just make people angry, they can ruin people’s lives.”

Invoking the deep opposition from populist, authoritarian leaders who have worked to stop the group, another employee wrote, “I believe this transformation has already done more to incapacitate OSF’s ability to support open societies, than all its enemies across the world, during an historic and pivotal moment.”

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Malloch-Brown appealed for civility on the call, asking employees to “take some of the real aggression out of some of the commentary which is going on in the organization at the moment,” according to the transcript. He reminded them that they are “comrades as well as colleagues.”

L. Muthoni Wanyeki, the group’s regional director for Africa, said that she was surprised by the degree of anger that had built up. “When I got off the call, so many of my African colleagues were sending me messages and my team messages, saying, ‘What was that?’ It was the first time I’d fully seen the emotions of the hub staff, in New York, London, Berlin. It was quite shocking.”

Yet public, difficult debates are in keeping with the culture of the foundation and something Soros has himself encouraged as an essential facet of an open society.

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After leaving Hungary, Soros studied at the London School of Economics. He became an arbitrage trader and moved to the United States in 1956, where he started what became Soros Fund Management. He made a fortune as an investor and first began his philanthropic work in 1979 with scholarships for Black students in South Africa and for Eastern European dissidents to study abroad.

He started the Hungarian Soros Foundation in his native country in 1984, while it was still under one-party, communist rule. One simple means of promoting a more open society was distributing photocopiers in places like universities and libraries so that civil society groups could print pamphlets and leaflets. He paid for scholarships so that Hungarians could study abroad, including a young Orban, who is now one of Soros’ most vocal critics.

Soros began Open Society’s work in the United States with a focus on drug policy reform and palliative care in 1994, and established a formal program in the United States in 1996. The foundation focused on issues including mass incarceration, immigration policy and reproductive rights.

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In 2018, the same year the foundation closed its office in Budapest, the group left Turkey after President Recep Tayyip Erdogan denounced Soros in a speech. Amid the growing threats and intimidation, former executives say, the foundation needs to focus its attention and resources.

Open Society had spread its spending over 47 grant-making units, a lot of them with small budgets. Its median grant size was $86,000 — small compared with peers like the Ford Foundation, where the median grant is roughly $200,000, and the Gates Foundation, where it is about $700,000, according to a Bridgespan presentation shared with employees. Half of the grants in 2019 were awarded for one year or less. In a single country, there might be half a dozen different foundation entities making grants, sometimes in concert but also sometimes in competition with or unaware of each other.

“In the past, if you asked OSF, ‘What’s your strategy?’ you would have to staple 40 different strategies together,” said Binaifer Nowrojee, a vice president at the foundation who is leading the transformation process. “Now you have these intertwined global problems, like climate change or the pandemic, or the rise of authoritarianism across the globe and suddenly the national foundation model or this kind of country-level work alone is not sufficient,” Nowrojee said.

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The foundation’s previous president, Patrick Gaspard, said that the process began three years ago at a meeting in London. In attendance were the global board, senior staff and George and Alex Soros. Gaspard said that he asked them whether the foundation would look the same if it were being founded right then rather than a quarter-century earlier. The answer was no.

“I was very clear that it was all on the table,” Gaspard said in an interview. “People should not say this came in the dead of night.”

Gaspard left last year and is now the president of the Center for American Progress in Washington. He was replaced by Malloch-Brown, who was already on the board and had a close relationship with George Soros dating back more than three decades.

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“He is deeply familiar with our work and shares my vision of political philanthropy,” Soros wrote of Malloch-Brown in a message to employees. He also noted that Malloch-Brown had worked alongside his son on the foundation’s board and at the International Crisis Group.

The transformation comes at a delicate moment for large philanthropies. Debates over diversity and inclusion have grown louder and more pointed, as have discussions about how much deference should be shown to billionaire donors over the disposition of donated money. After all, they receive what amounts to a public subsidy for that money in the form of tax breaks.

Many left-leaning, progressive staff members have questioned privately why Soros’ son should be his successor as chair. At the same time, the replacement of Gaspard, who is Black, with an older white man who is a member of Britain’s House of Lords, struck some employees as out of touch with the times. (According to the foundation, Malloch-Brown is currently on leave from the House of Lords.)

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Leaders on the regional level say the changes will give more independence and authority to the staff members where the work is being performed.

For example, in Africa, the foundation will have one regional office with an integrated strategy, said Wanyeki, the Africa regional director. Previously, it had four separate foundations, the regional team as well as grant making from the many thematic groups based elsewhere.

“Originally, George Soros hadn’t intended for any of this to last beyond his lifetime so things grew up organically without any rhyme or reason,” Wanyeki said. “We’re trying to put rhyme and reason to it now.”

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