Open Society Foundations will lay off at least 40% of its workforce, with hundreds of staff due to get pink slips in the coming months as billionaire George Soros’ globe-spanning philanthropy embarks on yet another round of restructuring.
First reported by Bloomberg News, the staff cuts come as the $25 billion organization undergoes a full-scale leadership transition. The financier’s 37-year-old son, Alexander Soros, formally took control of the philanthropic network last month, following an overhaul of its board structure at the end of last year that left the organization, at least for now, in the hands of a small circle of family members and longtime advisors.
Shared with the organization’s roughly 800 employees on the Friday before the July 4 holiday, the planned layoffs are the latest development in a long history of efforts to get a handle on OSF’s legendarily complex organizational structure. Those efforts date back across the tenures of multiple foundation presidents, and include a roughly two-year restructuring process formally started in 2021 involving multiple rounds of staff buyouts and spending freezes. More recently, at least a dozen country offices and satellite facilities across OSF’s global network have apparently closed their doors or gone independent, with more on the way.
The refashioned OSF board, which met last week to discuss the future of the organization, believes more shifts are needed, according to a statement to Inside Philanthropy by an OSF spokesperson.
“Our board of directors has concluded that the changes we undertook, while vitally important, did not go far enough in ensuring that the foundations are more nimble and better equipped to confront emerging and urgent challenges as they arise,” said the spokesperson, referring to the restructuring begun in 2021. “The board has decided circumstances demand a more radical shift to a dynamic and innovative operating model new for philanthropies of our size.”
OSF’s ongoing downsizing comes at a time of rising illiberalism around the world, leaving many inside and outside the organization concerned that perhaps this titan of democracy funding, known for working in corners of the world where few if any philanthropies have the resources or wherewithal to fund, has been hamstrung, or at least diminished, at a time of critical threats to the values it has advanced since its founding decades ago.
OSF leadership, however, sees the changes as essential to that cause. “This new strategic approach will reinforce our continued commitment — as one of the world’s largest private foundations — to the values we stand for,” the spokesperson said. Or as the board put it in its public statement, “The changes are intended to maximize Open Society’s impact in helping to counter the forces currently threatening open and free societies.”
How will these cuts change OSF?
The Open Society Foundations network has long been critiqued by insiders and outsiders alike for its unwieldy scope and scale. Most agree change was warranted, but the big question, of course, has been which arms of the organization — which IP once dubbed an “octopus” — should be put on the chopping block.
Over the last couple years, OSF has undergone what it refers to as a “transformation,” cutting or consolidating its wide-ranging thematic programs into four categories. Leadership’s stated goals included expanding local control by regional offices and improving the organization’s ability to react quickly to major events. Recent office closures seem to indicate it will also end its physical presence in many countries or even regions.
“This really means that… the longtime mission to support open societies, wherever they were threatened, is probably gone,” said Stanley Katz, a Princeton historian who studies philanthropy. OSF is “going to be more traditional in the sense that it’s more likely to move where the senior staff and Alex and family decide to take it.”
Extensive staff cuts will all but require OSF to make fewer but larger grants. Most grants require similar amounts of staff time, whether they’re for $50,000 or $5 million. As I reported in 2021, OSF has been something of an outlier among its peers for its relatively modest grants, which an internal evaluation put at a median size of $86,000, next to Ford’s $200,000 and the Gates Foundation’s $700,000. With fewer employees to do paperwork, OSF will move from “retail to wholesale” philanthropy, as Katz put it.
That shift may change what was once a “very interventionist, sometimes control-freak kind of operation,” he said. “It’s just not going to be possible to do that anymore.”
OSF also seems likely to send more money to intermediaries that can parcel out smaller grants. That’s a strategy many other major grantmakers and billionaire mega donors employ, particularly within climate and environmental philanthropy. Such intermediaries can be more connected to local groups and have more participatory structures, but that doesn’t mean they’re immune from replicating the power dynamics and strategic overreach common among traditional funders.
Of course, the staff cuts and office closures will also save OSF a great deal of money, potentially to be redirected to grantmaking. As recently as 2021, OSF was putting roughly $400 million toward operations and reserves on top of an annual grantmaking budget of $800 million. The board’s Friday note seemed to allude to this with its stated commitment to an “operating model that ensures that every grantmaking dollar is maximized.”
Operating expenses for foundations with more than $500 million in assets average about 14% of disbursements, according to FoundationMark. OSF’s dramatically higher figure of 50% is in large part due to its operations in exceedingly difficult environments — even now, it has an office in Kyiv and four other satellite offices across Ukraine — and its past willingness to make relatively small grants to organizations around the world, a rarity among its peers.
Several sources consulted for this piece were critical of the changes at OSF, saying they reflect a desire by leaders to consolidate power in fewer hands, specifically within the philanthropy’s headquarters in New York, and that the organization’s overhaul has lacked a cohesive plan. This perspective was shared by multiple people, but all but Katz requested anonymity to preserve relationships.
“We’ve always known that restructuring was necessary and had to be done,” said a person who served in OSF’s leadership. “The place got very big and the left hand didn’t always know what the right hand was doing, but there needed to be some kind of a vision or a reason behind it, and none was demonstrated.”
According to multiple sources, years of restructuring and uncertainty have left OSF’s staff “exhausted” and morale “very low” due to a lack of clarity about their grantmaking programs and the future of the organization, not to mention their own continued employment. The philanthropy, whose U.S. staff are among the few in American philanthropy that have unionized, is even running “wellbeing” workshops for employees, among other such resources, according to an email shared with IP.
OSF will “implement this new approach in accordance with local requirements and obligations to our employees and representatives,” said the spokesperson, who also said more information will be shared this summer, as further details depend on negotiations with relevant parties. “This will involve some difficult decisions.”
A quiet board overhaul
Late last October, an email landed in inboxes across OSF announcing a major shift: Four longtime board members would rotate off the board at the end of the year. The overhaul of OSF’s governance that followed foreshadowed the deep staff cuts announced last week.
Conductor and Bard College President Leon Botstein, economist and journalist Anatole Kaletsky, history and political science professor István Rév, and Columbia University Director and lecturer Anya Schiffrin would all depart the board at the close of 2022, according to the email.
“As part of Open Society’s transformation, we are changing our governance structure in line with our broader review,” said the message, which was shared with IP. Signed by Alex Soros, then OSF’s deputy chair, the message’s concluding line read: “Going forward, our goal is to have a board whose composition reflects the diversity of Open Society.”
By the first days of January, the organization’s website was updated to remove those four individuals, along with economist Shalini Randeria, the president of the Soros-founded Central European University, according to Internet Archive records. Also removed from the board list was George Soros himself, who is 92 years old and is now referred to on OSF’s website simply as “founder.” The organization, which regularly announces major new hires, does not appear to have made any public announcement regarding the governance shift.
The reconstituted board now has seven members, according to OSF’s website, including the veteran international business nonprofit leader Maria Cattaui, think tank chair and author Ivan Kratsev, financier Daniel Sachs, and Mark Malloch-Brown, who was named OSF’s president two and a half years ago. The remainder are family members: Alex Soros, his half-sister Andrea Soros Colombel, and George Soros’ wife Tamiko Bolton Soros, a consultant and online health education entrepreneur and the only new board member following the departures.
More additions may be on the way. A December email to the network shared with IP and signed by George Soros said, “I have asked Alex to chair the new body and lead the search for new members.”
The website update also included a potentially profound declaration: the board of directors is the “only body that reviews and advises with respect to all programs and entities” within OSF. While an executive committee and senior leadership team still exist, a philanthropy once infamous for near-countless boards and advisory bodies now has, at least officially, only one.
Amid the board overhaul, the executive committee, which is made up of the organization’s senior staff leaders, has been nearly unchanged. But there is one sign of flux. One former member, Smita Singh, who started as chief strategy officer in January 2022, is no longer with the organization, apparently lasting little more than a year in the post.
Six months after the board overhaul, in a June exclusive with the Wall Street Journal, George Soros announced that he was formally passing control of the philanthropic empire to his younger son, a long-rumored hand-off.
A far-flung network appears to shrink
The Open Society Foundations once had offices in more than three dozen countries. As recently as March, OSF’s website was advertising its “20+” regional and national foundations, and even today the website says the network is “active in more than 120 countries.”
Local conditions have led many of OSF’s brick and mortar operations to shut up shop over the years. Some offices have announced closures, such as outposts in Kabul, Afghanistan, and Yangon, Myanmar, where a staff member was detained by the military. Both officially shuttered in 2021. Back in 2015, OSF was ejected from Russia, and it withdrew from Hungary in 2018.
A much larger pullback now appears to be underway. Since the beginning of this year, the philanthropy has quietly removed a dozen offices or “satellite” facilities from its website. All of the deleted locations were in Asia or Africa, with the latter accounting for seven of the removals, spanning Angola, the Democratic Republic of the Congo, Nigeria, Sierra Leone, South Africa, Tanzania and Uganda. (See a complete list at the end of this article, including cities.)
Delisted locations in Asia included Armenia, Kazakhstan, Tajikistan, Mongolia and Pakistan. In sum, every OSF office or satellite facility once named on the website under the regions “Eurasia” and “Asian Pacific” is no longer mentioned, and those terms are no longer used. With the exception of South Africa, OSF no longer lists offices in any of those countries.
There’s been some turnover in regional leadership, too. The network’s executive director for Europe and Central Asia, Daniela Schwarzer, left the organization this April, two years after being named to the post, according to LinkedIn. The organization also hired Premesh Chandran, who is now on its senior leadership team, as the new director for Asia Pacific in April 2022. It spent nearly $60 million in Asia Pacific the year before, by its own count.
Withdrawals from these countries — and spinning off regional foundations as independent organizations — would certainly make sense within the goal of shrinking the sprawling philanthropic network, and given plans to lay off nearly half its staff. OSF did not comment directly on office closures in its statement to IP, though it noted its new model would require “retooling of our existing operations.”
As far as I can tell, the only public notice of an OSF office closure this year was a February press release announcing that the philanthropy’s Baltimore office, known as Open Society Institute Baltimore, would shutter after 25 years in operation. No date was given.
Further contraction is underway. The Barcelona office will close its doors, and two sources, who requested anonymity, said operations in Puerto Rico will also wind down. The philanthropy announced the end of a fellowship program on the island in March, and LinkedIn indicates that the director for Puerto Rico, Karina Claudio Betancourt, also departed that month.
A long, anxious summer
Looking back, the recent (and not so recent) history of OSF has been one of continual reckoning with George Soros’ highly ambitious “all of the above” approach to funding liberal civil society across the globe. President after president has come on board with a mandate, of one degree or another, to reshape and focus the organization. Measured by cuts, Mark Malloch-Brown has been the most successful so far, with OSF already a much leaner operation today than it was in years past.
Even before last Friday’s announcement of the forthcoming layoffs, staff numbers had fallen by more than half from a prior total of nearly 1,700. OSF’s thematic programs can now be summarized comfortably in a single breath: climate justice, equity, expression and justice.
It’s an open question what impact those cuts will have on the spread of democratic values, human rights and justice, which OSF has spent more than $19 billion championing over the past three decades. As mentioned, the philanthropy’s leaders say the cuts are critical to future success, while critics worry many will be left out in the cold. For now, a summer looms in which staff will await word on whether their grantmaking portfolios and their employment will survive the layoffs, while grantees wonder whether relationships with OSF will outlast the latest round of cuts.
At least one eventual impact seems clear. Most of the organizations receiving OSF’s smallest checks will almost definitely need to turn to other organizations for support. Soros funding may still find its way to those groups, but now, it will likely need to pass first through the hands of regrantors and intermediaries, or large nonprofits that often double as pass-throughs — in other words, entities able to receive the much-larger grants that OSF will be all but forced to issue in the future, given its reduced staff.
Making only massive grants and leaning heavily on such pass-throughs is a path many major philanthropies and mega donors already take, but OSF was an exception. Until now, it seems.
Locations removed from the OSF website’s list of offices and foundations since early this year, based on records from the Internet Archive:
-
Luanda, Angola (satellite)
-
Kinshasa, Democratic Republic of the Congo (satellite)
-
Abuja, Nigeria (satellite)
-
Freetown, Sierra Leone (satellite)
-
Cape Town, South Africa
-
Dar-es-Salaam, Tanzania (satellite)
-
Kampala, Uganda (satellite)
-
Yerevan, Armenia
-
Almaty, Kazakhstan
-
Dushanbe, Tajikistan
-
Kabul, Afghanistan (The following note was posted to the OSF website in September 2021: “OSA is closed and will remain closed.”)
-
Ulaanbaatar, Mongolia
-
Yangon, Myanmar (The following note posted to the OSF website in March 2021: “OSM is closed and will remain closed.” The philanthropy published an announcement that month regarding a detained staff member.)
-
Islamabad, Pakistan
Forthcoming location closures, operations reductions include:
-
Baltimore, USA
-
Barcelona, Spain
-
Puerto Rico, USA
Credit:Source link
