Soros, in Major Shift, Will Focus Giving on Advocacy and Globalization

George Soros, the international financier and founder of the Open Society Network — which

runs programs and makes grants in over 40 countries — says he plans “a radical transformation” of his charitable giving. The move leaves many of the foundations and nonprofit organizations in Mr. Soros’s network uncertain about their futures.

In a letter sent last month to charity leaders he has supported, Mr. Soros outlined his plans to shift his giving toward advocacy and global issues. He described plans for a revamped organization — a new “Open Society Network of Networks” — that would “be global in scope” and “be able to make an impact on how governments and international institutions conduct themselves.”

The 71-year-old Mr. Soros started his giving in South Africa in the late 1970s, expanded it substantially to Eastern Europe in the next decade, and then eventually extended it to the United States and elsewhere. His focus has been on fostering so-called open societies, nations that support press freedom, human rights, and other democratic ideals.

In his letter, Mr. Soros said his goals have expanded, so instead of concentrating on individual countries, he will support efforts that involve larger regions and that seek to create a “global open society.”

As part of this shift, Mr. Soros — who is worth $6.9-billion, according to Forbes magazine, and since 1982 has given away more than $3.8-billion — plans to reduce his network’s giving during the next four years — from about $430-million, as it stands today, to about $300-million, said Aryeh Neier, president of the Open Society Institute, the New York organization that oversees the network. The decision comes as several programs were scheduled to end during the next few years, Mr. Neier added.

Economic Realities

The budget cuts, however, are not just due to changes in thinking, but reflect economic realities as well.

“The foundation network’s expenditures bulged in the last four or five years, and we’ve been operating at a level that is probably not sustainable for the long term,” Mr. Neier said. Moreover, Mr. Soros’s and the network’s assets have declined because of the turbulence in the stock market, though Mr. Neier said that was not the impetus for the decrease in the grant-making budget.

Among the grant programs that will be significantly affected by Mr. Soros’s announcement:

Eastern Europe. Mr. Soros started setting up foundations in several countries in this region during the 1980s; Soros-related foundations now operate in the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. With the fall of communism and the expected induction of these countries into the European Union, Mr. Soros has decided to significantly reduce his giving to these grant-making organizations. They received a combined $24-million last year. By 2004, this budget will be reduced to about $10-million, said Mr. Neier. Support for foundations in the Balkans, such as Montenegro, will also be reduced, but at a slower rate. The size of the staffs at those institutions will be reduced sharply.

Education and youth. Support for general education and youth programs — such as Step by Step, a program to improve preschool and primary-school education in 28 countries and territories — will be cut almost entirely. “The largest decline in our expenditure by far will take place in that field,” Mr. Neier said about these programs, which received about $100-million in support from the network in 2001. This figure excludes grants to universities and scholarship programs, which will continue despite the changes, Mr. Neier said.

Regional efforts. Mr. Soros plans efforts in Africa, Central and South America, the Middle East, and Southeast Asia in coming years. But unlike the way Mr. Soros’s network has operated in the past — establishing national foundations to carry out its programs — Open Society will act more like a typical foundation, awarding grants to support nonprofit groups already established in these areas.

U.S. programs. The Open Society’s work in the United States — which focuses on drug treatment and drug-policy work, research on death and dying, and support of reproductive health — will be changed so that it deals with only one topic: justice. “We will, by 2005 or 2006, have in the U.S. a somewhat sharper focus on more limited but important issues around justice,” said Gara LaMarche, head of the network’s U.S. efforts. Changing the U.S. criminal-justice system, as well as supporting immigrants’ rights and civil liberties, will be part of this new emphasis, he said.

Mr. Soros said in his letter that all current commitments will be met, and that Open Society may continue to support certain programs that do not fall under the revised priorities, though at a significantly diminished level. When possible, the network will seek to work with other grant makers to make sure that the programs it had supported can continue.

Another significant change for Mr. Soros is his new emphasis on advocacy and influencing public policy.

He opened a $2-million office in Washington this month and created the Open Society Policy Center, which will focus on foreign policy and civil liberties.

The lobbying group’s immediate goal is to help shape the Bush administration’s new so-called Millennium Challenge Account, a proposal to increase foreign aid to poor nations.

‘Significant Loss’

The shakeup has left grantees worried about how the loss of Mr. Soros’s philanthropy will affect their programs and the people they benefit.

“It just will be very challenging to replace the resources,” said James C. Wagoner, president of Advocates for Youth, in Washington. “To have Soros pull out of the reproductive-health field is a real loss.” The organization, an advocacy group that seeks to improve the availability of contraception and promote sexual health, received a $495,000 grant from the Soros network, which is about 12 percent of its total budget. “It’s a significant loss, but it’s not a heart-stopper,” he said. Mr. Wagoner and other grantees praised Mr. Soros for being candid about the changes he plans to make in his philanthropy.

The change is going to be difficult, said Betsy S. Nelson, executive director of the Association of Baltimore Area Grantmakers, but Open Society’s Baltimore foundation, which awarded her group $60,000 last year, has done a good job preparing the association for its inevitable closure. Ms. Nelson said, “We never saw this as an ongoing funding source.”