6

Transforming Philanthropy

Phyllis Meadows, senior fellow in health at The Kresge Foundation, welcomed the panel on philanthropy, which was intended to explore the sector’s conceptual and practical responses to the pandemic and the movement for racial justice, as well as challenges faced by the field and the prospect of sustained, long-term improvements. Meadows began with brief remarks about the sector’s flexibility and responsiveness to grantees during the pandemic. This is a time of social reckoning, she continued, with racial injustice and a history that “demands transformation in philanthropic practice, policy, and investment.” There is also economic uncertainty, concerns about American democracy, and a range of other challenges. She introduced the panel: Jacqueline Martinez Garcel, chief executive officer of the Latino Community Foundation; William Buster, vice president of Saint David’s Foundation; Marion Standish, vice president for enterprise programs at The California Endowment; Rose Green, senior program officer at the Colorado Health Foundation; and Michelle Larkin, associate executive vice president at the Robert Wood Johnson Foundation. Key points from the panelists are provided in Box 6-1.

Jacqueline Martinez Garcel stated that the current moment has revealed a need for change, particularly to address the legacy of “centuries of racism embedded in our system and policy.” Yet, this time also has inspired a sense of hope, she said. One of the challenges is to sustain that hope and the momentum to engage and vote, hold leaders accountable, and demand change to lead to “sustainable public health changes, housing changes, and educational changes.” William Buster shared his

own sense of hopefulness in seeing—both in his personal circle and more broadly around the country—that families, communities, and neighborhoods are engaging in dialogue in unprecedented ways. Michelle Larkin commented on the recognition that economic hardships and racial injustice have not just been revealed by the COVID-19 pandemic but have been a reality for many decades. She reflected on how various systems, including philanthropy, have contributed to inequities for people across the country, and this moment is calling for rethinking and transformation.

Marion Standish reflected on the historical context for the current time and emphasized that the truth is finally “being seen and heard on issues and challenges that Black communities, communities of color, and Indigenous communities have been living with for all these years.” Rose Green agreed with previous remarks and shared Dr. Martin Luther King, Jr.’s quote about the long arc of the moral universe bending toward justice. “In many ways,” she said, “so many of us have become comfortable or apathetic about a system we are all a part of that is an inequitable system built on inequity” and that this is “a revolutionary moment” that provides an opportunity for change.

Meadows asked the panelists to describe how their foundations have begun to pivot in the midst of these challenges. Standish shared that her foundation’s major change has been its increased speed in getting resources to affected communities in addition to greater flexibility and

more operating funding for grantees. During the pandemic’s first month, the foundation made 21 grants amounting to $5 million in new dollars in 72 hours. Martinez Garcel stated that her community foundation’s focus is on unleashing the civic power of Latinos in California, and during the pandemic, it has been paying much greater attention to supporting “power builders and movement builders” and finding ways to address needs for “food, transportation, things that were happening with wildfires, people losing jobs impacted by COVID-19,” and other challenges being faced by nonprofit leaders that the foundation supports. Larkin shared that the foundation spent $50 million in humanitarian aid to help families and communities most affected by the “long-term policy failures that we put into place as a nation,” leading to needs for “food, housing, and things like rent support,” particularly among “communities that have suffered the greatest inequities—communities of color, lower-income workers, and Indigenous communities.”

Larkin underscored the earlier remarks about speed and her organization’s focus on lessening the burden of reporting and removing burdens in awarding grants to nonprofits that are providing on-the-ground emergency services. Larkin added that as the COVID-19 pandemic is ravaging Black and Indigenous people and communities and other communities of color, the foundation is rising to speak as a national voice “to the public about racial equity in particular and how this is not a political issue; it should not be a partisan issue.” The question is, said Larkin,

Meadows asked panelists how philanthropic organizations could keep this moment of expansion from contracting back into the old mode of operating. Martinez Garcel shared that it is essential that people in the field recognize that “racism has played a devastating role in how we think about philanthropy” and that “they are part of the problem.” Holding a mirror to themselves is crucial, and philanthropic organizations, she asserted, need to trust the people on the ground to do the work and discard reporting requirements. There are also leaders in philanthropy who are concerned about unsupportive boards, but there are ways to bring on board people who “get it” and who will use their abilities to facilitate and support change.

Buster pointed to the webcast window with images of the six speakers and remarked on its racial, ethnic, and gender diversity, but he added that does not reflect how the field looks. “Each of us have agency in our organization, if we have the power to hire and to contract, and it is

essential to reassess annually how the field is doing and hold each other accountable.”

Standish built on Martinez Garcel and Buster’s comments and spoke to both the internal and external aspects of the deliberate work her organization has undertaken to advance racial equity over the past 2 years. The foundation’s journey has included examining its use of the language of White supremacy. The internal work has been comprehensive, including reviewing vendors, investing, and grant-making staff. In its externally facing work, the foundation needs to spend more on its partners, Standish noted, asking “How can we spend in a way that gives our partners the room and maneuverability they need to operate effectively?”

Larkin commented that foundations are required by the Internal Revenue Service to pay out no less than 5 percent of their endowment each year. Her foundation, she stated, has focused on spending more than the 5 percent, and investing to support community power. Internally, the organization has focused on reviewing its hiring and contracting, and being explicit in examining “the connection between racism and health and health equity and the inequity that communities of color have suffered and continue to suffer.” Echoing Martinez Garcel, Larkin underscored the importance of acknowledging the origins of philanthropic funds, the importance of removing barriers to resources and services that people need, and the “real opportunity to do a better job of listening and understanding how we can work together to create the solutions that we hope to see in our nation.”

Green expressed a concern about a likely future contraction after this moment is over. The field needs to “recognize this moment is a long moment.” She also said that accountability is a key issue, particularly in some contexts. Privately endowed foundations, small family foundations, and others may not have robust mechanisms or any mechanisms for accountability, innovating, changing, or truly moving the work of equity forward, internally and externally. Green shared a recent report from Emerging Practitioners in Philanthropy, of which she is a member. The report Dissonance & Disconnects highlighted that a majority of staff of color who have joined philanthropy plan on leaving within the first 5 years “because they don’t feel supported [or] welcomed, or they don’t feel like they can do the work they want” (EPIP, 2018). Philanthropic organizations “need to think about how to institutionalize the changes so people can feel supported and move up and have influence rather than just being frontline staff.”

Meadows asked panelists how they can ensure that the field can be welcoming of diverse newcomers. Buster shared that he invites staff to “bring themselves into the office” and bring “the culture from which they come.” How people process things on a cultural level, he noted, informs

how they ask questions, make decisions, and move around in their communities. This is an intentional process that can make people uncomfortable because it is challenging the dominant culture, but he added that things do not improve without struggle.

Meadows posed the next question: Have foundations eliminated caps on indirect (i.e., not program) support as a means of support, and will this change continue past COVID-19? Larkin said that her foundation benefited from the work that other philanthropic organizations have done to get at the true cost for grantees, and it has increased indirect support to 20 percent this year and does not intend to reverse that direction, but will continue to reassess whether that is the correct amount to avoid “unintentionally starving nonprofit organizations.” Standish shared that her foundation has not formally changed its indirect policy, but it is interested in analyses of the true costs for their partners and in understanding how to support them in strengthening the sustainability of the work.

Reflecting on earlier mentions of “power building,” Meadows commented that the phrase can unintentionally connote that the foundation is giving something—power—to the grantee, and that narrative can be problematic. An audience question, Meadows added, stated that although philanthropy, unlike government, responded to the crisis, the private-sector response is not sustainable, so what should the role of government be, and is “power building in individual communities fast enough or forward enough to make the changes?” Martinez Garcel remarked that the right framing is “unleash the power” because “we know the power is there,” and what philanthropy can do is create “the opportunity for people to move together and move powerfully together.” But that in itself is not enough unless policies, systems, and organizations show they value community input and integrate community suggestions in policy and systems, and organizations become aligned to respond to the effects of “centuries of disinvestment of communities of color.” She added that investments in the sense of agency are needed, and she hopes that is surfacing in order to influence changes in government policy. Martinez Garcel added:

With regard to changing the sector, Martinez Garcel asserted that philanthropic organizations need to write their commitments into bylaws and

policies, including reflecting the racial diversity of the communities they are serving. For example, her organization devotes 20 percent of grant making “to unleash the power of communities of color.”

Standish said that two actions are needed in order to unleash the power of communities. First, the field needs to become faster at grant making and spending more, including connecting grantees to a larger ecosystem, such as with data-generating efforts and legal assistance. Secondly, the field needs to strengthen the work of “unleashing the power with long-term leadership commitment, building the pipeline, [and] building the places and opportunities where organizers, advocates, and policy makers can connect and strategize and plan.”

Green commented that it is important to think of this work of unleashing power not as a project grant, a program, an organization, or even for an individual leader, but rather, as a long-term, sustained, and well-supported movement. Referring to advocacy work, Green underscored the need to fund community advocacy in the way that philanthropy has funded large traditional advocacy organizations.

Larkin added the element of evidence and evaluation to the conversation, but noted that evaluation needs to be equitable and designed together with grantees. A paradigm shift is needed to inform how philanthropy supports grantees in conducting good data collection, analysis, and evaluation to help unleash community power and support civic engagement and positive changes in communities.

Meadows shared another question from the audience pertaining to how values inform an organization’s investments. Martinez Garcel spoke to programmatic investments in the community. More than 51 percent of her foundation’s board and staff is Latino, and the organization invests 65 percent of the funds it pays out to organizations that have budgets that are below $1 million; that are grassroots, without the luxury of grant writers; and that are led by trusted community leaders with lived experience. In other words, this is about making sure that the money follows the institution’s values. Larkin discussed the investment of a foundation’s endowment, acknowledging that the sector has a history of investing in ways that have been detrimental to communities of color. The foundation is investing in affordable housing and other work that advances health equity and racial equity, and those considerations are applied across all of the foundation’s work.

Green noted that her foundation uses some program-related investing, which offers low-interest loans to community-based organizations as well as larger institutions, to allow the foundation to grow its resources for greater effect. The foundation also applies the lens of environmental, social, and governance (ESG) questions to its investments to ensure alignment with its values. Moreover, it is working to ensure that more of

the people who manage its investments are women and people of color. Because her foundation has the vast majority of its resources in an endowment and not in grants, it holds “the money, power, and decision making” and is exploring ways to enable communities to have agency over resources. Standish added that her foundation also uses the strategies described by others, from ESG to diversity among investment managers, as well as program-related investments—all of which can help move the field of investment capital toward being a more equitable field.

Meadows shared another question from the audience. Are foundations extractive capitalists, and what are workshop participants’ organizations doing to ensure that they are accountable to the community? Buster responded that it is essential that foundations bring all of their resources and assets to bear in their support of communities. As an example, if a foundation is supporting a rural, low-income community, and foundation leaders have connections at the U.S. Department of Agriculture or with rural economic development practitioners, then “you have to bring those resources into the community—not just to grantees, but all the relationships you have.” Martinez Garcel noted that the idea of philanthropy being extractive may be linked with the fact that although foundations are tax exempt, they may “sit” on large endowments. The fact that they only invest 5 percent of those resources is unjust when there are many ways that those resources could be invested. Being honest about philanthropy also requires acknowledging that the sector extracts ideas, knowledge, and human capital, and foundations may take too much credit for the work that communities are doing and the fact that communities are thriving. Also, when foundations invest in large firms to develop communication strategy and the narratives about the work, it must be acknowledged that the ideas they are putting forward are extracted from communities. While the communication firm is paid to come up with a solution or a logic model, the insights used are sourced from interviews with community organizers.

Standish shared The California Endowment’s President’s Youth Council as one strategy that the foundation uses to listen to the community. This group of young people also has a formal relationship with the board, which facilitates mutual understanding and better listening “to the voices of people who are most proximate to the experiences we are trying to address.” Buster added that he observed that the Youth Council truly challenges the foundation’s leadership, and he shared his view that more leaders would benefit from being open to working with the community in that way.

Larkin built on the earlier theme of philanthropy working with and creating with communities versus being extractive. “Philanthropy has a long history of reaching in the community and not giving back or not

showing up in a way that elevates the solutions that are coming from community,” she said. Listening and understanding communities and working to create “learning networks that people can tap into” is important.

The last question from the audience that Meadows shared asked if any foundations are exploring ways to support grantees similar to an endowment so that they do not have to apply for funding each year. Buster responded that he has been fighting for that for 15 years, but has not seen it happen. However, he noted, this is an issue for the philanthropic sector to consider, even if he has not seen much movement on it. Larkin agreed and said that she has not seen that type of support constitute a long-term solution.

Standish said that her organization has rarely used this approach, and in her experience, it did not work very well. She also made two additional points. Some of the foundation’s working program-related investments (PRIs) are not exactly endowments, but they are intended to be mechanisms to help nonprofit organizations develop assets such as owning their own buildings. Thus, PRIs can be an important resource that grantees can use over time. The California Endowment makes mostly 2-year grants, Standish noted, and she asked if others make longer grants. How can foundations shift their thinking toward the longer term to facilitate sustainability, despite the many challenges of longer grants? Larkin stated that one of the strategies in use is general operating support, which may include longer duration grants, but impact investing, supervised guarantees, or low-market loans are other ways that the philanthropy sector can be more supportive in terms of long-term health and sustainability.

Meadows offered panelists a final chance to share. Martinez Garcel described how her foundation, which focuses on the largest ethnic population in California, is working to increase its endowment while also sharing with communities, and shifting generational wealth. The foundation views its work as investing in organizations led by people of color with a long-term focus, building the asset base to allow grantees to have more security to do the work they are doing for generations to come, and to stay in their locations without having to worry about rent increases for their facilities. Growing the endowment is critically important for organizations led by people of color who will build the pipeline of future civic and political leaders. Buster’s closing comment was “know who you are centering in your work, know who you network with, and use [that knowledge] to the extent you can.”