April 10, 2019

NFG speaks with place-based funders on how they are using impact investing to further justice and equity

A newspaper page with graphs and charts for the stock market.

Photo by Markus Spiske on Unsplash

An increasing number of foundations are embracing impact investing as a powerful strategy to potentially make use of all of their assets — not just 5% — to advance their place-based and justice-oriented missions. Last month, several Neighborhood Funders Group members attended Confluence Philanthropy’s 9th Annual Practitioners Gathering to explore how the philanthropic and investment sectors can accelerate movement-building for equity. In reflection, a few folks from NFG’s funder network share their perspectives on, and experience in, mission-related investing.

Beyond grantmaking for racial equity

Soon after Confluence Philanthropy’s Gathering, NFG member Amalgamated Foundation launched the Hate Is Not Charitable Campaign. The campaign brings to light how Donor Advised Funds (“DAFs”) have been used to finance hate groups — often times anonymously — and calls on DAF providers to stop this trend that can fund in direct opposition to some of these foundations’ missions. While the campaign highlights how DAFs can be misused when they are eventually dispersed, Amalgamated is also considering how these funds are being used while they are waiting to be dispersed.

Quote by Tyler Nickerson of Amalgamated Bank: “This is an opportunity for foundations to put all of their resources towards mission alignment and supporting enterprises that center a racial justice strategy.”“DAFs provide a set of resources... that can be risk tolerant, quick moving, and significant in their scale. Utilizing current IRS tax codes, DAF holders are allowed to make program related investments with their resources,” says Tyler Nickerson, First Vice President for Philanthropy Banking at Amalgamated Bank.

By choosing not to invest in some of the market’s largest companies in the fossil fuel, gun manufacturer, and private prison industries, Amalgamated is proactively aligning all of its assets with its values of environmental and social responsibility.

Incourage Community Foundation invests all of its endowed funds, including DAFs, in the same investment pool that includes their impact investments. According to Heather McKellips, Director of Learning & Engagement, "Incourage looks for investment opportunities that advance its vision of an inclusive, adaptive, and sustainable community.” She says, “Prudently thinking through how the principal portion of an investment portfolio (the 95%) can be effectively deployed to positively impact an issue, in addition to the traditional grantmaking portion (the 5%), greatly increases the ability to impact the real issues facing our communities.”

Impact investing strategies

For Incourage, this includes an African American-led private equity fund that seeks to provide business ownership opportunities for entrepreneurs of color and regional Community Development Financial Institutions (CDFIs) that channel capital and technical assistance to underserved populations including entrepreneurs and households of color, and nonprofit organizations serving communities of color. Heather explains, “By investing in CDFIs that do small business lending in a community, area businesses can then more readily access needed funding to start up, retain, and expand operations, meaning more families have jobs and then have less of a need for support services that are often funded by grant dollars.”

Quote by  Mark Paley of The Hyams Foundation: “Hyams does, however, have a long history of utilizing PRIs… These investments are examples of using issue-specific investment models to further Hyams’s racial equity work beyond direct grantmaking.”For foundations just starting with impact investing, it can be helpful to look at these alternatives. NFG member The Hyams Foundation considers itself to be at the beginning stages of its impact investment work and is exploring investment strategies to further its mission to increase economic, racial, and social justice and power within low-income communities in Boston and Chelsea, Massachusetts. In addition to its affordable housing PRIs, Hyams is exploring additional social, economic, and racial justice investment opportunities including social enterprise, wealth building, and solidarity economy models.

“Hyams does, however, have a long history of utilizing PRIs, including two active loans to affordable housing loan funds. These investments are examples of using issue-specific investment models to further Hyams’s racial equity work beyond direct grantmaking,” says Mark Paley, Director of Administration & Finance (and NFG board member).

Quote by Heather McKellips of Incourage Community Foundation: “We have found it to be much more effective to start with the problem or issue, and then look holistically at what the resources are that you, or someone you can collaborate with, can bring to bear.”There are many approaches to impact investing. Unlike Amalgamated Foundation, Nia Community Fund's approach is to invest directly into solutions-focused companies with diverse leaders, rather than screen out sectors. Founder and Director Kristin Hull says, “We begin with our end goal in mind, rather than with traditional investment philosophy. We think about how we can use each dollar to maximize our positive impact.” Their investment dollars go to women and people of color-led businesses working to address social justice and environmental sustainability.

Amalgamated is also exploring new models seeking to expand capital to Black, Brown, and Native communities. “This is an opportunity for foundations to put all of their resources towards mission alignment and supporting enterprises that center a racial justice strategy,” says Tyler Nickerson.

Impact investing should always be centered around core values. Evaluating how a foundation is putting its values into practice can even start with how they interface with the investment industry itself. For example, Nia Community Fund looks for companies, funds, and investment managers that use a racial justice lens, and predominantly works with women and people of color.

Quote by Kristin Hull of Nia Community Fund: “Our investment dollars far outweigh our grant dollars and so we are really strategic with both buckets and do as much to leverage what we have and have every dollar be as effective as possible.”Incourage Community Foundation takes their role as an investor even further by being “active owners who vote proxies and practice other forms of shareholder engagement to encourage inclusive and fair labor practices, strong governance, and responsible environmental practices by corporations doing business in our state,” according to Heather McKellips.

Amalgamated’s Tyler Nickerson suggests that investors and grantmakers “listen to the communities in which they seek to support. They know what the community needs and the type of businesses it can support. Community members also know who is a fair employer and a good steward.” He notes that centering those voices and racial justice is key in developing solutions like a fair and equitable business strategy, whether it involves grocery stores or clean energy or manufacturing jobs.

Takeaways and lessons learned

1. Much like a healthy business model, communities need diverse forms of investment.

“Communities need multiple types of capital to become inclusive, thriving places. Charitable grants can’t be the only the tool to build greater equity within community,” says Tyler Nickerson. “Grants coupled with investment capital will create an integrated stream of resources to build communities where all people can succeed.”

2. For some funders, the grant-to-investment ratio can be strengthened, even while preserving an endowment’s lifespan.

Nia Community Fund’s Kristin Hull points out, “Our investment dollars by far outweigh our grant dollars and so we are really strategic with both buckets and do as much to leverage what we have and have every dollar be as effective as possible.” Nia Community Fund focuses on working beyond the status quo and investing into a just, sustainable, and inclusive economy, which means having an investment policy statement and investment practices that keep equity and justice as the core principles.

3. Focus on community needs first, and develop your investment model accordingly.

While foundations often start with an investment product that they then try to figure out how to use to address their focus issues, Heather McKellips of Incourage Community Foundation says, “We have found it to be much more effective to start with the problem or issue, and then look holistically at what the resources are that you, or someone you can collaborate with, can bring to bear."

4. Spread the risk and enhance the impact through collaboration.

This collaboration is key to moving the philanthropic and investment sectors to a more integrated and effective model. Confluence Philanthropy and NFG are creating spaces to explore ideas around impact investing, such as the Hyams Foundation’s interest in engaging with other organizations on what racial justice investment metrics could look like.

Amalgamated’s Tyler Nickerson advises, “Find your allies and ask them to join in community-based solutions. Doing so spreads the risk, expands the capital stack, and helps move other institutions in their learning journey.”

September 3, 2019

Capitalism and Racism: Conjoined Twins

By Marjona Jones, Co-Chair of Funders for a Just Economy and Senior Program Officer at Unitarian Universalist Veatch Program at Shelter Rock

Marjona Jones speaking at a podium.

A few weeks ago, Democracy Now! aired a segment with Ibram X. Kendi, author and founding director of the Anti-Racist Research and Policy Center at American University, where he discussed white supremacy, anti-racism, and the increase in mass shootings. What struck me about the segment was his illuminating statement about the origins of capitalism. Kendi views capitalism and racism as "conjoined twins" and that “…the origins of racism cannot be separated from the origins of capitalism… the life of capitalism cannot be separated from the life of racism.”

Kendi continued by discussing how the Trans-Atlantic Slave Trade allowed for the massive accumulation of wealth in Europe and the Americas. Centuries of wage theft, trading in human bondage, insurance claims on "lost" cargo, and reparations for slave owners after emancipation entrenched this capitalist system with inequities based on race built into it. Slave owners protected their concentrated wealth by shaping our socio-economic and legal systems to benefit themselves and the industry of slavery, as well as limit democracy.

As I celebrate the worker movement’s victories on Labor Day this year, this segment and past conversations with grantees has triggered an important question for me: What does the notion that capitalism and racism are inextricably linked mean for our work as funders of racial and economic justice? Our grantee partners tell us how workers are implicated in the entangled web of these “conjoined twins” of racism and capitalism. Many worker-based organizations state that the best vehicle this country has in pursuit of economic justice is through organizing workers, but traditional labor hasn’t always been the best vehicle for racial justice. As Bill Fletcher Jr. and Fernando Gapasin discuss in Solidarity Divided: The Crisis in Organized Labor and a New Path toward Social Justice, while many unions integrated in the 1920s, some unionists decided to resist integration to ensure wins and job quality for white workers. These traditionalists understood the idea of “conjoined twins.”

Racial and economic justice movements have exposed exploitative and extractive practices within capitalism, making it less secure to accumulate wealth through those means. However, as Michelle Alexander points out in her book, The New Jim Crow, exposing capitalism for what it is forces it to transform and evolve. For example, following the Emancipation Proclamation of 1863, agriculture was still the main economic engine, and free exploited labor was needed for this industry to survive. Capitalism evolved while maintaining its racist and exploitative roots through policymakers passing the Black Codes of 1865 and 1866, making it easier to imprison recently freed slaves to continue that supply of free labor.

We are catching up to the fact that capitalism was never meant to work for everyone. What will the next evolution in capitalism bring as our movements fight even harder for racial and economic justice in the face of harm to workers and marginalized communities?

Funders for a Just Economy (FJE) has created an intentional space to begin discussing what these questions mean for our work and the grantees we support. Capitalism’s origin story is a critical part of analyzing how this system operates. By acknowledging the “conjoined twins,” we acknowledge the role of race and the legacy of slavery. FJE believes that there is a renewed opportunity to support a working-class movement that builds the power of all workers, especially Black, Trans and LGBQ workers, women, and immigrants—and lift their role as the main strategists to change the system. If we believe another world is possible, then so is another system that bakes in justice, equity, and respect.


  

Join FJE for these conversations and more at the upcoming Racial Capitalism, Power and Resistance event on October 17 & 18 in Brooklyn, NY. More information and registration link here.

Stay tuned for an upcoming Power Building Study Group for Neighborhood Funders Group members, and the Disrupt the System: How Labor and Philanthropy can Build Worker Power in a New Era event co-convened by the AFL-CIO, the LIFT Fund, and FJE on December 11 in Washington, DC. More information coming soon!

 
August 15, 2019

Beyond Outrage: A Clarity of Purpose

Dimple Abichandani, Executive Director of the General Service Foundation, urges grantmakers and the philanthropic sector to take concrete actions to defend democracy and speak out against racist attacks on people of color. This post was originally published here on the foundation's website.

Dimple was part of the first Philanthropy Forward: Leadership for Change Fellowship cohort, a joint initiative of Neighborhood Funders Group and The Aspen Institute Forum for Community Solutions. General Service Foundation, which partners with grassroots organizations to bring about a more just and sustainable world, is a member of NFG.


  

Dimple AbichandaniWe live in dangerous times, and every passing news cycle contains another outrage, another violation of norms, another threat to our democracy, another threat to our planet.  

In the face of escalating racial attacks, (be it imprisonment of kids on the border or the racist rhetoric being tweeted from the white house) many have noted, rightly, that philanthropy as a sector has been too cautious and too quiet.  The Communications Network, in it’s recent piece, Silence Speaks Volumes, calls on foundations to use their voices in this moment.

Yes, it’s meaningful for people from all sectors of our society to condemn the Administration’s attacks on people of color.  And, for those of us working in the philanthropic sector, these times call on us to use all of our tools in defense of our inclusive, multi-racial democracy.  We are more than commentators or observers– as funders, our role is to resource a more just and equitable future. What we do in this moment will be far more important than what we say.  

As painful as this moment is, it is also a time in which the work to be done has become more clear. The vulnerability of our democracy has become more clear.  Racial anxiety and social divisions are being stoked in order to prop up a reckless system that benefits only the wealthiest. As we condemn the most recent of a long list of outrages, can we also use this moment to deepen our own clarity of purpose, and ensure that our funding will bring about a more just future? 

As funders, we can not only speak out but also take action to bolster our inclusive democracy.

  1. Support those most directly impacted by injustice. Instead of wielding of our own voice and power as a foundation, we can support those most directly impacted by injustice to build their voice, power, and leadership. They must lead the way to a more just world; it is our job to uplift and resource their visions and voices. National organizations such as Color of Change, New American Leaders, and National Domestic Workers Alliance, regional and state-based organizations such as Western States Center, Black Voters Matter and Workers Defense Project and so many others are seeding a future in which racial, gender and economic justice will be the norm.
  2. Invest in the creation and dissemination of narratives that reshape cultural attitudes around belonging in our country.  The recent escalation in the use of racist and sexist rhetoric is not happening in a vacuum– rather it builds on broader public narratives shaped by white supremacy and male dominance.  We need to normalize new narratives that humanize all of us, that value all of us. Organizations such as the Pop Culture CollaborativeReFrame, and the Culture Change Fund, for example, build capacity for narrative equity and culture shift.
  3. Question the default funding habits and practices that limit us from making a bigger impact in this moment. As funders, we sometimes have a blind spot for how our internal practices create unnecessary burdens and barriers for organizations that do the important work we support. This moment calls on us to question our practices, shift to ways of working that account for the gravity of the problems we face, and center the people who are leading the social change efforts we support. Could your foundation increase its payout, provide more general operating support, increase the length of grants, and minimize busywork for grantees? Could you shift your grant strategy to more boldly meet the moment or more directly address the imbalances of power in our society? The Trust Based Philanthropy Network has tools and stories of inspiration from foundations who have increased their impact by changing their practices.

So many of us in philanthropy are eager to do something meaningful in this tumultuous time.  Let’s challenge ourselves to use this moment to put our institutional values into practice. Let’s walk the walk as boldly as we talk the talk.