There Is No Better Time Than Now for Philanthropy to Spend Itself Out of Existence

July 28, 2020
By Ellen Friedman, Glen Galaich, and Pia Infante

Reposted with permission of The Chronicle of Philanthropy

 

As our nation grapples with a confluence of crises, philanthropy is abuzz with how best to respond. Some are increasing payouts. Others are allowing grantees more flexibility in how they spend funds. A few have issued bonds to increase their charitable giving without tapping endowments. These are all useful steps, but none do enough to uproot historical inequities and upend power structures in society and philanthropy.

We offer an alternative solution: We encourage foundations to join the growing movement to distribute all their philanthropic assets within the next few years.

As the leaders of three foundations doing just that, we feel compelled in this moment to encourage grant makers to redistribute private philanthropic wealth back into communities instead of holding on to funds so their institutions can exist indefinitely. If we are to live our values, we must ask ourselves and our peers, “What are we saving our endowments for?”

Our call to distribute all endowment assets echoes many of our grantees’ pleas. Christina Livingston, director of the Alliance of Californians for Community Empowerment, says philanthropists who publicly declare their support for racial justice need to “unlock endowments and let those who bear the brunt of generations of systemic racial and economic violence determine how those resources can best serve.”

The grass-roots movements fighting for health, equity, and environmental and social justice are stronger, more interconnected, more knowledgeable, and more effective at creating change than grant makers like ourselves. They also need resources now to turn this moment of racial reckoning into real change. Our hope is that every private foundation committed to social justice and uprooting racism will listen to and invest fully in community leaders and movements that will continue to work for this change long after our endowments run out.

An Effective Approach

The three of us can personally attest that the decision to give every dollar of our institutions’ assets to our grantees has put our work into sharper focus and has allowed us to better meet community needs during this crisis.

Stupski Foundation, for example, was able to move rapidly during the first month of the pandemic, approving more than 30 grant requests in an average of four days. This included requests from Chinese Hospital and the Chinatown Community Development Center, which needed funds to help prevent a coronavirus outbreak in San Francisco’s densely populated Chinatown. The neighborhood — where multiple people live together in single-room-occupancy hotel units — was potentially a perfect breeding ground for the virus. But the fast turnaround of funds allowed community leaders to set up mobile clinics, get vital information to residents, and implement a prepared-meal program to keep residents without kitchens safely fed during the pandemic. The quick response turned what could have been a pandemic disaster into a success story.

Similarly, the Compton Foundation, using a simple approval process that did not require proposals, issued funds within five days to support nonprofits combating systemic racism following the murders of George Floyd, Breonna Taylor, and Ahmaud Arbery. This year, Compton has committed to increasing its grant making 15 percent, and Stupski has committed to a 25 percent increase. For both foundations, the decision to spend all their assets has removed the burden of planning for what might happen in the future and allowed them to better adapt to the moment.

Our commitments to spend all our assets have helped deepen relationships with partners. No longer burdened with preserving its endowment, the Whitman Institute, which is entering its final years, has been able to engage in more open discussions with grantees about how to overcome current challenges and prepare for the future. This year it distributed 32 percent of its entire endowment through multiyear and annual grants.

Ending the Need for Philanthropy

Some multibillion-dollar foundations have found new ways to give more, such as issuing bonds to increase grant making without dipping further into their endowments. While this could be seen as an alternative to distributing all a foundation’s assets, in reality such actions maintain the wealth and power of philanthropic institutions. What’s more, most private foundations invest 95 percent of their endowment assets in the traditional market and allot just 5 percent for charitable giving.

In many cases, these investments work in ways that are counterproductive to the foundations’ missions.

By contrast, foundations that choose the route we’ve taken can invest all their assets back into the communities they serve, redistributing endowments rather than finding creative ways to maintain them.

As we reimagine our role and responsibility to society, we also need to support advocates who are pushing public institutions to do a better job of addressing people’s needs. We envision a future where philanthropy will no longer be essential because everyone has the resources needed, and a well-functioning and fully funded government serves all people instead of a privileged few. But until that happens, foundations have a vital role to play.

Join us in taking bold collective action to respond to this historic moment. We encourage foundation leaders to:

Spend every dollar on transformational change. Ask yourself if the amount of your giving aligns with your mission. If it doesn’t, give more today but also consider whether your foundation needs to exist indefinitely to achieve its goals.

Upend traditional power structures. Cede decision-making power to community leaders whenever possible, and honor grantee partners’ expertise and lived experiences. Recognize that they know what solutions work best for their communities.

Redistribute resources to organizations led by Black and indigenous people and people of color. Supporting communities hurt most by systemic oppression is critical to upending those inequities. Set ambitious goals to keep your organization accountable.

While it isn’t possible to give every dollar away overnight, we cannot afford to limit our giving in our country’s time of need. Some grant makers may worry that distributing their wealth in the short term will leave them unable to weather the next crisis. But if we hold off, the problems we are confronting today could escalate past the point of influence.

Spending all our assets is ultimately an investment in hope and belief that community leaders, working with thriving democratic institutions, can serve people better than philanthropists can. If we upend philanthropy’s ossified structure of privately controlled money and power and invest fully in a more just and equitable society, economic prosperity will grow, and the need for philanthropy will sharply diminish. So, ask yourself: What are you saving your endowment for?

Ellen Friedman is executive director of Compton Foundation, Glen Galaich is chief executive officer of Stupski Foundation, and Pia Infante is co-executive director of the Whitman Institute.

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