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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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Social Change Philanthropy
Lisa Tracy and Tracy Gary, philanthropy activists and consultants to Changemakers
BEYOND THE CULTURE OF GREED AND WAR: Hope in Philanthropy
The SRI movement has successfully taken to task the mainstream view of investing - the notion that
for-profit investments could not, or should not, support social movements. Likewise, a sister
movement called 'social change philanthropy' has turned traditional philanthropy on its head. This
movement is about redirecting our giving to create real social transformation - not just "feel
good" charity.
Isn't Philanthropy Just For Rich People?
Reading the popular
press (see Business Week, December 23, 2002), you'd think philanthropy is the exclusive domain of
wealthy barons such as Bill Gates.
Most Americans are surprised to learn that foundations
account for a mere 13 percent of giving in the U.S. In fact, over 83 percent of private giving
comes from individuals. In philanthropy, ordinary people call the shots. They (you) decide which of
our nonprofit institutions will thrive - soup kitchens, soccer leagues, or civil rights.
In the 1970s, just as social investing started to gain momentum, a parallel movement emerged in
philanthropy. Both movements are premised on the notion that individuals of modest means can effect
big social change. Back then, we knew each other better. Let's get reacquainted.
"Change, Not Charity!"
The gap between rich and poor grows daily. The wealthiest one
percent of Americans now has more assets than the bottom 90 percent combined. Meanwhile, the gap
between small and large nonprofits is also increasing. While many universities construct a new
building every year, grassroots social change organizations struggle to pay a single staff person.
Only five percent of private donations goes to social change causes. These are the groups
that brought us sustainable agriculture, equitable pay, and countless other movements with which
the SRI world is deeply bonded. Sustaining vibrant movements requires inspiration. It also requires
money.
Currently, most U.S. philanthropy is directed to recipients such as universities,
traditional health care, and human services. Traditional philanthropy, including (perhaps
surprisingly) grant making by many community foundations, often fails to reach the very poor.
Social change philanthropy, by contrast, tackles the root causes of social ills. It seeks to solve
social problems rather than throw money at symptoms.
The 2001 book Robin Hood Was Right
offers illustrations of the contrast between traditional giving ("charity") and social change
philanthropy ("change"). Rather than funding Toys for Tots (charity), a social change orientation
funds organizers fighting for a living wage so that parents can afford to buy the toys themselves.
Instead of responding to a disability telethon, social change givers support disability advocacy
groups pushing officials to make buildings accessible.
"Change, Not Charity!" is the
tagline of the Funding Exchange (FEX), a national network of 16 social change funding
organizations. The first FEX member groups emerged in the 1970s as an alternative to a stodgy
philanthropic world, where wealthy foundation trustees made ill-informed funding decisions in
isolation from the communities they were ostensibly serving. FEX grants supported local nonprofits
fighting the city dump, advocating for domestic workers, or organizing tenants - in other words,
carrying on the movements that traditional foundations fail to support. More importantly, FEX
democratizes philanthropy by handing grant making decisions to a board of activists that represent
the diversity of the affected community.
Models such as FEX have since grown to include
over 100 groups that Changemakers calls the "community-based public foundations." Rather than
obeying standard counsel to fund a traditional community foundation or to set up a private
foundation, SRI folks might consider supporting one of these alternative foundations fighting for
true social change. These are some of the only foundations willing to support the anti-war
movement. By the way, about half of these foundations maintain an SRI investment policy! (For a
state-by-state guide to community-based public foundations go to- www.changemakers.org)
"But I Have Neither Time Nor Money!"
Most folks donate substantial time and energy
to nonprofits without even thinking about it. When was the last time you volunteered for your kid's
school, a church, or a friend's favorite charity? (The average American volunteers over 3 hours a
week.)
Have you ever cut a check to your alma mater, or given out of guilt to an appeal
made at your doorstep? How many professional associations do you belong to? A lot of money flows
out the door because of obligation or guilt. Sometimes social activists are dismayed to discover
that most of their giving in the last year has not gone to their deeply held social change
passions. Consider creating a personal "giving plan" aligned with your values (see Inspired
Philanthropy in the Resources list). If you are a financial advisor, think about exploring this
with your clients.
Americans currently give a smaller percentage of their incomes than
they did in the Great Depression. Are you sure you can't afford to give more? If you are an SRI
advisor, can you help your clients to discover the joy of being very generous while living
comfortably?
Okay. What Does This Have To Do With SRI?
A popular metaphor for
SRI is the three-legged stool. The three legs include screening, shareholder activism, and - more
recently - community investing.
At the 2002 SRI in the Rockies conference, Tracy Gary and
Cynthia Carey-Grant of Changemakers presented the concept of social change philanthropy as the
"fourth leg" of SRI. In the palette of transformative SRI tools, social change philanthropy is an
investment on par with community investing and social venture capital. Because social change
nonprofits are so underfunded in comparison to mainstream charities, a bit of money goes a long
way.
In only a few years, the SRI movement has achieved tremendous impact on poverty
through community investing. Regrettably, community investing and philanthropy are sometimes
depicted as competing strategies, as if we must choose between them. We gently suggest that both
tools are critical for successful change. Pick a cause: The chances of victory are amplified if all
four "legs" are employed in unison. [See information at the end of the article].
Social
change giving is highly leveraged, helping cutting-edge nonprofits gain legitimacy with more
conventional philanthropists. In the 1970s, only the most radical philanthropists supported prison
reform initiatives. After a decade, prison reform had become an acceptable cause to larger
philanthropists. As a result, prison reform advocates have multiplied their public influence.
Opportunities For SRI Advisors
Over the next 50 years, $40 to $160 trillion will
pass to younger generations as our elders pass on. Suppose that we could redirect just two percent
annually (assuming $1 trillion/year transfer) to social change philanthropy. We could support
200,000 U.S. groups annually at $100,000. Or, at $10,000/year, we could fund two million foreign
organizations! Such an infusion of social capital would dramatically amplify the voices of our
movements - groups working on urban and rural poverty, women, youth, alternative health,
environment, alternative media, bilingual programs... What's more, this is "easy" money - we just
encourage our family, friends, and clients to earmark a portion of their incomes and their estates
to philanthropy.
For SRI advisors, there are financial as well as emotional rewards to
tapping into this intergenerational transfer. A mid-thirties couple that Tracy knows, Sarah and
Jeff, are typical. Sarah and Jeff juggle two jobs and three small children. They have inherited
over $20 million and anticipate $10 million more. Longing to have an impact on alternative
education and other causes, Sarah and Jeff discovered both SRI and philanthropy at the same time.
Working with a team consisting of a wealth advisor, two SRI advisors, an estate attorney and a
philanthropic advisor, they "found" about $350,000 per year to play with philanthropically. Now,
three years later, they have done amazing things with their money.
Anticipate a stream of
inheritors who are ready for SRI and social change philanthropy. They are poised to create the next
great wave of change.
Corporate And Workplace Giving
Corporate philanthropy
represents less than five percent of U.S. giving. Find out how many dollars your employer donates.
Do the dollars go to social change, or to charity? What about those used computers, or the
company-subsidized volunteer hours? Prompt a discussion. How might a giving program be
constructed to express the company's deepest values?
Some companies encourage philanthropy
through workplace giving, in which employees themselves contribute cash via payroll deduction.
About 50 alternative workplace federations - environmental and social action funds, Black United
Funds, and Women's Funds - have emerged as alternatives to United Way.
Working In
Unison
As we educate the philanthropy world about community investing and persuade
foundations to bring their endowments under SRI management, we encourage SRI investors and socially
conscious businesses to introduce philanthropy into their own mix of strategies for social
transformation.
We are among the most hopeful people around. Money, coupled with the
amazing creativity of our movements, has generated stunning long-term change. Four legs make a
sturdier stool.
Philanthropy as the fourth leg of SRI
Social change target #1:
Saving Borneo's Rainforest
- Community investing: Offers loans to local
microenterprises producing nuts or crafts as alternatives to clearcut logging
- Shareholder
activism: Keeps multinational oil and logging companies out of pristine forests
- Screening:
Negative screening excludes the worst offenders from the portfolio; positive screening underwrites
a local for-profit social venture
- Philanthropy: Supports local nonprofits fighting for
native land rights; U.S. groups offering research and collaboration on shareholder activism; and
international groups working to disincentivize world oil and paper consumption
Without
well-funded advocacy groups, SRI funds lack partners with whom to pursue shareholder activism;
community investing fails because the native groups initiating the microenterprise fail to achieve
land rights. That's where philanthropy steps in.
Social change target #2: Boost
low-income housing availability
- Community investing: Builds housing via low-income
housing notes
- Shareholder activism: Confronts predatory lending practices (Citigroup/First
Associates 2002)
- Screening: Positive screening finances an investment in a low-cost
insulation company
- Philanthropy: Backs tenant organizing initiatives; advocacy nonprofits
pushing for state bonds or tax incentives to revitalize low-income housing; community groups
creating housing cooperatives
SOCIAL CHANGE PHILANTHROPY RESOURCES:
For Individual Givers
Changemakers - http://www.changemakers.org.
Funding
Exchange - http://www.fex.org
More Than Money - http://www.morethanmoney.org
Resource
Generation - http://www.resourcegeneration.org
For Corporations & Workplace Giving
Wise Giving - http://www.wisegiving.org
The Center for Corporate Citizenship at Boston
College - http://wwww.bc.edu/centers/ccc
Choice in Giving -
http://wwww.choiceingiving.org
Books
Inspired Philanthropy: Your Step By Step
Guide to Creating a Giving Plan by Tracy Gary and Melissa Kohner (Jossey-Bass Publishers, 2002)
Robin Hood Was Right: A Guide to Giving Your Money for Social Change by Chuck Collins and
Pam Rogers with John P. Garner (W.W. Norton & Co., 2001)
Note to readers: GreenMoney will
have another article on social change philanthropy during the next year.
Article by Lisa
Tracy and Tracy Gary, philanthropy activists and consultants to Changemakers.
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