Justice Is Possible If Funder Culture Is Willing To Change

Whether individual donors or major foundations, funder’s attitudes and behaviors have a huge impact on the ability organizers and nonprofits have to do their work. At best, it’s a constraint that begets creativity, if not overwork, on the part of nonprofits; at worst, our Chief Strategy Officer, Jessica Feingold would be the first to call this like it is: toxic. With the twin seasons of gratitude and giving on our mind, it’s time for funders to take a hard look about how their practices reinforce entrenched dynamics, and consider a more reparative approach to funding relationships.

The Problem With How Funders See Themselves

Any nonprofit out there has the tendency to see their funders as benevolent gods. We call this funder primacy — the idea that people with wealth deserve not only complete power over what’s done with their wealth, but also praise for giving away even a small part of it. Media coverage that focuses on funders rather than grantees reinforces this idea that funders are exceptional and exemplary. Just take a look at the headlines from the past year: Elon Musk’s $150 million charity spending spree, Bezos and Bloomberg among top 50 US charity donors for 2020, and our very own MacKenzie Scott Donates $2.7B to Charity (more on this one later). As a result, Jess says, “Funders wield immense power over civil society.”

The Demand for Praise

This attitude also leads to expectations of performances of gratitude, whether in the form of thank-you notes, recognition in reports, or naming rights for initiatives attached to large donations. Without that recognition, they can become vocally dissatisfied and even consider changing their level of support. Effectively, ​​funders expect their egos, not the needs of frontline communities, to be a major consideration in how nonprofits operate. “Funder culture should never have that kind of donor centricity to begin with,” says Rakiba Kibria, our Director of Advancement. “It’s not justice if you make the giving about you and not the problem, challenges, issues at hand. In that case, you just want social recognition.”

This issue goes way beyond the time-intensive demands for thank you notes, and funder perks but also has a meaningful impact on where donors donate at all. We saw this all too well when news began to spread that MacKenzie Scott had selected Common Future as one of her no-strings-attached grantees. Instead of treating the gift as an endorsement of the need for our work to expand, several funders reconsidered their support. Donor psychology is complex here; some considered the movement for justice amply funded, others were attached to their position relative to other funders, and still other motives remain mysterious. The result, however, is that a gift that is aimed to be transformative for the organization proved to be more cumbersome in its aftermath. And there’s no way to convey this message back to the philanthropist if transparent communications channels for feedback and relationship-building don’t even exist.

Jess explains, “That was not the perspective I went into this incredible gift with, but I’m coming away with how disruptive it is to the current relationships we have.” Justice is possible once funders stop this jockeying for recognition, and instead see themselves as part of a larger mission that has room for many supporters.

When Past Donations Get in the Way of Important Work

Following last summer’s uprising for racial justice, many foundations and philanthropists pledged to realign their funding accordingly. This hasn’t quite happened, especially with funders who see themselves as “one of the good ones” already onboard with racial justice. Because they see themselves as having done the work, they push back when our vision for change challenges their own perceptions of how justice should be won. Instead, they blame someone who doesn’t “get it,” like a board member, for keeping the pursestrings closed. “It cuts the conversation short, because I can’t give real feedback or criticism,” Jess explains. “They use [past commitments to racial justice to] excuse to deflect any meaningful conversation.” Taking a stand, even when it’s uncomfortable, is how things start to shift.

The Problem With How Funders Get Their Wealth

Reflecting on their own position of power is crucial for funders to move toward justice. Equally as important is reflecting on how they got to that position: through wealth accumulation in a profoundly unjust system.

“A big part of my job is helping funders understand the extractive nature of our current economy that has allowed wealth to accumulate to the extent that it has,” explains Katheryn Witt, our Director of Funder Learning and Investment. She points out that up to 95% of foundation assets can be in the stock market, which derives much of its profits from underpaying workers and exploiting communities and the earth.

Under this system, philanthropy can act as a cover for such exploitation to continue. Donating $5000 when you hold $5 million in stocks dependent on extractive profits is not justice. There are countless tax loopholes that philanthropy benefits from, which keeps money away from public programs. “Philanthropy becomes a way for communities to apply for funds that should have been in public hands in the first place,” explains Jess.

Funders, according to Rakiba, need to start asking themselves whether their everyday financial and business practices are perpetuating this system, and if so, how they can change them. “If a budget is a moral document, then the funders’ financial sheet is their moral document, and they need to come to terms with all the assets they have. Unless you take that holistic view, we’re never going to have a just funder culture.” A major blocker in aligning funders’ assets with justice is fiduciary duty — an investing principle legally binds portfolio managers to act in the best interest of the client, which is typically interpreted to mean maximizing the rate of return while minimizing risk.

So What Needs to Change?

The way forward isn’t entirely bleak. Beyond funders giving up their need for accolades and pats on the back, there are plenty of ways they can start shifting capital to truly fund justice. For example, instead of jockeying for power and donating where their names would get the most recognition, Rakiba suggests quite the opposite: for funders to leverage their reputational power to attract more funding for the organizations they support. “They could look at how to organize other funders and other influencers in a much more coalition-building, collaborative way.”

Change can also look like foundation boards and individual funders pushing their financial advisors to include their organizational mission as part of their best interest, overriding the fiduciary duty to maximize returns and allowing the priority to shift from growing capital to mobilizing it for justice. Among other things, this change allows for a crucial reinterpretation of risk. “Because of systemic racism, investments led by folks of color are deemed to be more risky,” Jess explains. Instead, she suggests, managers can view risk in terms of the opportunity cost of not investing toward racial and economic justice, echoing some of the rhetoric of Heather McGee in The Sum of Us. “Economies that have greater inequities are more volatile, so if funders support fixing those things, we can move toward a more stable economy that doesn’t continually fray at the edges.”

But funders aren’t the experts on racial and economic justice. To align their giving and investing with those principles, they need to listen to people on the ground, an inversion of the typical power dynamic in which funders have the ultimate say in where their money goes.

The way foundations are currently structured puts decision making power, especially around investments, with an investment committee that rarely reflects the community the foundation aims to serve. “Having those people take a step back, and instead allow for community members to participate in the investment decision making process and strategy development is one way justice could be actualized,” Kathryn explains. That way, representatives of a community dictate the focus area of funds, and even the process by which those funds are distributed.

Centering the needs of nonprofits, grantors and communities builds a more authentic relationship, where honest conversations about funding, timelines and long-term goals flow both ways, rather than top-down from funders. “From that type of relationship,” Rakiba says, “beautiful things can flourish.”