All of Us in Grant Making — Not Just the Financiers — Need to Pay Attention to Investments (Dispatches)

Illustration by Maria Mottola

Editor's Note: This is Lisa’s tenth piece in a Chronicle of Philanthropy series that originally focused on grantmaking in the coronavirus era. Recent pieces have explored philanthropy's role in dismantling a system of racial injustice. Today's piece takes a broader look at grantmaking in this season of crisis and opportunity. You may view the original piece here.

I developed a case of math phobia in eighth grade, moving from the front to the back of the classroom and rushing through my homework in the cafeteria before school.

In part, it was because I bought into a sexist notion that math was for boys and, in part, because math was hard — and I prefer to do well in things that are easy for me. Instead of working to understand and apply mathematical formulas and concepts, I read novels and studied people.

My understanding of literature and psychology have served me well, but my math phobia left me with huge blank holes in my analysis of the world.

I recently realized that my math phobia has followed me into adult life and into my work in philanthropy. I describe myself as a program person, not a finance person. I leave the budgeting to others less fearful of math and glaze over during the finance and audit reports in board meetings. I have been known to check my email while our investment managers report to the board. I perk up when we get to what I think is the important part — discussing the work of our grantees, our mission work.

In this season of crisis and opportunity, I have been learning and thinking and talking differently about the groups we at the foundation support, how we give them that support, and how much of our endowment we allocate to grant making.

But I realize now that while I have been agonizing over whether we should give 5 percent or 7 percent of our money each year, I have neglected to look at the other 93 to 95 percent. My willful ignorance of math and finances kept me from seeing the full range of our impact and mission work. I’ve allowed for the bifurcation of responsibility for dollars and for programs in a way that has come to seem false and — worse than false — destructive.

Recently I was talking to my friend and colleague the Rev. Emma Jordan-Simpson. Emma is executive pastor of the Concord Baptist Church of Christ in Brooklyn, N.Y., and a longtime civic and nonprofit leader. She is also a former board member of a private foundation, where she was head of the program committee.

We discussed the phenomenon of feeling removed from the financial conversations, which even at our progressive foundations are largely held by trustees and advisers who are white men in suits. Each of us described the fog that descends during these conversations, leaving us ready for a post-meeting cocktail.

The money conversations use acronyms and terms that I don’t understand and have not tried to learn. But this topic — the money — is critical to an understanding of philanthropy. Federal law requires that foundations give away at least 5 percent of their endowments each year. The rest of the money is typically invested in Wall Street markets. I have vaguely thought about the return on the endowment as a way to sustain our ability to keep giving — but have not thought about what our money is doing (or not doing) in the meantime.

Approximately 86,000 foundations hold more than $890 billion in assets. In 2015, they gave out a total of $62.8 billion, averaging 7 percent across the industry. So where is the rest of that money that foundations hold — $827.3 billion — and how are we using it in our work?

I am hardly the first person to ask this; many foundations and other organizations are working to help move our endowments to different spaces. Foundations like the Heron Foundation, Jessie Smith Noyes, Nathan Cummings, and many others have done this work publicly and with the intent of creating pathways for others.

Neglecting My Responsibility

My real point here is that I, and I am guessing some others, have successfully ignored what those foundations have sought to teach us. I now realize that while I kept my focus narrow, confined to programs that advance our mission, I neglected this responsibility. In doing so, I lost out on the full power, potential, and promise of the nonprofits we support.

Intrinsic to this issue is both the risk that investing in destructive and extractive companies runs counter to our mission (private prisons, gun manufacturers, and climate-chaos financiers to name a few) — and the opportunity to make investments in entities that support our missions.

To wade into these questions of investments and capital markets hasn’t been easy. I risk sounding dumb and naïve, making mistakes in my analysis, angering board members, and creating conflict within the foundation. On the other hand, to ignore this giant pool of wealth is to leave a large and powerful tool on the table at a time when we need to use all our tools to sustain and create democracy, preserve our climate, and work toward equity.

At the end of my conversation with Emma, she talked about our opportunity to make real change at this impossibly challenging moment, rather than simply providing help. She reminded me of Harriet Tubman, who said she wanted to tell President Lincoln that ending slavery could not be done piecemeal. Like killing a snake, she said, half measures would mean “the snake springs up and bites you again, and so he keeps doing it, till you kill him.”

This is the moment to question and rethink all the ways we are involved in the system — all the ways our organizations support and undermine our stated missions. If our goal is to make change rather than just provide help, we need to use everything we have to do it — not just 5 percent and not just 10 percent.