Endowments are the next step in trust-based philanthropy for racial justice
The Schott Foundation for Public Education team left our studio at the Association of Black Foundation Executives 2022 conference this spring with hope. The room was filled with people leaning and reflecting on the value and power of creating endowment funds for racial justice organizations. It was exciting because we believe this philanthropic investment strategy better supports the critical systemic efforts urgently needed to address racial inequality and strengthen our democracy.
After all, who more than foundation leaders understands how a permanent asset or wealth like an endowment brings power? Most institutional foundations are funded by endowments. It is the source of energy for philanthropy. This is how we plan. This is how we maintain our programmatic momentum. And yet, for most of the organizations that we work with, that are close to our hearts, we haven’t taken the strategic step of providing them with the same level of sustainable funding, the same level of power.
As a leader in black philanthropy, it’s personal. For decades, organizations and leaders of color have been one of the few forces supporting democracy across the country and trying to advance racial justice through organizing and advocacy. Groups like Alliance for Quality Education in New York, Education Justice Alliance in North Carolina, ARISE in Providence, Rhode Island, Families and Friends of Louisiana’s Incarcerated Children, and Boston Education Justice Alliance.
They show up at school board meetings. They are organized in the capitals of the States. They register voters. They sustain the fiber of our democracy and protect our constitutional rights.
Yet these BIPOC-led organizations remain grossly underfunded, despite stated commitments to philanthropy and interest in advancing racial justice. In 2018, the latest year for which complete subsidy data is available, research by the Philanthropic Initiative for Racial Equity found that only 6% of philanthropic dollars supported racial equity work and only 1% supported racial justice work. More recently, as the Schott Foundation detailed in our #JusticeIsTheFoundation data project with Candid, data shows that only 17% of all K-12 philanthropic dollars were invested in racial equity and justice in education between 2018 and 2020.
Even the NAACP, an organization that has contributed profoundly to America’s moral and democratic arc, supporting the Civil Rights Act of 1964, the Voting Rights Act, Brown v. Commission, etc.—remains unendowed.
These groups always produce more results with less, so why not give them the opportunity to do more with more?
The next evolution of trust-based philanthropy
Let’s face it: in philanthropy, if we do a lot of good, we also do harm. For decades, our practices and policies have been an obstacle to the stability and sustainability (and success) of many organizations that we care about and want to support.
Today, more of us are exploring trust-based philanthropy, from crowdfunding to unrestricted funding for BIPOC-led organizations. Yet this evolution of trust-based philanthropy is too slow to meet the enormity of the challenge before us and to compensate for the absence of sustainable funding for decades.
Historically, our opposition to long-term grant commitments or funding endowments has centered on our need to reserve our “buying power” for the future. This reasoning essentially tells beneficiary partners: what we buy in the future will probably be better than what you could plan for today or buy in the future with your own resources. We know how to use these resources better than you, so we’ll keep them.
There is little evidence to support such an assumption. In fact, on the contrary, many BIPOC-led organizations have produced more transformative results with fewer resources and fewer tools for long-term planning.
Endowments are a source of sustainable funding that allows grassroots organizations to have more stability in their organizations, more ability to plan and implement a strategy for change over time, without worrying about where it will come from. the next dollar or when it arrives. They offer funds to be spent as the organizations themselves see fit, rather than having to meet different programmatic and administrative donor requirements. Endowments allow these organizations to make immediate strategic spending decisions: from communications, bus tours and virtual campaigns to the personal care and healing of their staff.
So why are we sitting on hundreds of millions in our own endowments rather than building endowed networks? From 2000 to 2013, only 5% of donations of $10 million or more to social change causes took the form of an endowment. Endowments for organizations run by people of color are nearly four times lower than those run by white-led organizations, and their average income is less than half.
As a sector, we need to ask the question: how much is enough in our own endowments before shifting power to those people-led organizations closest to the challenges and solutions?
A diverse philanthropic portfolio includes endowments
Endowment funds are a familiar concept to foundation boards and executives. We should apply the same standards to our philanthropy portfolio that we apply to our investment portfolio. That is, building a balanced portfolio of asset classes to ensure stability and higher returns.
In our democracy, grassroots organizers are a class of assets. As my colleague Teresa Younger, President and CEO of the Ms. Foundation, says, these are the blue-chip organizations, regardless of current strategy, that we need to have in our portfolio in perpetuity. Whether you are funding a political strategy or a legal strategy for a better return or to protect your position, you will need these organizations on the ground and in your portfolio.
We have also demanded performance from our beneficiaries far beyond what we demand from our other investments. Too often, we evaluate organizations on annual grant cycles, while our investment managers are judged on 3, 5 or even 10 year horizons.
As foundation leaders, we need to engage our board members in translating these investment principles into our programmatic philanthropic strategies and portfolios. We must accept that our beneficiaries have the knowledge and the context to know how to build a strategy. We have to accept that they have the tactics to bring about systemic change and trust that they know how to use the resources better than we do.
Donors funding less progressive and less equity-minded organizations like ALEC or the Heritage Foundation have long added sustainable funding to their toolkit to support their causes. As stock markets have risen by 20% or more in 2021, their ability to change laws and advocate for injustice has also grown by 20% or more. Meanwhile, even with MacKenzie Scott’s bold investments in many BIPOC-led organizations, the sector’s ability to fight for racial justice has remained relatively the same.
Recognizing this, about 16 months ago I went to my board members at Schott and asked, “Could we raise more money than we have in our own assets to give three organizations each larger endowments than our own endowment?” With the launch of the Racial Justice in Education Endowment, a $30 million fund, we have decided to do just that and endow three national racial justice alliances, Journey For Justice (J4J), Dignity in Schools Campaign (DSC) and a youth-powered organization with $10 million each. For five years, these beneficiary partners will be part of the investment committee and will receive technical assistance and support enabling them to take over its management thereafter. We will get insights from alliance leaders, as endowment funding enables their organizations to effectively plan and execute their strategies. To date, we have quietly raised $5.5 million towards our goal of $30 million.
These endowments will shift power to those closest to their school communities and allow them to become less dependent on the whims of philanthropy. This will give these movement organizations the stability and durability to aggressively reduce racial disparities.
Harness the power
As philanthropic leaders, we have access to resources, but we don’t have all the answers.
Rather than store so much power in our institutions, the times compel us to use our institutions to strategically share that power – which includes public sector dollars, private dollars, and even our own endowments – with BIPOC-led organizations that have the answers and do the work.
I joked with Schott’s team about whether we should call it a game-changing strategy, because it’s yet to be determined if that’s the case. Our domain has already crossed the old boundaries, and we can do it again. We can start thinking, talking to others and learning more.
Staff now. It’s time for us to move beyond our philanthropic mode of providing just enough resources to make the back of the bus comfortable to sustainably fund those who can best advance racial justice and democracy.
This article is adapted from John Jackson’s presentation at the ABFE Conference 2022“EndowNow: A Game-Changing Strategy for Investing in Racial Justice.”
Read more John H. Jackson stories.