Evolving Trust-Based Philanthropy for Racial Justice

(Illustration by iStock/Overearth)

The Schott Foundation for Public Education’s team left our workshop at the Association of Black Foundation Executives’ 2022 conference this spring feeling hopeful. The room was filled with people leaning in and reflecting on the value and power of building endowments for racial justice organizations. This was exciting because we believe this philanthropic investment strategy better sustains the critical systemic efforts urgently needed to address racial inequities and strengthen our democracy.

After all, who more than foundation leaders understand how a permanent asset or wealth like an endowment brings power? Most institutional foundations are funded through endowments. That's philanthropy’s power source. That's how we plan. That's how we maintain our programmatic momentum. And yet, for most organizations that we work with, that we care about, we haven't taken the strategic step to provide them with the same level of sustainable funding—the same level of power.

As a Black philanthropy leader, this is personal. For decades, organizations and leaders of color have been one of the few forces sustaining 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're showing up at school board meetings. They are organizing at state capitols. They are registering voters. They are sustaining the fiber of our democracy and protecting our constitutional rights.

Yet, these BIPOC-led organizations remain grossly underfunded, despite philanthropy’s stated commitments and interest in advancing racial justice. In 2018, the last year for which fully complete grants data are available, research by the Philanthropic Initiative for Racial Equity found that only 6 percent of philanthropic dollars supported racial equity work and only 1 percent supported racial justice work. More recently, as the Schott Foundation detailed in our #JusticeIsTheFoundation data project with Candid, the data shows still only 17 percent of all K-12 philanthropic dollars were invested in racial equity and justice in education between 2018-2020.

Even the NAACP, an organization that has contributed profoundly to America’s moral and democratic arc—supporting the 1964 Civil Rights Act, the Voting Rights Act, Brown v. Board, etc.—remains un-endowed.

These groups consistently produce more results with less, so why not give them the opportunity to do more with more?

The Next Evolution in Trust-based Philanthropy

Let’s face it: In philanthropy, while we do a lot of good, we also do some harm. Our practices and policies for decades have served as a barrier to stability, and sustainability (and success) for many of the organizations we care about and want to support.

Today, more of us are exploring trust-based philanthropy—from participatory grantmaking 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 make up for the decades-long absence of sustainable funding.

Historically, our opposition to long-term grant commitments or funding endowments has been centered around our need to reserve our “purchasing power” for the future. This line of reasoning essentially says to grantee partners: what we buy in the future will likely be better than what you could plan for today or buy in the future with your own endowed resources. We know how to use these resources better than you do, so we're going to hold onto them.

There is little evidence to support such an assumption. In fact, to the contrary, many BIPOC-led organizations have produced more transformative outcomes with fewer resources and fewer long-term planning tools.

Endowments are a sustainable funding source that allow grassroots organizations to have more stability in their organizations, more capacity to plan and implement a change strategy over time—without worrying where the next dollar will come from or when it will arrive. They offer funding to spend as the organizations themselves see fit—rather than having to fulfill different programmatic and administrative funder requirements. Endowments allow these organizations to make immediate strategic decisions on spending: from communications, bus tours, and virtual campaigns, to self-care and healing for their staff.

So why do we sit on hundreds of millions in our own endowments rather than building endowed networks? From 2000 to 2013, only five percent of gifts of $10 million or more to social change causes took the form of an endowment. Endowments for organizations led by people of color are nearly four times smaller than those led by white-led organizations, and their average revenue is less than half.

As a sector we must call the question: how much is enough in our own endowments before we transfer some power to those organizations led by people closest to the challenges and solutions?

A Diverse Philanthropic Portfolio Includes Endowments

Endowments are a familiar concept to foundation boards and executives. We should apply the same standards to our philanthropy portfolio as we apply to our investment portfolio. That is, establishing a balanced portfolio of asset classes to ensure stability and higher returns.

In our democracy, grassroots organizers are an asset class. 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 policy strategy or a legal strategy for greater return or to protect your position, you’ll need these organizations on the ground and in your portfolio.

We’ve also required performance from our grantees way beyond what we require of 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 executives, we must bring along our board members in transferring these investment principles to our programmatic philanthropic strategies and portfolios. We have to accept that our grantees have the knowledge and context to know how to build a strategy. We have to accept they have the tactics to bring about systemic change and trust that they know how to use the resources better than we do.

Endow Now

Donors funding less progressive and less equity-conscious organizations like ALEC or the Heritage Foundation have long added sustainable funding to their toolkit for supporting their causes. As stock markets increased 20 percent or more in 2021, their capacity to move legislation and advocate for injustice also increased 20 percent or more. Meanwhile, even with MacKenzie Scott’s bold investments in many BIPOC-led organizations, the sector’s capacity to fight for racial justice remained relatively the same.

Recognizing this, about 16 months ago, I went to my board members at Schott and I asked, "Could we raise more money than we have in our own assets to give three organizations each endowments larger than our own endowment?” With the launch of the Racial Justice in Education Endowment, a $30 million fund, we have set out 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. Over a five-year period, these grantee partners will be a part of the investment committee and receive technical assistance and support—enabling them to take over management afterward. We will gain 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 $30 million goal.

These endowments will shift power to the people closest to their school communities and allow them to become less dependent on the whims of philanthropy. It will give these movement organizations the stability and sustainability to aggressively close racial disparities. 

Harness the Power

As philanthropic leaders, we have access to resources but we don't have all the answers.

Rather than storing so much power in our institutions, the times are calling for us to use our institutions to strategically share that power—which includes public sector dollars, private dollars, and even our own endowments—with the BIPOC-led organizations who have the answers and are doing the work.

I have joked with the team at Schott about whether we should call this a game-changing strategy because it is yet to be determined if it is. Our field has moved beyond old limits before, and we can do it again. We can start reflecting, talking to others, and learning more.

Endow now. It is our time to move beyond our philanthropic mode of providing just enough resources to make the back of the bus comfortable to sustainably funding those best able to bring racial justice and democracy forward.

This article is adapted from John Jackson’s presentation at the 2022 ABFE conference, “EndowNow: A Game-Changing Strategy for Investing in Racial Justice.”

Read more stories by John H. Jackson.