Grant makers boost climate-change commitments

More than two dozen foundations capped a three-day climate-change summit in California with a $3 billion pledge to reduce the rate of global warming.
grant makers boost climate change commitments write on fundraising

More than two dozen foundations capped a three-day climate-change summit in California with an announcement of $3 billion in new pledges to reduce the rate of global warming.

The funds, from 29 foundations, will be deployed over the next five years. The announcement came at the Global Climate Action Summit in San Francisco in response to criticism that philanthropy has chronically underfunded one of the planet’s most vexing challenges.

There is no overarching strategy guiding the group of foundations. Each institution plans to attack climate change using its own approach, whether it means developing alternative fuels, “re-greening” deforested lands, pressing for carbon-emission limits, or another strategy.

The $3 billion is a “down payment” in increased philanthropic investment, said Charlotte Pera, president of the ClimateWorks Foundation.

“There is a strong recognition from the philanthropic community that this issue is both urgent and long-term,” she said. “I’m confident that there will be a lot of coordination on how these funds are spent going forward.”

In 2015, the most recent year for which Foundation Center data is available, less than 1 percent of grants from the nation’s largest 1,000 grant makers went to address climate change.

Focusing on Land Use

The tide of new spending from institutional philanthropy comes as the federal government has withdrawn efforts to fight climate change. In June, 2017, President Trump announced his intention to withdraw from the multinational Paris climate agreement, which laid out pathways to achieve a slowdown in global warming.

The foundations announcing their pledges characterize it as a $4 billion commitment. But only $3 billion of it reflects newly announced spending plans. The announcement followed a pledge at the beginning of the summit by nine foundations to steer nearly half a billion to projects designed to change agricultural practices and promote conservation – a land-use approach to climate change. Some of the foundations that participated in that effort, including the John D. and Catherine T. MacArthur and Packard foundations, are also included in the current pledge announcement.

The $4 billion total also includes a $600 million commitment that the Hewlett Foundation announced in December of 2017.

The announcement, says Larry Kramer, Hewlett’s president, was part of a two-year campaign to get other donors interested in the topic. He said it was a signal to other donors that climate change would impact their work even if they don’t directly support the environment.

“If your interest in poverty, education, health – whatever it is – if we don’t solve the climate problem, whatever the gains you make in the short run are going to be undone, and them some,” said Kramer. He added, “We need additional philanthropic resources in the field.”

Kramer, who raised hundreds of millions of dollars for Stanford University when he was head of its law school, likened the effort to a major college fundraising campaign. First, quietly get longtime donors to boost their commitments. Then go public and use those commitments to entice others to get on board.

“We’ve been working to try and nail down commitments and generate momentum for more commitments going forward,” he said. “This announcement reflects the first fruits of that effort.”

“The new pledges are for a five-year period, a longer grant cycle than year-by-year commitments made by some foundations,” said Kate Wolford, president of the McKnight Foundation, which will add $75 million to its existing program on low-carbon energy in the Midwest. The longer time horizon should serve as an example to other foundations that their peers are serious about the planet’s health.

“It’s an invitation to others to make their commitment visible,” she said.

Avoiding Divestment

The announcement didn’t address the fact that many of the foundations’ endowments are invested in oil, gas, and coal companies. At the summit where the foundation leaders announced their commitment to climate change, Arabella Advisors released a study that found that 170 foundations with a total of $20 billion under management had chosen to divest their fossil-fuel holdings. That’s a small fraction of total foundation endowments. According to the Foundation Center, the top 50 foundations managed more than $273 billion in assets in 2015.

McKnight has not chosen to fully divest, but, Wolford says, foundations need to pay more attention to how their endowments are invested.
“There’s a lot of room for engagement,” she says. For instance, the foundation worked with its fund managers to develop a new fund available to institutional investors that underweights companies with high greenhouse-gas emissions.

Hewlett’s Kramer says foundations that divest from fossil-fuel investments have to be prepared for a smaller return and, as a result, less money to distribute in grants.

“We are open to finding a clean-energy fund, including one with some risks, but we haven’t found them yet,” he says. “Most of them are too small.”

Limited Approach

From 2011 to 2015, foundations working on climate change domestically concentrated their resources on a small number of grantees, according to a study produced this year by Matthew Nisbet, a communications professor at Northeastern University.

More than half of the $557 million in climate-change grants made by 19 major foundations went to 20 organizations. By clustering their support around a limited number of organizations, Nisbet suggested, foundations have supported an “insiders” group of think tanks and coalitions of environmental and business groups that limit the approaches taken.

The groups aided by the bulk of philanthropic support, he said, tend to develop policy analysis and build lobbying and public-policy campaigns in support of renewable energy and energy efficiency at the expense of research into carbon-capture technologies and the use of natural gas and nuclear energy.

“It’s really good news that foundations are going to make climate change a bigger priority,” he says. “The question mark is whether foundations have the capacity to make wise decisions about how to spend their money that don’t follow deeply ingrained patterns.”

Nisbet worries that if foundations continue to fund well-established environmental groups that put a lot of effort into mobilizing public opinion, they will pressure candidates for public office on their commitment to renewable fuel — a litmus test that, he says, will only inflame the debate over climate change without offering realistic solutions.

“It is likely that foundations will spread the seeds of even more extreme polarization” among the U.S. electorate, he said.

Nisbet noted that since he conducted his research, there have been some indications that foundations are taking a broader approach. For instance, the Hewlett Foundation has provided support for the Energy Innovation Reform Project, a nonprofit that works on a range of climate approaches including carbon capture, nuclear energy, and renewable energy.

Diversifying Approaches

Rachel Pritzker, president of the Pritzker Innovation Fund, agrees that the concentration of resources on a relatively small number of approaches “has made the politics tougher” in trying to advance climate-change solutions. She worries that most of the big new commitments of money will go only to large organizations that have the capacity to absorb hefty grants, rather than smaller organizations attempting to devise new solutions.

“Serious thinking needs to go into diversifying the approaches taken,” she says.

Hewlett’s Kramer says he hears that message loud and clear. The war chest of funds available to climate grantees will allow foundations to take risks on new projects.

“We are in a position of spreading our bets,” Kramer says.

The Chronicle of Philanthropy, September 14, 2018

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