![An upward facing view of a person jumping in the opening of a wooden tower. The sky is visible behind him.](https://nonprofitquarterly.org/wp-content/uploads/2024/07/1-11.jpg)
With this article, we conclude NPQ’s series, Just Transition: Liberating Finance to Build a Better World. Coproduced with Justice Funders, a group that organizes philanthropy to advance a just transition to an equitable and sustainable economy and planet, this series highlights case studies of emerging funding networks facilitating investment in liberatory economic practices in frontline BIPOC communities.
Movement leaders around the world have been calling for foundations to do more during a moment of multiple crises, particularly when it comes to being accountable to communities. Good ideas abound from grassroots leaders, but examples of how funder accountability is put into practice are often harder to come by.
Beyond foundations making commitments to practice better due diligence, lowering barriers of entry for receiving funding, and making reporting less cumbersome on grantees, the fact remains that too often communities are ultimately held accountable to foundations with no reciprocity. This fosters an inequitable power dynamic that persists between wealth holders and those without wealth. The very community members who philanthropy exists to serve have no guarantee that their funders will be accountable to them. And there is currently no way to systematically measure whether foundations are changing their practices or reaching their missions and goals.
Good ideas abound from grassroots leaders, but examples of how funder accountability is put into practice are often harder to come by.
This poses a critical question: What would real foundation accountability to communities look like?
Shifting Power
This question of funder accountability to communities, particularly in Black, Indigenous, and people of color communities, is a live one. An example of a community-led alternative from Canada is the creation of a council of Indigenous Aunties who formed the Right Relations Collaborative for foundations seeking to make grants to Indigenous communities.
Another community- and accountability-centered approach can be found in RUNWAY’s Funder Manifesto. The manifesto serves as a guide for engagement and practice for potential investors into RUNWAY’s cohesive and expansive body of work building wealth for Black entrepreneurs and communities. The document also includes a four-point call to action that centers care, trust, self-directed education, and repair, which they ask each investor to commit to before engaging with their work.
Even if grantmakers begin a process of transformation with their grantmaking, tension remains within many foundations between investments and grantmaking, further complicating even the best intentions of program officers. While grant budgets and practices might align with a foundation’s stated mission and values, US-based foundations leave money and opportunities to invest in communities on the table when it comes to their endowments. In fact, US-based foundations invested $1.2 trillion in 2020, largely in global extractive markets, while only giving away $88.6 billion to grantee partners.
A New Framework
In response to this disconnect between foundation aspirations and the realities of endowment investments, Justice Funders, the nonprofit where I work and which organizes in the social justice philanthropy field, released its Just Transition Investment Framework in early 2023. The framework serves as a roadmap for foundations to better support community groups, providing philanthropy with an investment strategy and pragmatic steps for how foundations can shift capital and power to frontline BIPOC communities building local regenerative economies.
This report largely grew from partnerships Justice Funders holds with movement partners and foundation members in our Just Transition Investment Community, a peer learning and action community for foundation staff and trustees to align their investments with just transition values and principles.
While foundation partners were excited about the framework, the reality is that many foundations, even “progressive” ones, outsource investment management to professionals who have been trained to maximize financial returns over all other values, including the core values of the foundations whose funds they are investing.
“Many of the funders we worked with were facing similar barriers when it came to their non-grant investments,” says Maria Nakae of Justice Funders, who leads the peer learning group. “Either they didn’t have internal capacity or staff to make these types of investments from their endowment, or they weren’t working with values-aligned investment consultants or wealth managers. They needed a vehicle to begin to shift their investing practices.”
The Just Transition Integrated Capital (JTIC) Fund, which is a democratically controlled $20 million integrated capital fund governed by five movement partners—Climate Justice Alliance, East Bay Permanent Real Estate Cooperative, Equitable Food Oriented Development, the Moonsoon Fund, and Right to the City Alliance—was created to address these internal challenges. Governing body members were chosen because they all operate democratically controlled investment funds, bring a level of expertise to this work, and are governed by and accountable to BIPOC and working-class communities.
The JTIC Fund’s guiding values are local community control, nonextractive finance, right relationships, rematriation, and reparations. The JTIC Fund offers zero percent interest loans at five-, seven-, and 10-year terms to democratically controlled investment funds like those run by the governing body members and locally controlled projects in alignment with the fund’s core values.
Sign up for our free newsletters
Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.
By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.
From the beginning, the goal has been to “flip the script” on almost every aspect of the investing status quo, from altering definitions of risk to prioritizing nonextractive investing (meaning forgoing loan payments until borrowers are in a financial position to be able to repay), and, of course, community accountability. Traditional terms are redefined in the fund’s Investment Policy Statement (IPS).
One area of focus has been changing the norms of financial reporting to align with solidarity economy and just transition investing goals.
Early on in the process of reimagining what a community-accountable IPS could look like, the governing body identified that this was a financial vehicle meant to fundamentally change philanthropic behavior. Therefore, investors would need to report on their impact and behavioral changes to advance a just transition.
Jaime Gloshay, cofounder of the Moonsoon Fund and a member of the JTIC Fund governing body, explained this need from her experience as an Indigenous woman working in the financial sector: “Reimagining an economic system that has largely excluded, extracted from, and exploited Indigenous people requires repair and restructuring of common definitions, practices, and approaches.”
She added, “Working with communities that have been economically excluded and forced to live in scarcity for the past 500 years means we have to understand, care, and show up differently when we bring capital into the relationship…and create pathways of safety through transparency and reciprocity to move from transactional to transformative relationships while honoring communities’ self-determination.”
Finding a Progressive Investment Manager
Of course, investment does require financial professionals. So, finding a values-aligned fund manager for the JTIC was critical. Just Futures, whose staff and board are populated with many longtime movement advocates, was selected to oversee all financial and legal transactions. The investment advisors report that working with a fund like JITC has helped stretch the investor advisors’ own vision of what is possible.
One area of focus has been changing the norms of financial reporting to align with solidarity economy and just transition investing goals. The reporting metrics are currently being cocreated by both governing body members and fund investors.
Lauren Ressler, a JTIC Fund governing body member with Climate Justice Alliance, notes that the collaborative process is already building greater accountability between funders and the projects they invest in. “By centering relational organizing,” Ressler says, “this work happens between funders in the peer network, between movement organizers designing the fund, and in shared spaces where funders and movement organizers cocreate aspects of the process together and are able to bring questions, ideas, and experiences into the room.”
Ressler thinks it helps to have a funder organizer at the table, like Justice Funders, as a convener. As Ressler puts it, “Justice Funders is equipping philanthropic members to become leaders in their field who challenge status quo practices that place significant burdens on grantees while not holding themselves accountable to taking a critical look at their own investing practices that are often doing harm in the same communities they support with grant dollars.”
“Materially poor people are the experts. Let’s put them in the driver’s seat to define risk, outcome reporting, and what makes a foundation impactful.”
A Larger Conversation
Beyond the development of a single fund, a more ambitious goal is to foster a larger conversation on how foundations can ultimately achieve their missions through being in the “right relationship” with the communities they are chartered to serve.
“There is a huge disconnect between the outcomes foundations and philanthropies say they want to achieve—eliminate poverty, close the racial wealth gap—and what is happening in our communities,” observes Camryn Smith, executive director of Communities in Partnership and a member of the Equitable Food Oriented Development’s steering committee.
Smith concludes by noting, “We need investors in philanthropy to be brave and truthful enough to understand that they may not be the experts. I believe materially poor people are the experts. Let’s put them in the driver’s seat to define risk, outcomes reporting, and what makes a foundation impactful. Let’s give them the power to direct what will be most impactful for their community.”