New Approaches to Investment: Toward a Regenerative, Solidarity Economy

With this article, we begin 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 that are facilitating investment in liberatory economic practices in frontline BIPOC communities.

When I tell my loved ones what I do for a living, I like to say that I’m a futurist because I dream about what lies ahead. This may sound strange coming from someone working in philanthropy, a place that owes its existence to the accumulation of wealth in the past. But I’m a futurist because most of my work—admittedly an anomaly within the larger philanthropic sector—is centered around organizing funders to move beyond the status quo toward a regenerative, solidarity economy.

While the work of funding a new economy requires imagining a better future, most of my dreams are rooted in ancestral technologies.I’ve only come to this understanding over time. When I started working in philanthropy near the beginning of the COVID-19 pandemic, I struggled to define the term for my family. My parents are Oaxacan-born economic refugees who came to the United States in their twenties. Their knowledge of the financial sector is limited to their interactions with big banks, predatory lending practices, and ideas of lifting themselves up by their “bootstraps.” When I told them I helped fund an emergent infrastructure of alternative economic projects that subverted the traditional finance system, they stared at me with confused eyes.

But this is the work of building regenerative, solidarity economies. Creating financial infrastructure that subverts oppressive systems and centers the economy in values of regeneration and solidarity—that is what truly transformative philanthropy looks like.

Restoring Ancestral Technology

While funding a new economy requires imagining a better future, most of my dreams are rooted in ancestral technologies suppressed by the economic and social paradigm under which we live.

Indeed, the principles of what is called a solidarity economy reflect longstanding community practices. For example, my parents participated in a locally organized tanda—a lending circle where shared ownership and mutual aid were at the heart and center of a community’s vitality.

In short, at the core of a just transition from the extractive economy that we have today to an ecologically sustainable solidarity economy is the restoration of community practices that have sustained generations.

To achieve a just transition in the field and build toward a solidarity economy, people committed to social justice philanthropy should fund the extension of longstanding cultural rituals and practices to enable diasporic and BIPOC communities to survive and thrive in a system that is rigged against our collective prosperity and self-determination.

Building a Framework for Just Transition Investing

In 2023, I began working for Justice Funders, a group of philanthropic organizers originating in the San Francisco Bay Area in the wake of the Great Recession. Five years earlier, the group adopted the Just Transition Framework. This is both an organizing ethos and a set of programmatic strategies, tools, and practices that enable communities to move away from the extractive economy (“stop the bad”) and toward a regenerative one (“build the new”).

The blueprint for the future we want to see in the world is there—provided we open our eyes and see it.

As is well known, foundations typically deploy 5 percent of their endowments to support nonprofits through grantmaking. The other 95 percent of the corpus is invested in a way that aims to maximize financial returns, often with shockingly little regard for how their investments align with their grantmaking mission.

As Clara Miller, former president of the Heron Foundation, wrote in NPQ, the ways foundations invest their dollars often “resemble the business model of hedge funds, typically allocating 80 to 90 percent of assets to opaque, ‘alternative’ holdings—private equity, distressed debt, partnerships organized in tax havens such as the Cayman Islands and similar.”

For example, in 2020, according to the Climate Justice Alliance, US-based foundations contributed over 13 times the amount of money to extractive global markets than in all their grantmaking. This means that US philanthropic institutions invested 13 times more in ways that very commonly deepen the problems they supposedly intend to solve through their grantmaking portfolios. At the height of the COVID-19 quarantine and the racial justice uprisings, funders in our network knew it was not enough to restructure their grantmaking portfolios to match their equity and justice values; it was time to align their investments with their missions.

This led to the formation at Justice Funders of an integrated capital team to work with foundation executive-level staff and trustees to help move foundations’ entire endowments to regenerative, community-controlled economic projects. Ultimately, out of these conversations emerged the idea to create a community-controlled integrated capital fund as a demonstration project for philanthropy, where funders and investors could start moving their investments into a new portfolio stewarded by movement partners seeking nonextractive financing.

At Justice Funders, we have called this demonstration project, launched in 2023, the Just Transition Integrated Capital Fund. The vision of the demonstration project is to begin to implement just transition investment principles in practice and provide a practical example to philanthropy of how to move beyond a charity-based model toward a solidarity-based one. In terms of scale, the fund aims to place $20 million in investments by the end of 2024. Throughout this process, we have learned a key lesson: communities are already investable. The blueprint for the future we want to see in the world is there—provided we open our eyes and see it.

A New Vision for How Foundations Invest Their Assets

If “philanthropy” is defined as a “love for humanity,” Justice Funders’ goal is to guide philanthropy to rewrite investment rules to create new economies of care that underscore this definition. To rewrite these rules, it is paramount to know what we’re building toward. In this series, we offer stories to show how frontline communities are already creating investable infrastructure to support their self-determination while moving toward a just transition.

Here you will hear from leaders who are actively seeding new economic models to support their communities. These leaders—and the community groups in which they participate—are uniquely positioned to activate “new” ecosystems because of their proximity to the harmful effects of our current economy. Advancing a just transition, in short, begins with implementing economic models that help people meet their needs and solve current daily problems.

Communities across the country are breaking through the status quo…and seeding new investable infrastructure to build community-controlled economies.

In the articles that follow, you’ll hear stories from organizers working to advance community-based work in the areas of climate justice, land justice, housing justice, and philanthropy. A common theme of all four articles: the need for financial infrastructure that can take philanthropic dollars—especially dollars that are currently invested in stocks and hedge funds—and repurpose them to provide critical investment capital that can convert “just transition” from a nice phrase into an actual movement to a new economy, rooted in community, justice, and regeneration.

First, Jessica Xiao and Lauren Ressler of the Climate Justice Alliance examine how to use what they call regenerative finance to support frontline communities in their climate justice work and help them respond to environmental crises. Next, Jaime Gloshay, who is helping develop the Indigenous-led Moonsoon Fund, and Melanie Allen of the Black Farmer Fund explore the close relationship between Black and Native communities and land stewardship. Both authors are involved in developing funds that use capital as a tool to return land to communitas that have historically had land taken from them.

Following that, Fernando Abarca of Right to the City analyzes how finance, as it operates today through private equity, is making housing across the country less and less affordable—and outlines strategies to combine community ownership with community finance to flip the scales and put housing justice at the center of the housing conversation, rather than on the periphery.

Finally, Lora Smith, who directs the new Justice Transition Integrated Capital Fund discussed above, closes out the series by addressing the many ways frontline BIPOC communities can upend the traditional investor-investee relationship and put community members in the driver’s seat of investment decisions by placing themselves at the helm of alternative funds.

Throughout this series, the authors show how communities across the country are breaking through the status quo, widening the openings they create, and seeding new investable infrastructure to build community-controlled economies that aim to be able ultimately to resource themselves.

While these communities uplift their ancestral traditions and cultural practices to design innovative solutions, everyone can actively participate in helping to build a path for a community-driven economy. In this work, we are guided by the Indigenous principle that the decisions that we make today must build a sustainable world seven generations into the future. This is the work of a futurist.