The Cognitive Dissonance of Climate Justice Philanthropy

A recent report on climate justice funding finds that many foundation leaders are of two minds when it comes to the climate crisis—the crisis is “urgent” yet easily put off for another day. The survey responses make this cognitive dissonance clear.

Titled Much Alarm, Less Action: Foundations & Climate Change and authored by Naomi Orensten, Katarina Malmgren, and Maria Lopez of the Center for Effective Philanthropy, the report (based on a survey of 188 foundation leaders and 120 nonprofit leaders) shows that, on one hand, 60 percent of foundation respondents say that the climate crisis is “extremely urgent,” and another 29 percent say it is “very urgent” (8). On the other hand, when asked about expected future climate-justice funding commitments, only 18 percent plan a large increase, 26 percent plan a small increase, 15 percent plan for no change, and 40 percent are not sure (16). The good news, apparently, is that no one is planning to reduce funding. Still, these numbers belie supposed urgency. All told, the authors report that presently less than two percent of total global philanthropic giving is directed toward addressing the climate crisis (4).

Intriguingly, of the 67 foundation respondents who indicated that their institutions had made no climate justice commitments, 29 of them (43 percent) said that the climate crisis was “extremely urgent.” How many of those 29 leaders expect their foundations to begin acting on the “extremely urgent” crisis? That remains unclear.

Failures to Act

Let’s begin with a statement of the obvious: philanthropy alone will not solve the climate crisis. Advancing climate justice requires, as does most social change, pressure from social movements from below. This is why, for instance, NPQ has been running a series of articles on building a Green New Deal on the Ground.

Still, foundations could take a number of easy steps to at least move the dial a little. Yet, a surprising number of foundations, including many self-identified climate funders, have been slow to act.

Take, for instance, the divestment of the corpus of foundation assets from fossil-fuel company stocks and bonds. Worldwide, a decade-long movement has encouraged institutions to divest their assets from the fossil-fuel industry. To date, 1,559 institutions (including foundations, religious groups, universities, pension funds, and governments) with $40.51 trillion in total assets have divested from such companies. They include Harvard University and, in the United Kingdom, Oxford University, as well prominent US foundations, including the Ford Foundation and the Rockefeller Brothers Fund.

These numbers are impressive. To get a sense of scale, as of mid-March, the total market capitalization of the S&P 500 Index was $32.684 trillion. In short, the $40.51 trillion in assets held by divesting institutions is considerably more than the stock value of the 500 largest publicly listed companies in the United States.

Put differently, given how widespread the fossil fuel divestment movement has become, a foundation that divests is not exactly going out on a limb. So, surely at least the 114 respondents who reportedly hail from foundations that support climate justice work can all report that their foundations have divested from fossil fuel stocks and bonds. Well actually, no. Only 39 reported had done so, meaning 75 had not.

Of the 39 that had divested, a third (13) reported that investment returns were unaffected. Another 19 indicated that investment returns were higher after fossil fuel divestment, while seven were unsure about any change. No foundation leader reported lower returns (21). In short, divestment appears to be costless in terms of investment returns, while making it at least marginally more difficult for fossil-fuel companies to raise money on the stock market—a win for the climate and for foundations’ asset accumulation. What’s not to like?

At least one foundation leader expressed shame at their colleagues’ inaction: “Good grief, what’s everyone waiting for on divestment? The lack of bravery and leadership from many foundations is embarrassing” (20).

Many survey respondents suggested that greater foundation action could also be effective in the area of advocacy, some of which requires grant funding, but some of which is relatively costless since it involves using foundations’ political power to effect change. The report’s authors write, “almost 60 percent of foundation leaders said funders should use their power and influence to advance more climate-related policy and advocacy efforts—through their grantmaking and through the use of their voice” (23). However, the consensus of survey respondents seemed to be that a combination of policy and grassroots work was needed, with a focus on supporting BIPOC community groups and youth organizing.

Yet another relatively costless way for foundations to leverage their social capital involves donor advising. This is especially pertinent for community foundations, which comprised 30 percent (about 56) of the 188 foundation survey respondents. According to the report’s authors, “More than 80 percent of community foundation leaders

reported that when donors seek guidance in their giving, the foundation does not explicitly prioritize encouraging donors to fund climate efforts” (16). The report cites one community foundation respondent, who noted that because discretionary grants at their foundation was limited, “We need to better leverage our donors’ giving” (16).

Addressing Philanthropic Myopia 

The last section of the report delves into what it might take for foundations that do not currently include climate justice in their work to begin doing so. About 30 of the 67 foundation leaders surveyed (45 percent) who hail from foundations that are not currently supporting climate justice say that their foundations are amenable to making this shift.

One valuable observation from the report is that finding areas of alignment or overlap with existing foundation efforts is critical to making this shift in philanthropic practice a reality. As one respondent indicated, “I’d like help [with] mapping our existing mission to climate change” (25). Another respondent put it as follows: “Give us the language and the strategy to correlate climate change with enhancing lives for all who live in our community, and my board would probably support climate change initiatives” (25).

In the report, the authors indicate that there is considerable work that remains to be done in this direction. Of the 67 respondents whose foundations have not funded climate change work, “Less than 15 percent have had board discussions about how climate change affects the foundation’s ability to achieve its goals, and less than 10 percent have had discussions with grantees about the effects of climate change on their work” (28). In short: out of sight, out of mind. Clearly, a starting point is having those conversations. There does seem to be a hunger for that, at least among some funders.

Some anonymous quotes from foundation leaders highlighted in the report are downright scary. One survey respondent indicated that the climate crisis is “serious in the long term, in 20 or 30 years, but not serious in the near term” (25), seemingly unaware that in 2021—that is, the year before the survey was conducted—one in three Americans were directly affected by extreme weather. Another survey respondent opined that their foundation was focused on the health and wellbeing of one specific community, and while members of that community are “exposed to increased heat, extreme weather, fire, drought like everyone else, our focus is on their needs. So, while this is objectively a very serious issue, potentially threatening billions of people around the world, it is not our issue” (25).

Mirror, Mirror

Perhaps the most important contribution of the report by Orensten, Malmgren, and Lopez aren’t their recommendations per se, but the fact that the survey provides a reflection for the field. And while what is made visible is often not pretty, it is important for the field to see where it is—and where it is not.

The report is written for the philanthropic world. So, it is not particularly surprising that the authors begin their conclusion by writing, “Foundation and nonprofit leaders are concerned about climate change and believe that foundations and nonprofits can play a meaningful and important role in addressing this urgent issue,” even though their survey findings show something rather different—with supposed urgency largely contradicted by a lack of action.

They follow that paragraph with a more forthright statement: “We hope this analysis of hundreds of foundation and nonprofit leaders’ views can spur foundation staff, leaders, and boards to candidly discuss climate change and its implications on the people, communities, and issues that funders and nonprofits focus on.” This would be a start.