Ellen Dorsey has served since 2008 as the executive director of the Wallace Global Fund, where she helped launch Divest-Invest Philanthropy, a coalition of more than two hundred foundations that have pledged to divest their portfolios of fossil fuel companies and deploy their investments to accelerate the clean energy transition. Dorsey and Divest-Invest Philanthropy signatories were awarded the 2016 inaugural Nelson Mandela – Graca Machel Brave Philanthropy Award.
Earlier this month, the fund announced that it would pay out 20 percent of its endowment this year in support of COVID-19 relief and ongoing systemic change efforts and called on other funders to increase their grantmaking.
PND spoke with Dorsey about the fund's decision-making process, the moral obligations of foundations in a time of crisis, and the longer-term consequences of the COVID-19 pandemic.
Philanthropy News Digest: What was the impetus behind the fund's decision to commit 20 percent of the endowment to grantmaking in 2020, and how did you and the board arrive at that amount?
Ellen Dorsey: We have said for a while now that philanthropy cannot engage in business as usual, either by failing to align our investments with our missions or not giving at a level commensurate with the seriousness of the many challenges we face. Before COVID-19, we were already calling for philanthropy to declare a climate emergency and increase giving levels over the next ten years. COVID-19 was yet another overlapping shockwave added to the list of threats that compounded our sense of urgency.
For too long, philanthropy has been content to give the bare minimum — the 5 percent required by law — while growing its endowments. Even before COVID-19, the Wallace Global Fund felt it was unethical for any foundation to grow its endowment during a five-alarm fire, particularly given the many financial and logistical challenges faced by our grantees.
As for the percentage decision, it happened organically. We were already planning to spend a significant percentage of our endowment this year on critical work being done within our core priority areas, and we invested 100 percent of our stock market gains — close to 22 percent — in 2018. Keeping our investments aligned with our mission is something that has long been a board priority. We see this as consistent with the legacy of our founding donor, former U.S. Vice President Henry A. Wallace, and his warning that democracies must put people before profits if they plan to survive.
PND: In a joint opinion piece with the National Committee for Responsive Philanthropy's Aaron Dorfman, you argued that "it is no time for philanthropy to think about cutting back...[instead, it should] give more to address the public-health crisis while continuing to fund existing social and systemic change efforts." You've said elsewhere that preserving foundation endowments instead of boosting granmaking was "both immoral and a failure to honor the mandate that foundations have to serve society." Have you received any pushback from CEOs at other foundations? And do you think philanthropy will take this "opportunity to fundamentally rethink past practices and upend the status quo," especially with respect to the mandatory 5 percent payout requirement?
ED: Ultimately, it's an empirical question. We will see. Right now, many foundations are stepping up and making significant pledges to address COVID-19 and the related economic crisis. Will enhanced giving continue as the reality of reduced endowments sinks in later this year and persists into 2021? The fallout of COVID-19, coupled with the spiraling climate catastrophe, requires dramatically more funding, not less. We have a decade to fundamentally reduce emissions and change the energy base of our global economy while creating more sustainable and equitable systems.
What we need from philanthropy goes beyond simply spending more. Frankly, if ever there was a time to fund system change work, it is now. We need to break the corporate capture of democracy, create new patterns of ownership, change the growth-only measures of economic and societal success, level patterns of inequality, and meet the basic human needs of billions, all while reversing the climate catastrophe barreling down on humanity. Philanthropy needs to support movements that are advancing new paradigms, support systemic theories of change that confront our unjust system, and invest its money in a way that is consistent with these values.
PND: As you've acknowledged, some foundations have taken steps to provide more — and more flexible — support for nonprofits, while more than seven hundred foundations have signed on to the Council on Foundations' pledge to do so. Are we seeing a shift among foundations toward more grantee-centered practices? Or will things revert to the status quo after we get to the other side of this crisis?
ED: History shows that there is a tendency among philanthropy to scale back when times get tough. For example, in the immediate aftermath of the Great Recession, philanthropic grantmaking dropped by 15 percent. We've been really encouraged to see the groundswell of statements calling for philanthropy to use this moment to break that bad habit. It is particularly important given the unique vulnerabilities faced by nonprofits, movements, and the communities they serve.
It is hard to say right now whether the status quo will fully return in any sector, but I will say that philanthropy has an obligation to resist it. Getting rid of COVID-19 will do nothing to stop the dire consequences we were already facing as the result of a number of threats, most notably climate change. In fact, if society returns to its established habits of emitting more carbon into the atmosphere, damaging or destroying ecological habitats, and giving corporations free rein to pursue the myth of limitless economic growth, the consequences of climate change will only continue to worsen.
The same could also be said for economic inequality, the rising privatization of public resources around the world, gender-based violence in the Global South, and the rise in misogyny faced by women around the world. There is no vaccine for social injustice. We cannot allow ourselves to be so relieved once the COVID-19 crisis has passed that we ignore the fissures in society it has exposed. Philanthropy has both an opportunity and a duty to partner with people-centered movements that are fighting for systems change and broad, structural reform today, and we must continue to support them in the aftermath of this pandemic.
PND: This is not the first time the Wallace Global Fund has used its investment portfolio to boost the impact of its grantmaking; in 2018, the fund pledged to invest all its gains from the previous year into organizations working to advance social and environmental justice. Have you seen tangible returns on those investments?
ED: Yes, without a question. We have already seen positive impacts from our funding and there are results to come that we cannot yet see. We fund progressive social movements and systemic change work both globally and in the U.S. We believe building people power is the necessary ingredient to challenging entrenched economic and political interests. We have been funding the fossil fuel divestment movement for over a decade and, to date, there are more than a thousand institutions around the globe that have divested — institutions with a combined $14 trillion under management. We have funded the youth climate movement, the so-called climate strikers, and those calling for a Green New Deal. They are changing the debate on climate in truly significant ways. We're also supporting groups around the world that are challenging authoritarian governments and defending basic human rights.
Often those fights seem insurmountable, but defending the front lines is often the only antibody to the virus of authoritarianism and is essential if we are to preserve our democratic ideals and way of life. In the U.S., our grantees are working to transform conditions of inequality, defend democratic institutions, get toxic money out of our political system, and break up monopolies. These are big and audacious goals, not easy to measure in the near term, but they absolutely are critical in terms of the system change work we need. I think it's fair to say we would rather invest in deep change than obsess about lowest-common-denominator metrics.
PND: What, if anything, do the systemic social change efforts you've urged your philanthropic peers to support — climate action, defending the rights of marginalized populations, strengthening civil society and democracy — have to do with the public health and economic emergencies caused by COVID-19?
ED: It's true that all those issues were issues before COVID-19. For example, we know that seven hundred people a day were dying from poverty in the U.S. before the virus ever reached our shores. But COVID-19 has laid bare the many ways in which it is not the great equalizer many claim it is.
Communities of color have been disproportionately devastated by the virus. Places with higher levels of carbon-based pollution are seeing corresponding spikes in death rates. Voting rights are under increasing threat from a lack of contingency planning and stalled efforts to expand vote-by-mail nationally. And as millions of small businesses were forced to close their doors — many for the last time — American billionaires made more than $300 billion.
These injustices are all interconnected. One of the movement leaders who inspires me most, Rev. Dr. William J. Barber II of the Poor People's Campaign, has built a movement on the simple yet profound notion that the struggles against systemic racism, inadequate health care, poverty, voter suppression, ecological devastation, environmental injustice, and human rights abuses are not separate struggles at all. We are dependent on each other in our quest for liberation, and our narratives must be bound together if we hope to win.
— Kyoko Uchida