Shifting Power in Impact Investments

Interrogating our assumptions and co-creating a vision for participatory investing

Katheryn Witt
Common Future

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Images by Kat Jaynes for Common Future

What’s the Problem

Foundations in the United States hold over $1 trillion in assets — 93% of which are invested in Wall Street rather than being used for the common good. What’s worse, decisions about the allocation of these assets are regularly made behind closed doors, and by investment committee members or advisors who often have no first hand experience with the challenges the foundation aims to address or the communities that the capital is supposed to be supporting.

Communities should have a say in how investment capital within foundations who claim to serve them is allocated. That’s why Common Future and the WES Mariam Assefa Fund are thrilled to be partnering to launch our first Action Lab focused on participatory investing. The Action Lab is a 12-month learning and action initiative in which funders will learn about, experiment with, and co-create new models and strategies for participatory investing within their own institutions and through a collaborative fund.

Common Future Action Labs epitomize the process of praxis — combining the importance of learning with the necessary step of action. We have an unapologetic commitment to community-driven solutions and shifting capital and power. We believe that capital must be rooted in and drive towards the transformation of power and resources in our economy for those who have been intentionally and systemically excluded. This partnership with WES will give us the opportunity to incubate and experiment with building more policies, practices, structures and models to support this vision and encourage funders to share power with the communities they serve.

WES intentionally defines its impact as both what it invests in and how it invests. As a funder focused on economic opportunity and inclusion for immigrants, refugees, and communities of color, centering equity and shifting power to communities is key. WES has made strides to adopt participatory investing practices — by reimagining its governance structure to give decision-making power to those who are closer to the issues it seeks to address and supporting participatory funding structures, including a recent investment in Community Credit Lab, an organization that provides financial lending programs created with input from local lending partners and communities.

By partnering with Common Future to launch the Action Lab on Participatory Investing, WES hopes to build on this work, demonstrate how to shift power and decision-making to communities, and bring peer funders and investors along in a learning journey.

More and more, the field of philanthropy is recognizing its duty to better serve the communities in which they work by incorporating community input and sharing decision-making power around where capital flows. And as a society, we are increasingly recognizing the importance of including the “end user” — in this case, the community — into processes earlier and in a more meaningful way. But the intersection of investment practices and these more participatory strategies is a nascent field. We know that innovation and paradigm-challenging ideas need space for experimentation.

We are excited to see more foundations experimenting with participatory grantmaking, and more cities have begun pursuing participatory budget strategies. These power-sharing structures have not made their way into the capital-heavy world of foundation endowments, and it’s time for change. This means funders should start to invest in models in which shared community ownership and decision-making power is a priority, but also should interrogate their overall investment strategy, and explore ways in which participatory processes can be incorporated at every step — from soup to nuts.

What is this Initiative?

The Action Lab: Participatory Investing seeks to redesign the systems in which power and capital are held. This action lab is an opportunity to learn and build a community-driven fund to shift power and accelerate the field.

We’ve convened a group of eight funders — #NoRegretsInitative, Alliance Healthcare Foundation, California Wellness Foundation, Footprint Foundation, Hyams Foundation, Samuel S. Fels, Spring Point Partners, and WES — to learn about existing participatory models, both from within philanthropy and outside of it. We balance this learning with action. Action Lab participants have committed to incorporating these learnings into their respective institutions. Additionally, they have contributed to an experimental fund, which will serve as a tool for us to collectively put these learnings into practice. Led by practitioners in the field, we’ll co-create new structures, models, and practices.

As a group, we aim to delve into a variety of participatory policies, practices, norms, and models. We have bucketed them into three categories to better talk about the work we’re doing: individual, institutional, and community. At the individual level, it’s critical to analyze the cultural norms that could either help or hinder participatory strategies. At the institutional level, we must outline the policy and structure intervention points where participatory practices can be integrated. And at the community level, we will explore investment opportunities that integrate participatory decision-making and community ownership practices.

We fully expect this process to be iterative, and a useful framework for understanding this work may or may not end up being what we’ve outlined above. We’re ready to interrogate our assumptions and together co-create what this new field of participatory investing can look like.

What’s Next?

Common Future and WES will share our learnings, challenges, and successes — stopping along the way to reflect and share these out with you and with the larger field. As we embark upon this learning and experimentation journey, we invite you to join and learn alongside us by following our updates on Common Future’s Medium page and WES’s Insights page.

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Katheryn Witt
Common Future

Director of Funder Learning and Investment at Common Future. Adventurer, ice cream maker, puzzler. Based out of Denver, Co.