Act III. All the seats
“Or pay me in equity.” — The Carters
I was recently at a conference where a program officer at a foundation asked me a question that I have learned to be prepared to answer: where do you get your money? I answered their question like I always do. I explained that we are an intermediary investor. We raise large checks from a few foundations to make micro-grants in many budding organizations. We work with aligned philanthropic partners that understand the important gap that 4.0 fills in the education investment continuum — the very beginning. Then, I found the courage to ask them back: and where do you get your money?
In the “Invest” chapter of his latest book, Villanueva asks the same question:
“Since 1969, U.S. tax law has mandated that foundations pay out a minimum of 5 percent of their total assets each year in the form of grants or eligible administration expenses. The “payout rule” was created to prevent foundations from receiving assets but never actually making charitable distributions with them. The other 95 percent of the assets are invested with the goal of earning financial returns that sustain the grantmaking power of the foundation over time. It makes zero sense that a foundation that aims to stop global warming with the 5 percent it pays out would simultanously invest its assets in fossil fuel industries, right? Yet this kind of contradition occurs all the time. This is unconscionable. What about the 95 percent?! is a question all of us need to be asking, and almost no one is. It’s only just in recent years, after a decade in the field, that I’ve awakened to the 95 percent. What is going on with that money? For those of us in the field, it’s as if there’s a firewall. We’re kept in the dark about what’s hapenning on the other side. We’re not privy to conversations about the corpus, yet that’s where the real power is, because it’s where the vast, vast majority of the money is working. The 5 percent we’re in charge of allocating is just a drop in the bucket.”
Fifteen million dollars is a lot of money. It can do a lot of good. It can do a lot of harm. And it is a drop in the bucket compared to the billions of assets that are working hard every day to keep everything the same. I am not an educator by training. But my background helps me see equity as a financial term, too. We are excited to close and deliver on the goals of this third fund with the generous support of our partners. And our dream is for our fourth fund to be the last one we raise: an $80 million, community-raised, community-managed endowment. To put that number in perspective, it equals 0.01% of total annual spending in public elementary and secondary schools, 0.2% of Harvard’s endowment, or less than 4% of all K-12 education-related grants made by the top 1,000 U.S. foundations in 2012. Still, that number would allow 4.0 to invest four million dollars annually in perpetuity to continue funding promising education entrepreneurs. It would also allow us to invest the $80 million in assets in mission-aligned work that is already happening in our communities but not getting sufficiently funded. These mission-aligned investments will return both kinds of equity — social and financial. We will not only spark innovation but sustain it. We will begin to truly self-actualize our visions of our futures. Only then can we become independent and self-sufficient. Only then can we answer Villanueva’s call to action to heal divides and restore balance. It’s an ambitious goal. We might never get there. We have four years as a community to give it a fair shot. And more of us out there should try.
I want to come full circle to that scene of the Founding Mothers.
I’m out here searching for my path to our wildest dreams, too.
But, we are already standing on proud shoulders.
Now is the time to take our seats and rise.
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My deepest gratitude to these incredible people for shaping this letter:
The 4.0 team for teaching me to lead.
Stas and Lea for sharing the gift that is their Cultivate Consent Zine. Get it here.
Caroline Hill for asserting that equity work needs bias. Read her latest post here.
My people in Sudan, who remind me that decolonization is personal and global.
And my father, who taught me to dream big and be comfortable in my blue skin.
