A Just Transition for Philanthropy

This is the fourth post for “Liberate Philanthropy,” a new blog series curated by Justice Funders to re-imagine and practice philanthropy free of its current constraints — the accumulation and privatization of wealth, and the centralization of power and control — to one that redistributes wealth, democratizes power and shifts economic control to communities. Over the next few months, we will be sharing stories from some of our most forward thinking, transformational leaders in philanthropy about how they are facilitating a Just Transition for philanthropy.

Renaissance Community Coop — a cooperatively owned, full service grocery store located in what was previously a food desert in a working class, majority black community — is one of many cooperative economic development projects supported by the Fund for Democratic Communities (F4DC).

Folks who know us would not be surprised to hear that Marnie Thompson and I are critical of philanthropy and have built a small foundation that tries to be non-foundation-like in many respects. We both have long histories in social justice work, typically done without subsidy, and we both have worked in non-elite private sector jobs while continuing to work at very active levels in the community.

Marnie and I began conceiving of Fund for Democratic Communities (F4DC) in 2007 when we had the opportunity to bring some financial resources to the challenge of nurturing authentic grassroots democracy. Marnie’s father, who had been involved in a manufacturing business and private equity investing, was in declining health. He wanted the portion of the family wealth that would be passed down to Marnie to be invested in a non-taxable foundation, since he understood that she was going to give it away anyway. Marnie asked me if I would be willing to help her build this foundation. I agreed on the condition that we use these resources to continue the work that she and I had been doing together for years, helping to make communities and social justice organizations more democratic spaces.

Our first three years as a foundation were a bit bumpy, but by 2010, we’d honed our ideas about how to nurture authentic grassroots democracy and developed a framework that helps us focus our efforts. Our basic framework has two components. First is the importance of promoting self-reliance and self-determination.

In 2010, Marnie and I were having a discussion with a long time Southern organizer in the women’s and labor movements. She described a young couple that she knew who had just had a baby but had little hope of getting their lives together; neither had a job or a place to stay. Furthermore, there were no prospects for stable employment in the area. At first, this organizer suggested that we should help organize a massive jobs march in Washington. When I asked her if she thought that this would really result in any jobs programs from the federal government, she admitted that given who was in the Congress, there was little hope that it would. I then asked, if this would not make a concrete difference, then what would? It was from this conversation that our focus shifted to helping communities create their own solutions rather than calling on an unresponsive federal government to take care of their problems.

We feel that armed with sufficient resources and skills, communities can build the organizations and enterprises that meet their own needs. An example of this would be the growing interest in cooperative, community-based solutions to the problems of creating jobs and building community wealth, such as the Mondragon cooperatives in the Basque region of Spain and the Evergreen cooperatives in Cleveland. For these co-ops to work, it is not enough to simply bring more community-based stakeholders to the table; it is also important to include them in planning the menu and in cooking the meal.

We are convinced that there is a need to shift the activity of progressive philanthropy from its almost exclusive support for resistance and advocacy to finding creative ways to support the work of envisioning and actually building a new, more humane world.

We talk about the relationship between Resistance, Advocacy and Doing-for-self, RAD. While Resistance and Advocacy are both necessary, it is the ability to be productive and Do For Ourselves, creating the tools and processes to meet our needs and elevate the quality of life in community, that makes us fully human.

The second important component of our framework is that the wealth of foundations is derived from the wealth that was created by laboring people, often from the very communities that currently need that wealth so that they can more fully develop and be productive.

It is the “big pile of money” on Wall Street and in other financial markets that is directly traceable back to the US slave system, through the banks that were developed to finance slave trading to the insurance companies that emerged to guarantee slaves as property.

The big pile of money was further enhanced by the massive profits created from the underpaid labor of working people in textile mills, coal mines, steel mills and automobile plants. For those of us who get a chance to distribute it, it is important to recognize labor as the source of all created value. To us that means that there is a moral imperative to give it back to the communities where it was generated, and to do so in ways that ensure its use as a productive asset, hence our focus on supporting the development of democratic productive enterprises.

Sometimes, the activities associated with the invested securities that fund philanthropy are causing the very problems that the returns from the investment are used to help mitigate. Deep poverty exists within the same communities from which enormous wealth has been extracted — look at Detroit, Buffalo, Cleveland, the Mississippi Delta. These are now areas of philanthropic activity focused on the reduction of poverty, even though each was once a highly productive area where a great deal of wealth was once accumulated. That wealth was extracted from the communities in which it was created, leaving these places devastated and without the resources needed to remain productive. Real estate investment is another example of the contradictions that so many foundations are caught up in. Non-productive real estate speculation creates huge profits for corporate developers and their investors on the one hand, and problems of gentrification and displacement in communities that we try to abate with our philanthropic dollars. As our friend Brendan Martin of The Working World once said, investing on Wall Street is like carpet bombing where you don’t even see the damage you are causing down on the ground.

Facing these contradictions, we asked ourselves: What do we dream of in a future that is not based on the charity of foundations?

How can ordinary people living in their communities gain control of and benefit from their own self-reliant capacity to be productive? How can we promote democratic access to common and public resources to meet community needs and elevate the quality of life? How can we move philanthropic resources into that pool of common resources? These questions have guided both our grantmaking and programmatic focus.

In 2010, after F4DC had been in existence for a few years, Marnie and I made the decision for F4DC to not exist in perpetuity. Most foundations invest their core endowment in securities and other instruments to generate a return that is greater than the 5% of assets that must be spent each year on charitable activities and grants. This allows them to exist forever on returns from investments. We chose instead to put our resources back into the community at a rate of more than the returns on our investments in order to have a larger impact by investing in people, rather than stocks and bonds. We decided to wrap up in 2020. What was then a 10-year time horizon is now drawing near its end. What we have found in our work is that it is easier to conceive of aiming resources at radical solutions to difficult problems than it is to implement those solutions. We once thought, for example, that if people heard about opportunities to own cooperative businesses within their communities and we helped them with training and some resources, that communities would flock to these solutions. What we have found instead is that there is a lot of hard work in building successful, sustainable cooperative enterprises. We would say now that everything is harder than it seems. Everything takes longer than it should. And everything costs more than it ought to. We have learned that building new structures that are genuinely rooted in community is hard.

But to even begin, we must examine some of the unquestioned and often unquestionable assumptions about the legitimacy and permanence of elite ownership and control of capital, even as it is practiced in the most progressive and well-meaning foundations.

By this, I mean that there is an assumption that it is natural and right for the elites who have accumulated the wealth created by others to make all of the decisions about how it is to be allocated, as though we in philanthropy know better than those whose sweat and toil created the wealth what to do with it.

This viewpoint may be satisfying to those of us who enjoy the privileges of philanthropy, but it is not borne out by the experiences of those who do not see sustainable benefit to their communities.

We wanted to strengthen self-reliance rather than strengthen the dependence on philanthropy. One part of this has been our practice of providing grants that match grassroots fundraising. For these grants, we match donations of under $100, typically up to a limit of $5,000. We do this to encourage groups to build accountable relationships with the constituencies that they are interested in helping, rather than just with the foundations that fund them. We feel that the ability to raise support within the people you are serving is a good indicator of deepening democratic relationships with those groups.

We have also put considerable efforts into creating sustainable financial institutions that are rooted in grassroots communities and serve to redirect philanthropic and major donor dollars into grassroots, community-based control. This includes both our direct involvement in cooperative economic development such as the Renaissance Community Cooperative (RCC) grocery store and our work to develop a grassroots revolving loan fund to offer non-extractive support to cooperative businesses.

The RCC is a cooperatively owned full service grocery store located in what was previously a food desert in a working class, majority black community. In 2011 F4DC brought the idea of cooperative development to this community that had been working since 1998 to get a grocery store. The store was opened in November of 2016 with a well-attended, community-wide celebration marking the success of a community building for itself what it had initially wanted to get from a corporate developer. But this has not been a fairytale ending. The store, while open, has not yet reached its projected sales and is struggling to become fully sustainable and fulfill the vision from which it was born. Much is being learned, now that the store is open, about the governance and management of a complex enterprise. But hopefully these lessons will inform future efforts that will inevitably follow.

In the first post of this series, Dana Kawaoka-Chen of Justice Funders asked, “How can YOU be a part of facilitating the Just Transition for philanthropy? We need to solve the question of what to do with the resources that are being divested from exploitative and polluting industries. A mechanism is needed for reinvesting those resources back into productive community businesses that would foster self-reliance and self-determination. We need to be supporting the creation of new structures like the Financial Cooperative that can put concentrated wealth under the democratic control of communities for creative, productive activity and not just for resistance and advocacy. Hopefully, this will be our legacy.

Ed Whitfield is co-founder and Co-Managing Director of the Fund for Democratic Communities and the chair of the board of the Southern Reparations Loan Fund. He has been a long-time community activist from the peace movement of the 1960s through the Black Student Movement to labor and community organizing and even local politics. Ed Lives now in Greensboro, NC.