Nattapol_Sritongcom/shutterstock
Nattapol_Sritongcom/shutterstock

Philanthropy has long exemplified a power imbalance of haves and have-nots, between those who have funding to give out and those seeking grants to do good in the world. To the have-nots, how funding decisions get made is often a mystery and the ultimate tool of philanthropic power.

Now such decisions are under scrutiny as never before. Criticism of institutional philanthropy has been growing in recent years, leading to increased self-reflection by foundations and some movement on how they relate to community organizations and residents.

Funders are stepping up efforts to gather feedback from the communities they work in, through their own practices, as well as collaborations such as the Fund for Shared Insight. A coalition of progressive funders is working together to advance what they call trust-based philanthropy, looking to strengthen relationships with grantees and provide more flexible support.

Beyond these moves to embrace more listening and transparency, we are seeing some soul searching in philanthropy, especially in reaction to the movement for racial justice that is questioning institutions of power in society.

Lisa Pilar Cowan, VP of programs at the Robert Sterling Clark Foundation, wrote recently that philanthropy may need to “dismantle itself” to “move massive resources quickly and easily to facilitate change, to recognize new leadership, and to listen more humbly and deeply to where the answers lie” in the face of structural racism. More than 60 Black philanthropic CEOs issued a joint statement calling on philanthropy to carry out 10 anti-Black racism imperatives to support “deep, transformative institutional change in this country.”

Some foundations are responding. The Zarrow Families Foundation recently announced a $6 million racial justice fund to honor victims of the 1921 Tulsa Race Massacre. Rather than the foundation’s board or staff deciding where the funds will go, however, an advisory board made up entirely of people of color will determine funding guidelines and make decisions. Zarrow Executive Director Bill Major explains, “Our trustees recognize that the expertise on how and where to best provide funding to address the legacy of racial injustice in Tulsa lies directly with people who have been affected by it.”

Participatory Grantmaking

Providing people outside of foundation staff and trustees with authority to make funding decisions is the next frontier in rebalancing the power dynamics in philanthropy. Participatory grantmaking has received more attention in recent years, but it isn’t new. The Funding Exchange (FEX) was founded in 1979 by local and regional social justice foundations to advance participatory grantmaking.

FEX had several funding initiatives to advance progressive causes and supported 16 local funds that involved community activists in funding decisions. Closing its doors in 2018, the legacy of FEX continues in the local funds that carry on the participatory approach, such as Crossroads Fund in Chicago, Haymarket People’s Fund in Boston, Headwaters Foundation for Justice in Minneapolis and North Star Fund in New York.

In addition to these social justice funds, public and community foundations and funding collaboratives are also embracing participatory grantmaking. Maine Initiatives established a 40-person Grantmaking Advisory Committee for its racial justice fund, and the Hartford Foundation for Public Giving has formed committees to oversee funds in 29 communities in the region. A collaborative of 11 funders in California is allowing community advisors to make funding decisions in the five regions where they support organizing and movement building.

The practice of participatory grantmaking has been less common in private foundations, but it does appear to be catching on in places like Chicago. The highest-profile example is from the MacArthur Foundation, which set up a panel of 11 diverse Chicagoans to recommend grantees for its Culture, Equity, and the Arts program earlier this year.

Crown Family Philanthropies, another Chicago-focused funder, has also begun experimenting with participatory grantmaking in some of its local programs. A few years ago, the Crown board created a civic engagement fund over which staff have decision making authority, and this year, the team decided to engage people with lived experience in the process. They met with a dozen recently incarcerated women at a transitional housing program over several weeks to get their input into how to use the funds. The women decided that the best use of the funds would be giving women transitioning from incarceration direct cash assistance to use for a phone, transit and other needs: The fund will provide assistance to 50 women this year.

Another example from Chicago is the Conant Family Foundation, a small funder focused on social justice issues. Spurred on by the younger generation of the family who was pushing for new ways to engage with community in their philanthropy and inspired by Edgar Villanueva’s writing, Conant created a participatory process for “decolonizing wealth” that gave a review team made up of community residents the authority to make grants for grassroots organizations led by people of color. Conant Executive Director Leslie Ramyk reflects: “We, myself included, forget how much wisdom is outside of our walls. I learned so much from the discussions of the review team. This is a highlight of my career.”

The growing interest in participatory grantmaking is evident in the release of reports and resources from Ford Foundation and Grantcraft on the topic in the past few years. According to Grantcraft’s “Deciding Together: Shifting Power and Resources Through Participatory Grantmaking,” “participatory grantmaking is a lever for disrupting and democratizing philanthropy.”

Participatory Investing 

A potentially even more disruptive lever than shifting power over grant decisions would be in deciding where the nearly $1 trillion in assets that foundations hold get invested. While the impact investing movement has led to more responsiveness to social and community benefit, the vast majority of endowment funds are simply invested to generate the highest financial return. Investment decisions are typically the purview of professional investment staff, fund managers, and board investment committees, but one foundation is borrowing from participatory grantmaking to turn this on its head.

The Heron Foundation focuses on economic opportunity and “helping people and communities help themselves.” Since its founding in the early 1990s, Heron aligned a proportion of its investments to support the mission, and in 2012 it made a bold commitment that 100% of its endowment would be in impact investments within five years. Part of this shift was looking for new investments, but also meant divesting from others. For example, it discovered investments where it was seeing a positive return but weren’t in line with their values, like private prisons. Rather than looking just at fiscal returns from investments, it considers the human, natural, civic and financial effects.

Dana Bezerra has been a key part of this evolution at Heron, joining the foundation 2006 and named president in 2017. She says the foundation has long been clear that the expertise in carrying out its mission comes from community partners, whose wisdom has informed Heron’s investment strategies, particularly since the early 2000s. It has relied on community partners for “bottoms up sourcing” of investment deals, but for many years they followed the traditional model of staff underwriting its investments and the board investment committee approving them.

Heron is currently working to shift from that traditional model completely, ceding the authority to make investment decisions to “local integrated capitals committees” in a number of communities across the U.S. It is in the process of forming its first committee, made up of a diverse group of representatives that will help create a shared vision for their community, and hope to have them deploying capital in the fall of this year. The plan is to have committees in up to eight communities and for the committees to deploy all of Heron’s investments. As Dana clarifies, “our intention is that each community has access to the totality of Heron’s balance sheet, and that’s now what we exist to do.”

What brought about this rather radical approach? Dana explains that it was a natural outgrowth of going to the community for wisdom and advice: “if we already believe that they have what’s needed to fully direct the investment, then maybe what we need to do is just put the deployment authority in their hands.” Heron was inspired by the participatory approach of Maine Initiatives and other funders such as Boston Ujima Project, and they began to self-reflect on philanthropy’s call for systems change approaches. Dana asserts, “especially for private foundations, turn that finger back around and ask what kind of systemic change we should invoke inside our organizations.”

Heron’s leaders are clear that they are trying something new and that they will likely make mistakes along the way. But they are fully committed to this participatory approach, especially given the moment we are living through, when the COVID-19 pandemic and violence against Black people at the hands of police have exposed deep structural inequities and led to calls for systemic change.

According to Preeti Bhattacharji, Heron’s Vice President of Integrated Capitals, the current social upheaval “accelerates the urgency in rethinking power structures in a really fundamental way.” Instead of the typical approach of “trying to diversify preexisting rooms of power,” she says, “I think what it means for us is moving the rooms of power, and that’s exactly what we’re hoping to do.”

Is This a Shift for Philanthropy?

As philanthropy faces a reckoning, from both internal and external sources, about its role in systems of inequality, calls for greater listening and partnering with those it seeks to help will likely increase. Foundations have gotten more comfortable with supporting advocacy, organizing and movement building, as well as with efforts to increase community voice and address equity and inclusion in the sector. Unless these efforts address issues of power, however, they will not fundamentally change how philanthropy reflects the wisdom of people with lived expertise.

Participatory grantmaking has been present in philanthropy for a while, but it does appear to be gaining steam and drawing interest, even from private philanthropy and, for the first time, impact investors. It’s too early to say whether this is a major shift, but if it doesn’t happen during this time of upheaval over racial and social exclusion, will it ever?

Bill Pitkin is a social justice advocate and leader who has worked in the nonprofit and philanthropic sectors for more than 25 years. Currently, he advises nonprofit organizations and foundations on strategy and social change.

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