Climate and Philanthropy

This week I had the privilege of attending the Nexus Youth Summit in Washington, DC.  The purpose of this summit is to bring together leaders in philanthropy, social enterprise, social finance and the Next Generation for a series of conversations that lead to action around the critical issues facing our communities - locally, nationally, internationally.

One session that stood out in particular for me was a session on Climate and Philanthropy.  A panel discussion with:

• Ibrahim Al-Husseini, FullCycle Energy
• Ellen Dorsey, Wallace Global Fund
• Alex Bozmoski, Energy & Enterprise Initiative
• Megan Nicholson, Information Technology & Innovation Foundation

As you can see, this panel cross the spectrum of Republicans and Democrats with a view to find economic solutions and market-based solutions to environmental problems.  

There are three things that I took away from this discussion:

1. Subsidies for extractive resource based energy should be stopped so as to level the playing field for the development of renewable energy technologies
2. Having an energy policy discussion in the US without considering the energy policy (or lack thereof) of Canada will curtail or delay meaningful movement regarding how North America addresses complex climate issues
3. Philanthropists need to look at the assets that make up their charitable investments and not just at how the disbursement quota is being allocated

It's point number three that I want to focus on in greater detail.

Both Canada and the US have disbursement quotas for private foundations.  This is the amount that is to be donated out to charities on an annual basis.  The point was raised by Ellen Dorsey that foundation managers/creators need to think about the larger asset base, the base upon which the disbursements come from and not just the effectiveness and impact that the disbursements are having.  

This is a very important point.  If 95% of the assets are remaining in the foundation year-over-year and growing, how those funds are invested is going to have a direct impact on how impactful the donations will be on the other side.

As Ellen pointed out, even if your foundation or charitable giving doesn't go towards environmental projects, climate change and environmental issues will have a direct impact on various social issues that you might be funding.  For example, let's say you are addressing water issues in Africa.  Science has shown that climate change is directly affecting the rain/drought cycles. Even if you are funding an amazing water organization like CAWST, if your investment base is made up of companies that are contributing to the climate change issues then you are subverting the efforts that your charitable dollars are having on the other side of the ledger.

So how do we balance this out?  According to Ibrahim Al-Husseini, there is a way to have a diversified portfolio that can have an asset base of high returns, socially conscious and environmentally positive companies.  Companies like Enclude, in the US, can help you identify those types of investments.  One of Canada's leading experts in social impact investing, Patti Dolan at Raymond James has been involved in building out Canada's social finance sector for years.

Here's a suggested call to action - what if hospital foundations and medical school foundations divested 5% of their asset portfolio into clean-tech/green-tech initiatives.  We know that pollution is directly connected to health related issues like Asthma and other lung diseases.  Seems counter-intuitive that a hospital will have foundation dollars go towards medical research and support for the very diseases that their investment portfolio acts as a contributing agent to the problem.

Looking just at Canada's hospital and medical foundations (just over 200), there is approximately $4Billion of investable assets managed; if they took 5% of this base, there is approximately $200Million that could be invested into the market to develop out sustainable technologies.  Imagine how these funds could leverage the already existing government funded R&D and subsidies. (Rough numbers provided by Place2Give).

What would it look like if these funds were released into the open market?