“We need to stop separating investment decisions from philanthropic giving,” writes Alexander Friedman, in an opinion piece in the “Financial Times.”
Huzzah! At last! Someone has actually named the bridge that should have been built long ago.
Friedman, who recently stepped down as CFO of the Bill and Melinda Gates Foundation, and who also was an investment banker at Lazard, clearly is a serious radical — a lot more of a freethinker than many social activists I’ve met.
Can you imagine a greater giving game-changer than having major donors and foundations commit a percentage of their endowments and investment choices to organizations and businesses that support social change? Vote with your dollars, I say. Few foundations, large or small, are making that decision. But it’s definitely where we need to go.
“The world’s problems cannot be solved either by unfettered markets or by limited pools of philanthropic dollars,” advises Friedman. Clearly, these two adversarial factions need to figure out that they need each other. They must find absolutely new ways to align, combine and partner.
Bill Gates walked away from the idea of the so-called “ethical investing” movement by announcing last January that his foundation would focus on grant making, not on the social impact of its investments. Yet the Gates Foundation –under Friedman’s leadership? — earmarked 1% of its endowment for investment instruments like bond guarantees, securing donor aid and equity funds in developing countries. Maybe it just needs a bit more time.
Other philanthropic consultancies, foundations and for-profit businesses are trying similar experiments and efforts. Goldman Sachs — not the most popular company these days – nevertheless has launched the 10,000 Women and 10,000 Small Business Initiatives. Google Dot Org is trying something similar, by investing small venture capital amounts in for-profit startups trying to do social good. JPMorgan’s social sector finance group is bringing financial skills and funding to nonprofits.
We need more of these first-mover, change-the-model partnerships.
We’ll never get anywhere significant in building social change if we keep divorcing real moneymaking venues from philanthropy