The (Puny) Power of Philanthropy
And The Importance of Economic Drawdown (aka investing directly in clear measures of peace, prosperity, regeneration, and wellbeing for all)
Charitable giving in the United States totaled $410.02 billion in 2017, or 2.1% of the GDP. That increased to $471.44 billion in 2020, barely enough to keep up with inflation. And barely an eyelash in the face of the $1.3 trillion dollar increase in the wealth of the billionaires. It is worth noting, because taxes and philanthropy are the two main pillars of wealth redistribution. Moral of the story, we don’t have time to wait for wealth to be redistributed, we are obliged to attract Economic Drawdown, that is, attracting excess financial assets into secure and meaningful investments that provide a long term and measurable return on social peace, community prosperity, ecosystem and cultural regeneration, and wellbeing for all.
We cannot rely on charity.
According to the National Philanthropic Trust, “In 2020, the majority of charitable dollars went to religion (28%), education (15%), human services (14%), grantmaking foundations (12%) and public-society benefit (10%).”
Less than 2% of philanthropic money goes toward climate mitigation, creating a call to action in this report, Time to Act, by FSG, a consulting firm (formerly called Foundation Strategy Group).
But as YES! Magazine reports, that’s only about 5% of the story.
Federal law requires that foundations give away 5 percent of their endowments each year. The other 95 percent is typically invested in Wall Street markets to sustain and increase the philanthropic pot.
For those who have plenty of money and need to store it somewhere, a foundation provide a lot of benefits. It can:
- Reduce income taxes,
- Avoid capital gains taxes,
- Reduce or eliminate potential estate taxes,
- Grow investments in a tax-advantaged environment,
- Receive tax-deductible contributions.
Each one of those perpetuating pressurized power dynamics.
While it sounds quite reasonable that if a foundation is to continue to donate money, it cannot dip into its own portfolio. Rather, the more a foundation’s investment portfolio grows, the 5% donation allotment grows too. An average return in the stock market is 10%, so everybody wins, right?
Not really.
Very little of Wall Street investments are currently able to be held accountable to the goals of Environmental, Social, and Governance (ESG) investing at this time.
So while a foundation donates to saving the rainforest, its making money from cattle ranching and palm oil.
Another contributes to poverty alleviation, while earning an ROI from investing in private prisons. Or, contributing to supporting homeless people, while investing in mutual real estate funds. These aren’t anomalies, this is the reality of the hypocrisy, and what happens when money is meaningless (it takes on a sort of Voldemort quality).
Are we serving the causes we seek to support if we rely on the purse strings of philanthropy? In what other ways does a system of philanthropy perpetuate environmental harm, a colonial culture, and disempower communities?
How about investing in what we want? And accounting for outcomes?
The ability to directly invest in measurable outcomes we want is growing. It is an exciting, yet extremely precarious time, and time to be honest about how our money is growing.
Investing in Economic Drawdown is how we move money out of pathogenic harm-inducing arenas and into the salutogenic health-inducing spaces what we really want to see flourish. (Like the broad and universally applicable spheres of social peace, community prosperity, bioregional and cultural regeneration, and wellbeing for all.)
Curious about how to keep your investments secure and coherent?
Curious about how to fund your regenerative project?
Curious about how to not miss out on investing in new crypto-technologies while remaining true to your own personal mission or that of your organization?
It is probably an NFT- based DAO, includes a well designed complimentary currency, and likely means a more resilient and salutogenic sense of coherence between our investments and our lives, so both are:
-More meaningful
-More manageable
-More secure
