New Approaches to Investment: Towards a Regenerative, Solidarity Economy – Nonprofit News

With this article, we begin NPQA sequel to, Just Transition: Liberating Finance to Build a Better World. Produced with Justice fundersA group organizing philanthropy to advance a just transition to an equitable and sustainable economy and planet, this series highlights case studies of emerging financial networks facilitating investment in independent economic practices in leading BIPOC communities.

When I tell my loved ones what I do for a living, I like to say that I am a futurist because I dream about what will happen in the future. This may seem strange coming from someone who works in philanthropy, which has owed much to wealth accumulation in the past. But I’m a futurist because most of my work—an anomaly in the larger philanthropic sector—centers on organizing funders to move beyond the status quo toward a regenerative, solidarity economy.

Although the task of financing a new economy requires imagining a better future, most of my dreams are rooted in ancestral technologies.I came to this understanding only over time. When I started working in philanthropy at the start of the Covid-19 pandemic, I struggled to define the term for my family. My parents were Oaxacan-born economic refugees who came to America in their twenties. Their knowledge of the financial sector is limited to their connections with big banks, predatory lending practices and ideas of lifting themselves up by their „bootstraps”. When I told them that I funded alternative economic projects that were subverting the traditional financial system, they looked at me with confused eyes.

But this is the work of building regenerative, solidarity economies. Creating a financial infrastructure that disrupts oppressive systems and centers the economy on the values ​​of regeneration and solidarity—that’s what truly transformative philanthropy looks like.

Restoring ancestral technology

While funding a new economy is supposed to envision a better future, most of my dreams are rooted in ancestral technologies suppressed by the economic and social paradigm we live in.

In fact, the principles of the so-called solidarity economy reflect long-standing social practices. For example, my parents attended a locally organized event MarkA circle of credit, in which shared ownership and mutual aid are at the heart and center of community vitality.

In short, at the heart of a just transition from the extractive economy we have today to an ecologically sustainable solidarity economy is the restoration of social practices that have endured for generations.

To achieve a just change in the field and build toward a solidarity economy, people committed to social justice philanthropy must fund the expansion of long-standing cultural rituals and practices that help diaspora and BIPOC communities survive and thrive in a system rigged against our collective. Prosperity and self-determination.

Building a Framework for Just Transition Investment

In 2023, I started working Justice funders, a group of philanthropic organizers that emerged in the San Francisco Bay Area in the wake of the Great Depression. Five years ago, the group was accepted Just change configuration. It is both an organizing principle And A set of programming strategies, tools, and practices to help communities move away from an extractive economy („stop the bad”) and toward a regenerative one („create the new”).

The world has a blueprint for the future we want to see – we open our eyes and see it.

As is well known, foundations typically allocate 5 percent of their endowments to support non-profit organizations through grantmaking. The other 95 percent of corpus funds are invested with the aim of maximizing returns, often with shockingly little regard for how their investments align with their grantmaking mission.

As Clara Miller, former president of the Heron Foundation, writes NPQThe way foundations invest their dollars often „resembles the business model of hedge funds, typically allocating 80 to 90 percent of assets to opaque, 'alternative’ holdings—private equity, distressed debt, partnerships organized in tax havens like the Cayman Islands, etc.”

For example, in 2020, US-based foundations contributed, according to the Climate Justice Coalition 13 times Amount of money for global markets that extract more than all their subsidies. This means that American philanthropies have invested 13 times more, deepening the problems they would normally seek to address through their grantmaking portfolios. At the height of the Covid-19 isolation and racial justice uprisings, funders in our network knew that it was not enough to restructure their grantmaking portfolios in line with their equity and justice values; It’s time to align their investments with their work.

This led to the creation of an integrated capital team at Justice Funders to work with foundation management level staff and trustees. Ultimately, from these conversations emerged the idea of ​​creating a community-controlled pooled capital fund as a demonstration project for philanthropy, in which funders and investors could begin to transform their investments into a new portfolio.

At Justice Funders, we called this demonstration project, launched in 2023, the Just Transition Integrated Capital Fund. The aim of the Action Plan is to start implementing transformative investment policies in practice and to provide a practical example of how to move beyond a charity-based model towards a solidarity-based one. In terms of scale, it aims to invest $20 million in investments by the end of 2024. Throughout this process, we learned an important lesson: communities are already investable. The world has a blueprint for the future we want to see – we open our eyes and see it.

A new look at how foundations invest their assets

If „philanthropy” is defined as „love of humanity,” Justice Funders’ goal is to lead philanthropy to rewrite the rules of investment to create new economies of conservation that underpin this definition. To rewrite these rules, it is critical to know what we are building towards. In this series, we present stories to show how frontline communities are building the investment infrastructure that supports their self-determination while moving toward a just transition.

Here you’ll hear from leaders who are actively seeding new economic models to support their communities. These leaders – and the social groups in which they participate – are uniquely positioned to implement “new” ecosystems because of their proximity to the harmful effects of our current economy. Advancing a just transition, in short, starts with implementing economic models that help people meet their needs and solve current day-to-day problems.

Communities across the country are breaking with the status quo… seeding new investment infrastructure to create community-driven economies.

In the articles that follow, you’ll hear the stories of organizers advancing community-based work in the fields of climate justice, land justice, housing justice, and philanthropy. A common theme of the four essays: the need for a financial infrastructure that can take philanthropic dollars—especially dollars currently invested in stocks and hedge funds—and repurpose them to provide critical investment capital that can turn „just change” from a nice phrase. As a true movement for a new economy rooted in community, justice and regeneration.

First, Jessica Xiao and Lauren Ressler of the Climate Justice Alliance explore how they can use what they call regenerative funding to support communities at the forefront of their climate justice work and help them respond to environmental crises. Next, Jaime Closhe, who helped create the Aboriginal-led Monsoon Fund, and Melanie Allen of the Black Farmer Fund explore the intimate relationship between Black and Indigenous communities and land stewards. Both authors are involved in creating a fund that uses capital as a tool to return land to communities that have historically had land taken from them.

Next, Right to the City’s Fernando Abarca analyzes how financing today, through private equity, is making housing affordable and affordable across the country—and outlines strategies to turn the scales on housing by combining social ownership with social financing. Justice at the center of household conversation instead of at the periphery.

Finally, Laura Smith, who directs the new Justice Change Integrated Capital Fund discussed above, closes the series in several ways by leading BIPOC communities upending the traditional investor-investor relationship and putting community members in the driver’s seat of investment decisions. At the helm of alternative funds are themselves.

Throughout the series, the authors show how communities across the country are breaking with the status quo, expanding the openings they create, and seeding new investment infrastructure to create socially controlled economies that can ultimately enrich themselves.

While these communities leverage their ancestral traditions and cultural practices to design innovative solutions, all can actively participate in helping to pave the way for a community-based economy. In this work, the decisions we make today are guided by the founding principle of creating a sustainable world. Seven generations In future. This is the work of a futurist.