By Alfredo Montoya
Social Impact Exchange , a cross-industry organization dedicated to creating impact on a large scale, presents The Exchange 2020: Unifying Leadership. A virtual event from September 23 to 24 whose agenda includes inspiring and thought-provoking conversations and providing tangible solutions and initiatives to the critical challenges we face today.
The Exchange 2020: Unifying Leadership is a happening virtual event recognizing the existential issues of this year, an ever-increasing imperative to achieve racial equity while tackling a global pandemic, an emerging economic downturn, and perhaps the most recent American presidential election. important story.
How can philanthropy help fight discrimination and inequality?
Discrimination and inequality have to be addressed at a systemic and structural level, taking into account the policies, rules and laws that keep inequality ingrained.
At the systemic level, the fundamental step is to change the mindset, attitudes and beliefs that perpetuate racial and other discrimination. These types of efforts can and should be supported by philanthropy and are long-term in nature. They are multifaceted and include communication campaigns, narrative shifts, and person-to-person movements, including community organizing at many levels.
it is necessary to map the systems that perpetuate discrimination [. . .] to clearly identify the points where discrimination is creating inequalities and focus the efforts made by philanthropic and support organizations to confront systemic racism
In addition to facing racism head-on, it is crucial to discover and address the unconscious biases that are generally held, we must help people understand the history of racism and discrimination and how it has become integrated into the fabric of our society, from what On the contrary, it is difficult to fully understand the depth of discrimination and why our systems must be significantly redesigned to resolve it.
All of this requires infrastructure, resources, and collaborative “trust-based” initiatives that philanthropy can support. In fact, it has started to do so in a more robust way in the wake of George Floyd’s murder, however, it is important not to rush just to change the rules and laws. The “public will” for change that comes through mindset and belief shifts will lead to the “political” will necessary to change policies, rules, and structures in transformative ways.
To determine which rules, policies, and laws need to be changed – which would be the most transformational – it is necessary to map the systems that perpetuate discrimination to see how they operate, whether in criminal justice, health, education, etc. This allows us to clearly identify the points where discrimination is creating inequalities and focus the efforts made by philanthropic and support organizations to confront systemic racism.
What challenges does philanthropy face amid the pandemic?
The pandemic has exposed the deep inequalities in our systems, which already existed before COVID, and are now only getting worse. It has also created a severe shortage of basic necessities. The problem is that if philanthropy only focuses on basic needs, as soon as other crises arrive, which will arrive, the structural deficiencies of the system that creates inequalities will continue to generate the same results, perpetrating the cycle of inequality. Institutional philanthropy (the larger foundations) must focus primarily on systemic structural change and must collaborate to do so (with other foundations and community leaders) because they cannot succeed on their own, they have not.
The challenge is how to simultaneously meet basic needs and achieve the structural changes that millions of more people in inequality have.
Some ideas on how to address these competing demands include:
- Increase the available capital of foundations by at least 5% over the next 2-4 years.
- Help the government channel more resources to meet people’s basic needs. Philanthropy alone will not make a difference without government effort;
- Encourage the use of technological platforms and digital marketing strategies, so that foundations can increase the collection of donations through digital means. Attention to basic needs is a perfect way for individual donors (large and small) to step up during the pandemic, especially at the local level.
What is the role of philanthropy in impact investing?
Philanthropy plays a very important role in building the infrastructure necessary to position impact investing as an investment standard.
The way in which conventional investments are made must be changed by advocating for the full implementation of the “Statement on the purpose of the corporation” of the 2019 Business Roundtable, which states that the purpose of a company is to benefit all parties stakeholders : customers, employees, suppliers and communities. It’s not just about maximizing value for shareholders and investors.
Achieving this change would put social returns on par with financial returns, allowing specific subsidies, monetary and fiscal support, and incentives that the Federal Reserve and Congress could provide to Social Enterprises (those that equally generate a social and financial return). so that they become the standard corporate model. It would also allow significant support from CDFIs (Community Development Financial Institutions – non-profit banks), which invest in low-income communities and support small businesses and economic renewal in the most affected areas. Currently, CDFIs hold only 1% of the capital of commercial banks ($ 200 billion compared to $ 18 trillion).
For philanthropy, investing in infrastructure, including enabling policies, is the most leveraged way to advance the field of impact investing.
What advice can you give to the big donors, foundations and institutional impact investors in Latin America?
- Work together. Individually they have very little capacity to have an impact at the population level.
- Focus on changing systems. Change the structures of society so that they generate more equitable results. As Patrick McCarthy, former executive director of the Annie E. Casey Foundation, put it, “A bad system always trumps a good program.” This includes the “meta” systems of racism, capitalism and democracy, but also the main systems of education, health, criminal justice, environment and economic mobility.
- Get closer to the ground and empower community leaders . By empowering community-led efforts, communities closest to the problem have the power to design their own solutions. If they can combine their own knowledge, with the resources and information that foundations and institutional investors possess, then they will have the necessary tools, not only to solve their problems, but also have the dignity and self-efficacy that self-determination brings.
- Focus on racial equity and changing power dynamics.
- Do not go to the ivory tower to determine strategies and then implement them. Instead, develop the strategies with community leaders and other multi-sectoral leaders. Join the multi-sector networks that are authorized to implement them. Enable the multi-stakeholder coalition to work collaboratively among philanthropic, business, community, government, academic, and non-profit organizations to make decisions with the resources they need to implement together.
- Finally, institutional investors have a special role in changing the business purpose of maximizing shareholder value and an exclusive focus on ROI, to an equal focus on social returns. Changing the business sector in this way changes capitalism itself and this has the greatest influence on creating a more just and equitable society.