The Transformative Role of Reparations in Trust-Based Philanthropy
Compton Foundation has chosen to spend up because we want to meaningfully address the problem of economic power imbalances in philanthropy. For us, that means acknowledging how the foundation acquired its endowment, and changing who controls the distribution of funds.
But our approach is just one of the many ways the world of philanthropy needs to change if we want to truly move the levers of power from the privileged few to the most disadvantaged.
In a recent article at Inside Philanthropy, Deb Nelson of the Just Economy Institute (JEI) looks at three recent examples of how power-shifting solutions can take multiple forms. The first example involves our own Executive Director, June Wilson, whose experience was so remarkable that it inspired her to launch the Reparative Action Initiative (RAI), which uses the mechanism of reparations to provide no-strings-attached financial and networking resources to Black women entrepreneurs.
You can read Deb Nelson’s article “What Does it Look Like to Truly Shift Power in Philanthropy? Here Are 3 Real World Examples” below, reprinted with permission from Inside Philanthropy.
What Does it Look Like to Truly Shift Power in Philanthropy? Here Are 3 Real World Examples
Originally published on Inside Philanthropy on September 29, 2022
Underlying all the crises we’re now facing — including climate change, lack of healthcare access and racial and economic inequities — there’s a harmful imbalance. Our current zero-sum socioeconomic model depends on some people being “winners” while others are left behind. Losses and failures only accrue further when the people who are least affected by crises have the biggest say in how to solve them.
Trust-based philanthropy starts to get at the need to shift control of money and power from those who have traditionally held it to those who haven’t. But the power-shifting solutions that get at the root of systemic problems are coming from distinct groups working in collaboration as equals.
As executive director of the Just Economy Institute, I’ve seen what can unfold when financial activists of different classes, races and generations work together. Their diverse perspectives and skills fuel a powerful engine that’s bringing to life radical solutions with profound effects.
JEI’s nine-month fellowship program brings together financial advisers, investors, philanthropists and community leaders to examine their views about money, promote effective collaboration with people from very different backgrounds, and learn to apply an integrated approach to funding change. Since 2017, we’ve graduated 129 fellows, and as the following examples show, they’re demonstrating the positive potential of cross-collaboration by transforming practices in philanthropy and impact investing.
The power of reparations
In 2019, Seattle-based June Wilson was invited to join a group of five other Black women and six white women in an ongoing conversation about privilege and race. At the time, Wilson, a JEI fellow, worked as a philanthropic consultant and adviser to Black women entrepreneurs.
The cross-racial group of 13 women — including a facilitator — met monthly, and after several months of sharing and strengthening their connection, their talk turned to reparations. Together, they decided that the six white wealth holders would return $10,000 per year, for five years, to each of the group’s six Black members, with no strings attached.
“That was transformative for us, modeling this particular structure of a return,” Wilson says. “Because of internalized racism, we were like, ‘Whoa, really?’ We thought there was going to be a catch. But it turned out we didn’t have to do or give anything in return.” As a result, trust began to deepen within the group and they started calling themselves “The Sisterhood.”
The white women felt it, too. “There is a profound wound that exists between white women and Black women in this country,” says Candace Tkachuck, one of the wealth holders. “But to be part of the healing of that, to have that come into being, is just miraculous.”
Wilson felt so empowered by the exchange that she created the Reparative Action Initiative under the umbrella of the Compton Foundation, where she’s now executive director. The RAI supports three Seattle-based Black women entrepreneurs, one with a textile recycling business, one working in the wellness and fitness field, and another with a plant-based food delivery service. Six wealth holders who are white women (three from the Sisterhood) fund the initiative, returning to each entrepreneur $80,000 a year over the course of five years, with no restrictions on how they can use the money. The entrepreneurs also have access to the wealth holders’ connections and networks.
For Wilson, this work fills a void. “With the drive toward VC funding and impact investing, a certain group of entrepreneurs were being left out,” she says. “But these women, the ones we’re funding with the RAI, are actually doing the work and serving the community.” Wilson now plans to replicate the program in other cities.
The power of turning the philanthropic model upside down
In her three years as executive director of the Qqs Projects Society in British Columbia, Jess H̓áust̓i has felt frustrated, even demoralized, by the bureaucratic hoops she has had to jump through to secure philanthropic funding for her nonprofit, which supports Heiltsuk First Nation youth and families.
Early on, she spoke often with her friend Kim Hardy, a JEI fellow and Pacific partnerships lead at the MakeWay Foundation, about creating a different model. But it was only when COVID-19 hit and philanthropies lowered their barriers to funding that the two saw the opportunity to act on their dream. In 2021, they co-created the Right Relations Collaborative and flipped the philanthropic model upside down.
Kim and Jess now co-lead the collaborative, which is governed by a Council of Aunties — H̓áust̓i and three other Indigenous women — who ask funders to apply to fund them. The funders are required to share their money story (how they earned their wealth), what harms were created through the amassing of that wealth, and how they’re addressing those harms.
Carolynn Beaty, a JEI fellow and executive director of the Sitka Foundation, which was founded with wealth deriving in part from the renewable energy company her parents established and sold, leapt at the chance to participate. She’s now one of six funders who have applied and been accepted. Collectively, this group has committed over CA$1 million annually over the next three years for the Council of Aunties to disseminate.
With its new funding, the collaborative has removed competition, scarcity and uncertainty for these Indigenous women and their organizations, supporting transformative projects across Haida, Haítzaqv, Tsilhqot’in, Nuxalk, WSANEC, and Ts’msyen homelands.
One of the most transformative aspects of the collaborative, however, is its emphasis on relationship and trust. Funder collaborators are invited to share their progress in removing barriers and being in right relationship. And every month, the Aunties hold an optional “Ask an Auntie” session, in which funders can ask questions that help them grow in their relationship to Indigenous communities. In turn, the Aunties have all the say over how the money is distributed, selecting projects that will benefit the community most. For H̓áust̓i, this is revolutionary.
“When I think about how it feels to me, in my body,” she says, “as someone who’s fought for resources in the traditional way for nearly two decades — it’s actually really emotional and liberating to be doing things differently.”
The power of community-led investments
As the director of capacity-building and an analyst with the Restorative Economies Fund at the Kataly Foundation in San Francisco, Jocelyn Wong has worked with many groups funding community-led and community-governed investments. Kataly is a spend-out foundation created with assets from Regan Pritzker and Chris Olin, a wealthy white couple, to move resources in support of the economic, political and cultural power-building of Black and Indigenous communities and all people of color.
Wong’s collaboration via the Restorative Economies Fund with Michael Johnson, director of advancement at the NDN Collective, exemplifies this approach. The NDN Collective supports self-determination for Indigenous people, and over the last year and a half, Kataly has provided $2 million in nonextractive, patient term loans to the NDN Fund, as well as $400,000 in grants to support NDN’s loan loss reserve funds. The loans required no collateral, and their interest rate is 0% for the first three years and 1% thereafter.
Kataly encouraged NDN to use the loans however they saw fit. “One of the great things about the relationships with Jocelyn and Kataly,” says Johnson, a citizen of the Three Affiliated Tribes of North Dakota, “is that while they know and understand the projects we’re investing in, their investment is into us — and into our autonomy to move that money into our community in ways that make sense for our community.”
NDN has used the Kataly loan to fund projects such as the Wolakota Buffalo Range Project, reintroducing bison to South Dakota, and a large-scale solar project in the Navajo Nation. Because Kataly provided such favorable terms, NDN in turn extends favorable terms to its borrowers. Kataly also supported NDN in the purchase of its headquarters and partnered with the organization on its COVID-19 Response Project.
Many of the conversations between Wong and Johnson, however, have been less about hard finance and more about the challenges of moving the traditionally white investment field toward equity and justice for all people and the planet. Indigenous people and others still face barriers to accessing resources, including racial biases, white supremacist systems and entrenched hierarchies.
“Often, funders see one part of NDN that makes sense to them — our grantmaking, or loans, or nonviolent direct action — but don’t grasp that all these strategies are working toward the same goal: building Indigenous power. Jocelyn and the Kataly family see us for our full, complicated and disruptive selves,” says Johnson. “This is a huge part of trust-based philanthropy, not just seeing what you like in your partners, but really understanding all their work in total.”
Reflecting on what is needed to transform the philanthropic and investment sectors, Wong says, “Along with political education, people with power in our current system need clear guidance and technical expertise to translate principles into action on the ground. What I’ve seen is that there are many people coming from social movements who have that expertise, and our role is to learn from them and follow their lead.”
Cross-collaborations produce the most powerful solutions
Some of these collaborations are small; some are not. (Kataly is activating a half-billion dollars in its power-shifting strategy.) These initiatives are powerful because they prove that radically different approaches emerging from community leaders are effective. If scaled, they could create lasting, equitable solutions to massive systemic problems.
We’ve been socialized to believe that it’s risky to think and act differently. But what is the cost to our communities if we don’t take those risks? There’s so much to be gained by trying different approaches and embracing different ways of thinking. We can solve problems at a systemic level when we work in community and each of us does our part. And we do our part best when we collaborate across differences.
Deb Nelson is the founder and executive director of the Just Economy Institute, which educates, supports, and connects a growing movement of financial activists who are shifting the flow of capital and power to solve social and environmental problems.
This article was originally published on InsidePhilanthropy.com with the title, “What Does it Look Like to Truly Shift Power in Philanthropy? Here Are 3 Real World Examples.”