03: We redefined our fiduciary duty as responsibility to social movements.Our duty is to use, not protect, an endowment.

Back when Compton Foundation softened the boundaries among formal interest areas to emphasize broader movement-building efforts, the board also began to reconsider its financial holdings, looking beyond grantmaking for more ways to advance social and environmental progress.

This thought process wasn’t entirely new: the foundation had started excluding harmful industries from its portfolio and investing in social impact funds in the late 1990s. By 2010, most of the endowment was “impact invested.” But beginning in 2011, new executive director Ellen Friedman and board treasurer Emilie Cortes worked with advisors to activate 100 percent of foundation assets with investments that would explicitly further the mission. In early 2014, Compton Foundation was among the first 17 organizations signing onto a Divest/Invest pledge that eventually involved 140 foundations making a unified public commitment to divest from fossil fuels and reinvest the money with a focus on renewable energy, energy efficiency, sustainable agriculture and other solutions.

Our view of what constituted a mission-aligned investment was evolving. We had begun to recognize the intersecting forces affecting women and communities of color across the globe, and to understand that climate action was relevant not only to our environmental interests but also to initiatives promoting peaceful foreign policy, democracy and reproductive justice. This growing awareness led us to look beyond what, in hindsight, we’d regard as an “impact light” approach to investing.

In partnership with Sonen Capital, we assessed each holding in our endowment. Reducing harm wasn’t enough — we were looking to produce tangible benefits. Once invested, we continued to monitor corporate actions closely, even if an equity was bundled in a broader fund. For example, when we discovered one of the companies in an evergreen fund was diverting its use of drones from sourcing water to waging war, we moved our money elsewhere.

The board also began to take a very particular view of “fiduciary duty” in the context of a private foundation’s investment choices, recognizing:

And then, 2016 happened. Donald J. Trump lost the popular vote but was elected to the U.S. presidency, precipitating overt attacks on domestic freedoms, fomenting fear in the form of xenophobia and ultranationalism, weaponizing lies and disinformation, and exemplifying a rising trend toward far-right leadership in ostensibly democratic nations worldwide such as Brazil, Australia, Italy, France, England and Hungary. The Compton Foundation board faced an imperative question: How could we prioritize our organization’s continued existence while fundamental rights were under attack, undermining our hope for a stable climate, peace, and reproductive freedom? The issue of foundation perpetuity was raised again. This time, the board voted to spend the whole endowment within seven years, with the exact timeline to be determined by grant partner and movement needs as they evolved.

That decision allowed the staff and board to adopt a flexible mindset, making larger, longer-term grants and streamlining processes to meet urgent requests in a matter of days. In the context of the COVID-19 pandemic, demands for racial justice and serious threats to U.S. elections, we increased the 2021 grants budget by 35 percent. Doing so made possible one-time investments in election and democracy infrastructure, along with multi-year commitments to BIPOC-led intermediary funds and other key movement organizations and networks. Damn, that was a time.

With a focused lifespan and facing a constantly changing context, we felt a fresh sense of urgency to make sure every investment made in grants, technical assistance and infrastructure would leave organizations and movements stronger when our institution was gone. While purposely reducing our assets, we also sought to improve the capital structures that had benefited the foundation so richly. We recommitted to promoting racial equity within the investment advisory, banking and investment management systems.

One such investment was structured as a loan to a Black woman pioneer who was addressing stark racial disparities in the venture capital space. Her startup VC firm, Include Ventures, supported development and expanded opportunities for BIPOC fund managers. Another set of investments went to the Southern Opportunity and Resilience Fund (SOAR), a mission-driven loan fund which was created to support Black and Brown small businesses and nonprofits in the Southern U.S. — an economic sector whose survival was disproportionately impacted by COVID-19.

Results were mixed. Include Ventures raised $15 million, falling short of its fundraising goals while still advancing its mission to support and develop BIPOC investment professionals. SOAR’s success was hindered because the program required repayment of the loan principal on a fixed timeline rather than on a schedule that reflected the needs and realities of participating businesses and their communities. Compton Foundation may have provided temporary resources, but those funds didn’t dent the systemic biases affecting the venture capital industry or Black-owned small businesses in the South. In effect, the cash infusions were a Band-Aid, not a remedy. Based on what we know today, we would certainly structure our interventions differently.

And yet, they had value. They shined a spotlight on both the situational and the systemic inequities that persist in who foundations do and don’t support, what they view as risk, who they do and don’t trust to manage investments, and whether they can let go of their hunger for maximum financial returns in favor of systemic changes that could mean much more. Our grants and loans were tiny steps toward repair, examples of how a foundation might disrupt the racialized capital system our sector has long taken for granted.