We keep a close eye on divestment efforts in the foundation world, the most energetic of which have lately focused on pulling endowment capital out of fossil fuel companies as a way to fight climate change.
Skeptics of divestment drives worry that foundations can find themselves on a slippery slope. Once you divest in one set of bad companies, it's only a matter of time before someone is urging you to pull investments from other industries, with no end in sight to the second-guessing of portfolios that ensues.
We're betting that many divestment advocates would be perfectly fine with such wider scrutiny. And if you want a better sense of what other kinds of no-no stocks might be flagged in years ahead, take a look at the recent divestment move by the Brooklyn Community Foundation.
It’s been a little while since we caught up with BCF, a funder that’s only been around about seven years but has already distinguished itself for operating on the cutting edge of progressive philanthropy. Not long ago, BCF announced a decision approved by the board in September that it would not invest in three industries that just don’t jive with what it’s trying to do in Brooklyn: private prisons, gun manufacturers, and predatory lenders.
The logic chain here isn't hard to follow.
“Racial equity is core to our vision of a fair and just Brooklyn,” said BCF President and CEO Cecilia Clarke. “Private prisons, gun manufacturers, and predatory lenders are three industries that have had a devastating impact on communities of color and low-income communities in our borough and across our nation. This decision is critical to the foundation’s ability to fully pursue its mission, and it will hopefully serve as a call to other institutions to do the same.”
If nonprofits in Brooklyn are wondering if this move will impact current and future grantmaking, the short answer is no. According to a foundation press release, BCF is not anticipating an impact on portfolio performance due to this investment policy change. Instead, it’ll be working in partnership with donors outside of these three industries to “bolster Brooklyn’s charitable community and spark lasting social change.”
BCF was one of the early adopters of the racial justice mission that we’ve seen so many others jump on board with in 2016. The funder adopted the mission back in 2014 for grantmaking, advocacy work, and internal governance, as well. Today, BCF has an investment portfolio of about $60 million to work with.
Eric Ward of the foundation’s Racial Justice Advisory Council described BCF’s bold move as “profound” and “powerful.” We wouldn't go quite that far, since it's not like BCF is making a big sacrifice by avoiding a large swath of must-have stocks. But certainly, this is an example of a funder staying accountable to the mission it's set for itself. It'd be nice to see more foundations thinking just as critically about their portfolios.
In other news, BCF launched a resident-led grantmaking program to invest in under-resourced communities of color in Brooklyn, providing free racial justice training for nonprofit leaders through its Brooklyn Accelerator initiative. In 2017, BCF plans to set up a separate Girls of Color Fund and a Racial Equity Fund to give donors in Brooklyn even more avenues of direct support for the advancement of racial equity on a local level.
Follow the funder’s news section for updates on these two new funds and how you can tap into them for support once they've been established. Upcoming opportunities between fall 2016 and spring 2017 for the Neighborhood Strength, Invest in Youth, and Brooklyn Accelerator initiatives can be viewed here.