Dear Climate Funders: The Clock is Ticking. Use Your Endowments

Dear Climate Funders,

It’s time to devote more money to the climate issue. Much, much more. And soon.

We could certainly say the same thing to the philanthropic sector overall, not to mention governments, investors and corporations. But right now, we’re doing something kind of unusual for us, and talking just to you—namely the Hewlett, Packard, MacArthur, and Rockefeller foundations.

We’re addressing you, because you four are among the top philanthropic leaders when it comes to this issue. And don’t get us wrong, you’re doing a lot. But it’s not enough. We know, because we asked eight of the leading nonprofits working on climate change, and they have a ton of urgent priorities that need more funding (more on that later).

So we have a proposition for you: Think bigger about how to use your assets to tackle the defining global crisis of our time. Forget about the traditional 5 percent payout limits and tap your endowments for some extra emergency cash. Just this once. Cash out 10 percent, and devote a combined extra $2.6 billion to climate work over the next five years. What do you say?

Yes, that is a lot of money. But then again, it's not really when you put it in perspective. That’s less than General Motors’ annual advertising budget. Netflix spent more than that on programming last year. I mean, House of Cards is great, but I think we can do better when it comes to curbing rising sea levels.

“While We Still Have Time”

And the thing is, we know you agree with us on the need to go bigger. In August, MacArthur, led by new president Julia Stasch, unveiled an ambitious program to combat climate change, warning of far-reaching “global disruption.”

Hewlett and Packard have shown especially impressive leadership on climate change, making huge financial commitments in this area over many years. Their presidents recently sounded a stirring alarm on the climate threat, calling for greater action. Larry Kramer of Hewlett and Carol Larson of Packard co-authored a strong op-ed for the Chronicle of Philanthropy, proclaiming “Foundations Must Move Fast to Fight Climate Change.”

It is an urgent global crisis that affects everything philanthropy seeks to do, whether it is to improve health, alleviate poverty, reduce famine, promote peace, or advance social justice. It is a problem that can and must be solved—a problem that demands action now, while we still have time. And it is a challenge on which foundations can make a profound difference.

Currently less than 2 percent of all philanthropic dollars are being spent in the fight against climate change. That is not enough given how big of a threat we face.

We couldn’t agree more, and that op-ed inspired us to run a less tactfully titled follow up, “Where the Hell is All the Climate Funding?” in which we questioned why more funders aren’t getting onboard. We still believe far more of them should, considering the issue touches pretty much any foundation’s priorities on some level, as Kramer and Larson noted. To take one example: The WHO estimates that climate change will cause 250,000 additional deaths per year from malnutrition, malaria, diarrhea and heat stress from 2030 to 2050—a number you’d think would catch the attention of Bill and Melinda Gates.

But here’s the thing: We can’t just sit around hoping that Gates or Ford or Robert Wood Johnson is going to take on this issue, since we know all know that’s probably not going to happen any time soon. And while new billionaire mega-donors are likely to enter the climate space, there’s no guarantee of that.

Which means that the single best bet for mobilizing more money now to fight climate change is for existing climate funders—you all, the ones that already get it—to act more boldly.

New Thinking for a New Threat

We’re not saying that your foundations should spend down, or anything close to that. Rather, we’re talking about a one-time draw on your endowments at a pivotal moment in the climate change fight.

Yes, that would be an unprecedented step. But this is an unprecedented challenge—an existential threat the likes of which philanthropy has never encountered before. Secretary of State John Kerry has said that the damage from climate change could rival that of World War II in terms of global scope and the harm caused. In fact, though, the Axis powers never directly threatened U.S. cities the way that climate change does. Hurricane Katrina and Superstorm Sandy offered a mild taste of what may lie ahead for the U.S.

Sticking with the legally required 5 percent payout often makes sense, as it ensures a foundation can give in perpetuity, so money is available to address future societal needs. We understand why you’d want to stay that course. But right now, you need to show some flexibility on this front, to prioritize the preventive work today needed to avoid expenses tomorrow that will be off the charts.

A Pivotal Moment

If there was ever a time to make an exception on payout and bust open the endowment piggy bank, wouldn’t that time be now? Not only is the climate clock ticking louder, but there are hopeful signs that the U.S. is turning a corner on this issue politically.

The mainstream business community is now onboard as never before, and just this week, a bunch of top companies announced new steps to cut emissions. Meanwhile, the public is more receptive to action as they see growing signs of climate change all around them. In Washington, the Obama administration has made historic regulatory changes that will reduce greenhouse gas emissions—assuming the new rules survive a determined attack at both the federal and state level. The new climate agreement between the U.S. and China is also a big step forward.

Things are finally moving and the time to achieve major breakthroughs on climate change is at hand. But it’s going to require more resources to exploit this window of opportunity.

More Assets on Deck

Together, your four foundations have combined assets of roughly $26 billion, with much of that in effect, sitting on the sidelines. Our proposal is that you put a modest chunk of that money into action right now. If you all acted together, we’re talking $2.6 billion in new funds to fight climate change—or $520 million annually over five years. That would represent a huge jump in resources for green groups, dramatically raising the total philanthropic dollars available for climate change work.

Why do we think this step would make a difference? Because we asked the top executives at a bunch of leading environmental nonprofits if significantly more money could be helpful, and what they would do if they had it.

A lot of these execs are your grantees, and we don’t want to throw them under the bus. They didn’t ask us to demand billions more from their best benefactors. That was our idea. Certainly, they are deeply grateful for all you’re doing already.

But with varying degrees of enthusiasm, they all responded that there’s a lot of unfunded work that needs to be done and that now is the moment to step things up.

As Rhea Suh, president of the Natural Resources Defense Council, told us, “This is the time to double down. We simply must be successful in our efforts to realize global action—there is no alternative.”

Gwen Ruta, VP of Climate and Energy at the Environmental Defense Fund said: “Would more make a difference? The answer is an unequivocal yes. Now more than ever, in fact. While crucial progress is happening at every level, the window for action is closing.”

Of course, any nonprofit leader is always going to say that they could use more money. How do we know that the green execs we talked to aren’t just coming up with self-serving justifications for more funding?

Well, beyond the obvious fact that these leaders are basically armed with slingshots relative to the problem they’re up against, we were impressed by the smart, concrete ideas they had for deploying more resources for greater impact. Read on, and judge their wish list for yourself.

Diversifying the Movement

A number of the nonprofit leaders we queried pointed out that more work needs to be done to bring different actors to the table.

“We would like to see funders do even more to support a broader array of groups and strategies, like investing in climate justice groups which are ensuring that more voices are engaged and leading on climate actions,” responded Trip Van Noppen, president of Earthjustice.

Greenpeace Executive Director Annie Leonard similarly cited the need to fund more grassroots community groups working for environmental justice. “These communities are at the heart of a just transition to an economy that's sustainable for people and the planet, and right now, they are severely under-funded.”

Breaking Political Deadlock

Nonprofit leaders also highlighted the importance of breaking up the national logjam resulting from both lobbying and partisanship. Leonard from Greenpeace pointed out the tens of millions being spent by donors like the Koch family to derail climate and energy legislation. She also posits that campaigning on the economic potential of renewable energy at local levels could help win over both liberals and conservatives.

Mark Tercek, President and CEO of the Nature Conservancy, had a similar take on approaching the issue locally. Tercek pointed out their effort with EDF to invest in climate strategies that are “tailored to the people, politics and opportunities in each of the 50 states.” They’ve received significant funding for the effort, but “the more we learn, the more opportunities we will find to deploy that knowledge in more places and with more partners—which will require sustained funding.”

Implementing State and Local Emissions Reductions

Along these lines, a number of those we asked emphasized the importance of implementing emissions reductions plans in dozens of local and state arenas, particularly in relation to the federal Clean Power Plan. Staff at the Sierra Club pointed out that decisions about where energy comes from are still happening at the local and state levels. “To seize this opportunity, there is a need for additional resources, both for Sierra Club and more than a hundred local, regional and national allies engaged in this critical work.”

The NRDC also cited both defending the Clean Power Plan in courts, and the need to scale up efforts and “expand our focus to dozens of administrations, legislatures and utility commissions where the Clean Power Plan will be implemented.”

The Sierra Club has done quite well in garnering funds for Beyond Coal, its effort to move away from coal power, but notes that this push needs to go beyond its already audacious goal of replacing half of the nation’s coal plants with clean energy. It believes that a bigger push with more resources could put the U.S. on track to 100 percent clean energy, including transitioning away from natural gas. Then the campaign needs to pivot toward rapid electrification of vehicles.

Other Needs

Respondents cited a number of other specific projects, including:

Working in China to reduce coal emissions and improve efficiency (EDF and NRDC)
Financing communities to stop deforestation, a leading cause of carbon emissions (EDF)
Expanding research and advocacy in the Arctic (Greenpeace)
Reducing emissions and increasing clean energy on public lands (Wilderness Society)
Accelerating research and technology on climate and energy, including modernizing our utility grid (EDF)

Overall, environmental groups have a long to-do list for fighting climate change. Would funding all those activities make a difference? It’s hard to know for sure, but there’s plenty of evidence that these groups have already made a big impact. We believe their leaders’ claims that with more money, they could have an even bigger impact.

Now, you four foundations are probably feeling a bit singled out by this proposition. Folks at Hewlett might be thinking, "Man, give us a break, we gave $500 million to launch ClimateWorks in 2008." And MacArthur only started its program a month ago, and already came out strong with a bunch of general support.

But that’s exactly why we are focusing on you four. You get it. You understand the urgency, and you’ve led the call to action. But it’s not enough.

Dipping into your endowments is not the only way you could mobilize new resources. Perhaps you could borrow against those assets, paying back the money over a long period. If things go well with the market, you could pay back the borrowed funds faster. Reducing other areas of grantmaking is another option.

We don’t care how you free up extra money. The point is that you need to go above and beyond all you’ve done already, with a much higher level of funding that can change the game and catch the world’s attention. By showing this kind of courage and leadership, you can inspire support from large donors and medium-sized foundations. In fact, ideally, your contributions could anchor a new pot of money—call it, say, a Climate Crisis Fund—that a bunch of funders could chip into, including corporate and individual donors (who we’ll be addressing in a separate piece).

This kind of bold push has succeeded before. Over the past 15 years, a range of funders in the global health space have come together to shake free big new money, saving millions of lives. Now we need that same mix of creativity and fierce sense of urgency on climate change.

There’s work to be done, and the clock is ticking. We hope you’ll step up.

Sincerely,

Inside Philanthropy