Better Business: How Funders Can Achieve Big Impact Outside the Policy Arena

 photo: mozakim/shutterstock

photo: mozakim/shutterstock

Progressive donors passionate about social change are understandably drawn to the political and policy space. Elected leaders, government policy and public institutions (and their large budgets) have a massive effect on our lives and either reinforce or dismantle key structural barriers. We also hope for our public institutions and leaders to share and reflect our values. As I have previously discussed, there are, indeed, critical opportunities for donors to support effective efforts to resist the right-wing policies of the Trump administration and underwrite long-term state-level social change initiatives.

But there are also worthy nonpolitical strategies for new progressively minded donors and established funders seeking to leverage their charitable resources for an outsized impact.

One strategy is to support efforts to reform and improve large private institutions, starting with major corporations, prioritizing systems-level change approaches that can transform entire industries or harness the power of global markets for social good. This space is ripe with opportunity as companies (and their investors) increasingly care about the intersection of their reputations, financial risks and corporate practices across a firm’s stakeholders—customers, workers, suppliers, shareholders and the communities where they operate. In recent years, we’ve witnessed skilled nonprofits, backed by supportive funders, build real influence and pioneer tools to impact corporate practices and elevate industry standards.

Here are some exciting examples:

The Coalition of Immokalee Workers (CIW), a relatively small but mighty worker organizing nonprofit based in Immokalee, Florida, has already dramatically improved the lives of 30,000 farmworkers. The CIW was recognized last month when its co-founder, Greg Asbed, was named a 2017 MacArthur Foundation Fellow. In 2014, I visited their operation in Immokalee, where the vast majority of tomatoes grown in the U.S. originate, with the filmmakers behind the award winning documentary Food Chains.

Over the years, CIW has successfully pressured retail companies—national fast food chains and major grocery stores, including Walmart—to become partners in the Fair Food Program, agreeing to buy tomatoes only from growers that participate in and uphold the standards. As a result, CIW’s efforts have significantly increased the wages of participating farm workers by 20 to 35 percent and improved working conditions in fields that had been plagued by wage theft, human trafficking, enslavement and sexual harassment and assault. Through this work, CIW has helped set new industry-wide standards that go beyond state regulations, and that will improve the lives of thousands of additional workers.

Those impressive results from a relatively small nonprofit—CIW’s recent annual expenses were less than $2 million—underscore the importance of focusing on systems level (and industry) change. Last month, the New York Times editorial board highlighted CIW’s standards as a model for companies to limit workplace sexual harassment—showing impact beyond the tomato fields. National foundations and social justice funders like the W.K. Kellogg Foundation, Kresge Foundation, Jessie Smith Noyes Foundation, Public Welfare Foundation and the Foundation for a Just Society have been important financial backers of the CIW over the years.

With the Trump administration hostile to environmental protections and climate change mitigation—even pulling the U.S. out of the Paris climate accord—nonprofits, collaboratives, and foundations are stepping up efforts to push major corporations and entire industries to reduce their carbon emissions. Considering that these mega-corporations have revenues larger than many countries’ GDPs, improving their environmental practices and raising industry standards has a significant global impact.

This week, international leaders are gathered in Bonn, Germany, to continue United Nations climate talks. With support from Bloomberg Philanthropies, and the Hewlett, Packard, MacArthur and Robertson foundations, as well as other funders, leading U.S. nonprofits are working with businesses, mayors and governors to fill the void left by the Trump administration to showcase U.S. efforts to cut carbon emissions and participate in global discussions on policy and planning.

Many companies rightly view their environmental practices as essential to their bottom line and brand equity, and tech giants like Apple, Google and Facebook are well on their way toward running their major operations on 100 percent renewable energy. More than 1,200 businesses like Microsoft, Disney and General Motors, are (or soon will be) voluntarily pricing their own carbon emissions. Internal carbon pricing can have a huge impact since it creates the financial incentives for firms to reduce their emissions, even when not legally required by government policies.

The global nonprofit CDP (formerly the Carbon Disclosure Project), deserves significant credit for leveraging investor influence to build more resilient and transparent companies. Fifteen years ago, CDP pioneered a model to work with companies to disclose their carbon emissions and climate risk strategies to investors, and more than 5,600 companies disclosed data through CDP in 2017. Disclosure has paved the way to real improvements in corporate environmental practices, including carbon pricing. Today, major institutional investors expect and demand companies to disclose environmental, social and governance (ESG) practices, and account for those practices in their financial analysis—creating powerful incentives across industries. That lever of investor influence is backed up by nonprofits like Ceres and SASB that engage and support institutional investors and global companies by creating industry tools, standards and sustainability accounting practices. CDP Worldwide, including their U.S.-based operation, raised $17 million last year, including $8 million from philanthropic sources like the New Venture Fund and Bloomberg Philanthropies.

Even when corporate management resists environmental disclosure or changes, activist shareholders and private family foundations are wielding their influence. For example, in a historic move, Exxon shareholders this year overwhelmingly voted for the company to evaluate and release details on how climate change will impact the company’s products and financial risk. A similar resolution previously failed, but won new support from major institutional shareholders, including Blackrock and Vanguard, that view carbon emissions and climate change as influences on the long-term financial performance of the company. We can expect more of these activist shareholder efforts as mainstream investors raise expectations about the link between climate action and financial risk.

Exxon has also been the target of in-depth, investigative reporting related to the company's knowledge and position on climate science. Some of this reporting was financially backed by the Rockefeller Family Fund and Rockefeller Brothers Fund. That independent reporting resulted in attorneys general, including in New York and California, opening investigations into whether Exxon “had committed fraud by failing to disclose many of the business risks of climate change to its shareholders despite evidence that it understood those risks internally.” In addition, the Securities and Exchange Commission began looking at how the company valued its assets. Collectively, these actions, along with elevated investor expectations, resulted in the successful shareholder resolution adopted this year. Those forces will continue to impact industries and global markets.

As progressive funders, including newly motivated individual donors, look to leverage their resources for lasting social change, they should consider opportunities to support effective nonprofits and collaboratives that are transforming corporate practices outside and beyond the political and policy arena. There are many effective approaches to consider—including activist organizing campaigns, investor pressure and creating new industry-wide tools and standards. This work is already adding up to real results at a massive scale, and is an approach worthy of continued support from funders.

Nicholas Salter is the founder of Progressive Philanthropy Group where he advises donors on progressive, social change strategies. Follow Nick on Twitter or Medium.