Overcoming Barriers to Employment
REDF CEO Maria Kim, ’12, on why 10 million people are boxed out of the economy—and how social enterprises can help.Overcoming Barriers to Employment
This has certainly been an eventful year, certainly even for the last six months with more eventful things to come starting with the global pandemic, the economic devastation caused by that, and the social unrest sparked by racial injustice. The past six months, I would say, have laid bare the deep disparities that persist in this country, and these crises have moved segments of American society from, I would say complacency to action, but they've also raised questions about the progress that the social sector has or hasn't made towards a more just society. With so much money spent by public, private, and philanthropic sectors, one of the questions that's come up is, why do profound disparities continue to persist? This series, the Innovating for Social Equity series, will examine efforts across the philanthropic and private sectors to tackle the barriers to a society and economy that work for all.
Tonight's conversation is going to examine how new approaches in philanthropy may be employed to identify innovative strategies for achieving social equity. We will ask questions such as: Where has philanthropy succeeded in moving the needle, on issues like racial equity and social justice? Why hasn't more progress been made? And, is philanthropy part of the problem? So this session is gonna provide a rare opportunity for us to hear from some of the foremost leaders in philanthropy, in the US. So we have a powerhouse panel of speakers who together represent endowment and investment power of more than $14 billion.
So I wanted to thank our moderator Julia Stasch and our panelists, John Palfrey, Tom Tierney, and La June Montgomery Tebron. And of course I'm very, very grateful to Chicago Booth Rustandy Center for putting together this excellent program. My thanks again to so many of you for spending your time with us and engaging with the school in this way, and there'll be time for live questions at the end of the panel conversation. So with that, it's my pleasure to hand the program off to our moderator, Julia Stasch, who is the Immediate Past President of the John and Catherine MacArthur Foundation. She's the philanthropy executive in residence for the Rustandy Center for Social Sector Innovation. Please take it away, Julia, thank you.
So thank you so much. I'm going to welcome my fellow panelists, John, La June, and Tom Tierney. I'm going to point you to the Q&A section where their long bios are, but they are friends and colleagues, and each of them is a provocative thinker, but together collectively they really will bring to you this evening, you know, incredibly varied expertise and experience. So let's just, let's dive in.
Okay, for the basics, what is social equity? I think we all think we know, but what do the words mean? So I actually looked it up. I liked the definition that I found from 1981, which was "equal treatment to which all are entitled by virtue of being human." I like that, but the definition has gotten much more specific over time, talking about race and gender, economic status, sexual and gender identity, physical and mental disability, and more. But tonight I think we're gonna narrow and speak mostly about racial inequity, and when I think about that, two words actually come to mind, and those two words are baked-in. So racial inequity is actually baked-in from the very beginning of our history and now of course we see that is at the core of disparate treatment, lack of opportunity, limited life prospects in virtually every aspect of life, and by that, I mean from wealth to health, healthcare, jobs, education, housing, business, justice, and much more, which really means that virtually every institution, every policy, and every program is suspect. And it really deserves interrogation and change.
Now, when you look back across history, philanthropy has been a player, sometimes a large player, sometimes a small player, in every major move forward in American history. But let's not forget as well that with every major step forward, there's a pushback, there's a backlash that has actually limited truly enduring and truly transformative change. So tonight we're gonna look at philanthropy and change.
Now, of course, philanthropy cannot do anything totally alone and future sessions in this series as the dean said, will look at other actors, but there's no question about it. Philanthropy has the power and the responsibility to lead, but the question is, what will it take to meet this moment?
So, you've got the names of the panelists. Let's get to know them just a tiny bit. Let's kick off with a lightning round question to each of the panelists. So talk quickly about your personal journey, when you began your career, how were you thinking about social justice and economic equity, and how has your thinking changed? Let's start with you, John.
Julie, thank you. It's a treat to be here and to be with these fellow panelists. Thank you to Dean Rajan and the entire team. My journey is, I think, as many born into privilege as a white man with a great interest in social equity, but certainly not grounding in it through lived experience in any way. I began working at the US Environmental Protection Agency after college in 1994 and was focused on a series of environmental justice issues. So, aware of these topics in the field, but certainly have had a ton to learn in the ensuing 25 or so years, and that I think is true at MacArthur Foundation too as an institution today, but following some very important leads that you got started during your tenure.
Thank you, how about you, Tom? (mouse clicks)
Well, thanks, and I'll echo John, just pleased to be here. I guess I'm a little bit of an odd duck in that, you know, my dad worked for a factory, I went to business school, went into business and I wasn't thinking about social equity, I was thinking about business. I went to a company called Bain Company and loved that, but I had at the back of my mind that life wasn't a level playing field, and I started volunteering and volunteering and long story short, I ended up leaving Bain to start a nonprofit, with three of us at the time, it became Bridgespan, about 20 years.
It has been one awakening after another for me, and what I've learned is: asking questions about other people's lives and about the barriers that really exist that maybe you haven't experienced, helps you calibrate. And one quick illustration, you know, a few years ago, I wrote a book on philanthropy that when I reread it today, didn't understand racial barriers to capital, just didn't understand it. And I coauthored with fantastic, brilliant guy. Nevertheless, I would say over these last 10 years especially, as I've encountered more and more real-life barriers that are racially oriented, it's been like a light going on a dark corner.
La June, how about you?
La June Montgomery Tabron:
Thank you, Julia. I'm also honored to be here with you all this evening. So mine was very much a personal journey. I encountered social injustices in my own life. I'm number nine of 10 children, so I had many older siblings who had been part of the civil rights movement and they buffered me in some ways. So while I understood that injustices existed, I didn't really start to encounter them personally until I entered college and left college and started my career.
My father was also in the automotive industry, he left Mississippi migrating North, as you've heard the story, and worked for Chrysler Corporation. But Tom, I think even though both of our parents were in the auto industry, my opportunities were not certain for me, nor was it for my siblings, but my father and parents believed in hard work, and my orientation was always knowing that if you didn't work twice or three times as hard, you weren't going to be noticed, and so that was my entrée into philanthropy coming from a place of actually participating in some of the programs that now the W.K. Kellogg Foundation funds today, but using that as a way of really strengthening my own inner confidence and then beginning a passion to fight for all those other children like me.
So many pathways, I think, to a place that is really important, where we all find ourselves today. I just wanna make sure that all four of us can be on the view at the same time, because I wanna have a little bit of a, you know, interactive conversation.
So let's move from the personal to what it seems like people today are demanding. People are demanding change that both recognizes and values leadership by people most affected, by racial inequities. Change that shifts the power and change that sticks and change that doesn't have to be fought for again and again.
So I wanna start with you, Tom. You were an observer, an advisor to philanthropy, why is the kind of change that people are demanding today hard for philanthropy? Is philanthropy's elite status, the inherent power dynamics, the networks, is all that part of the problem?
Well, let me, it's a great question. Let me define philanthropy because I think there are two different categories, I'll call them professionals, and there are two of them on the panel, organizations that are foundations with staffs who actually have jobs to put money, to work in service of society. Then there are individuals who are giving money away, sometimes with no staff, often with no staff, often as a part-time do-it-yourself. They may be incredibly wealthy, but they're not thinking about this every day.
For them, it is hard to sort out, which is why you see a disproportionate amount of money going to—nothing wrong with this, major institutions that wealthy people are familiar with. We did work, and I won't linger on this long, but it's interesting about big bets that is, commitments of over $10 million, 80% of them in United States went to major institutions: universities, hospitals, major arts, why? Because wealthy people are familiar with them. They went to school there, they had the kids, whatever. Only 20% went to social change. That was despite, when you went to Forbes websites, and if there were pledgers, letters they've written, the vast majority said, we wanna help those in need, we wanna help make society better, we wanna give back, but it's hard to do, and if we have time we can unpack what those barriers are, but for people that are only doing this, you know, a few hours a week, bombarded with requests and can't figure it out, it's too easy to delay. It's too easy to say, I'll sort this out later.
Or too easy to say, I'll give to my university. That's a good thing too, I forgot. Okay.
Yes, that's not a bad thing, but we can get into that more, but I'll sit out.
So La June, you know, working right there, leadership role in philanthropy, I wanna ask you, are there other problems too? I mean, I saw this when I was at MacArthur, this whole move towards strategic philanthropy with elaborate theories of change, the whole idea that you only do what works, and there's ways specific measurable outcomes, has that gone too far? And is there bias built into all that that reinforces inequities?
La June Montgomery Tabron:
You have to be careful with a full-baked theory of change going into community if you really believe that the answer is within the community. I think what we've determined at the Kellogg Foundation is, you know, you should have an idea of what success looks like, but if you have it all identified and believe that the research is what's best for community, you're probably going to have some difficulty connecting with the community members.
At the Kellogg Foundation you know, we talk about a theory of change, but it's very simple, and I think all you need is something very simple. Our founders said very clearly, the way you make change in community is you create cooperative planning, you infuse that cooperative planning with intelligent study, knowledge that can be imparted by all of the members of the planning process, and then together based on that process you take it to group action, and that's when lasting change occurs because the people who actually aspire for change actually create the change that happens, and that is what sustainability looks like.
So I do think that if you overemphasize a rigorous process that doesn't include agility and connection on the ground and learning from the people who have the problems, you're probably gonna miss it a lot of times. You may be successful, but the real true sustainable success will happen, when you step back a little bit from that canned approach and you dig deep into community and learn from those who are leading the way to make the change for themselves and their families and communities.
You know, John, let's talk a little bit about when a foundation examines its own practices and realizes that it has been part of the problem. You know, MacArthur has been the largest funder of arts in Illinois, you looked at that, and the foundation has been making grants for decades, it was clear that MacArthur was exacerbating racial inequities. What'd you see and what'd you do about it?
Well, Julie, thank you for teeing up the arts as a conversation point, because I think it's a great example, although, of course the pivot that occurred is under your watch, not under mine, but MacArthur for many, many years was an arts and culture funder, I think in a pretty classic way, and I don't mean to denigrate anybody, but I think there was a sense of you kind of threw the money out the 17th floor window, toward the Art Institute or other wonderful institutions that do need the support, and are close by, and the opera in the ballet and so forth. But when you mapped that and looked at it, it was pretty clear that we were doing good, but within a very small geographic radius and largely to institutions led by white leaders and largely to institutions serving white communities, and those are good, wonderful, important institutions that do need support as well, much like Tom was saying with respect to large universities, but it wasn't supporting a truly equitable approach, nor was it really reaching everybody in the city, by any stretch of the imagination.
So the shift was to go from an arts and culture program to a culture equity in the arts program and that flipped on its head the strategy and said, instead of having people who worked downtown in the Loop of Chicago, that was going to be decided by people who've lived out in the community in a broader sense, and the decision rights were gonna be shifted, really dramatically, to say, we will continue to give general operating support which we believe in, we'll continue to do that on a steady basis so organizations can plan, but the decisions of who's gonna get in, what amount and so forth, is gonna be given to the community to determine, and we're going to put a very high thumb on the scale, strong thumb on the scale in favor of diversity, equity, inclusion.
So it's not to say that a white serving institution can't get the money, and of course some continue to, but that we want a different heat map, when we look at this again, in terms of who's serving, we want a different demographic set up of who's leading those organizations, and absolutely every one of those institutions in our portfolio have to have equity at the core of what they're doing. So it's a work in progress. We're only one round in, but I'm totally confident we'll continue in this direction, and there's a lot to learn.
But it really, I mean, La June, your founder was prescient, you know, however many, was that 90 years ago when he said that, that's a pretty amazing view of philanthropy for back then and it's very, very much like what the Culture, Equity and the Arts program, is doing now in Chicago.
And I think the interesting about what you just talked about John, is the willingness of philanthropy to interrogate its own practices, and Tom, this could even be something that individual, you know, ultra-high-net-worth individuals might have to do, which is interrogate their own worldview to see if there isn't something in their own, the way they act or maybe in the way they run their business, that is actually adding to the problem that doesn't just get fixed by being, by giving money to another problem. But this acknowledging of where philanthropy has contributed and now taking responsibility to do things in a different way, it's a good bridge to talking about other ways to tackle the barriers and to use all of philanthropy's power to change society and the economy for the better.
Now, of course, everybody thinks that philanthropy is huge and resources are big and they're growing and you know, almost every day in the past three or four months, you hear of someone else who's making, $100 million commitment or a $50 million commitment or half of their donor advised fund or something because they are motivated by the moment. But even with all that, I think we can agree that the scale and the complexity of the problem really dwarfs these available funds.
So, but Tom, you and I met around the issue of Bridgespan trying to bring money off the sidelines. Tell us about your, even a little bit more about your seminal research, but some of the innovative ways now that philanthropists have come together to make these big bets, but a little question there, does this working at scale, is there, something implicit in that that makes racial equity hard? So talk a little bit about, you know, build on your earlier comments and.
Oh gosh, okay. Let me see if I can do this quickly. First of all, start with a thesis that there in fact are, and I'm gonna focus on high net worth folks who want to put capital, work, and service of inequities. Let's take that as, and you know, it's not 100 out of 100, but there's a segment out there that really wants to do that. They do not want to go hire 50 people to create a staff to get them to do it. So, okay. So what do you do? People are working hard, they're busy, you know, they're, maybe they're in their sixties or seventies. It's not like they wanna spend full time, every week doing this. So what do you do?
So we started experimenting two years ago, and we noticed that this is just a fact and it's kind of an appalling fact, but it's a fact. The top 2,000 households in the United States, at least 24 months ago, got around 4 trillion in change and assets. That's 2,000 households with median age, around 65, baby boom generation. They were giving away as a percentage of those assets around 1.2% a year. 1.2%, your assets have been appreciating, you know, six, seven, 8% for 30 years. So do the math, they're getting richer, and that's despite pledgers. This is true of everybody, even people that said, I wanna give more money away.
So we said, gosh, there, some of those people really want to give more money away. What can be done to create new models that doesn't require hiring 50 people? And so Lever for Change with MacArthur was creating a mechanism that would allow an individual donor, or a couple to create a competition and fund one or more organizations for tens of millions of dollars. Audacious, which is a collaboration with TED, same kind of model in the sense that donors can come together and fund multiple projects, and I think so far more than a billion dollars have gone to many racially oriented organizations around the globe through Audacious, or a Blue Meridian which is an aggregation fund. Think of it as kind of a private equity fund. So these are exciting new models that actually help unlock, enable capital flow.
Now that's the good news. The bad news is it's still only about this big, it's a rounding error compared to the amount of capital that's out there, and so I struggle with how to unlock more capital to really address racial inequities and especially going to organizations led by people who come from the communities they're serving. We touched on this before, I can come back to it, but I just, that is like a double barrier, that these intermediary platforms are solving in a modest way, but not at a scale way. Not yet.
So I wonder if actually any of you could come at on the notion that if philanthropy is looking to deploy ever larger amounts of money, are we running up against a field of leaders who by other racial dynamics have been held back from growing organizations to the scale that the, you know, that $100 million could be useful? I mean, we have a lot of work to do to be helpful to take away the barriers to growth for organizations led particularly by people of color, La June, do you have thoughts about that?
La June Montgomery Tabron:
I do. I wanna just share a little bit about how we think about this at the Kellogg Foundation. First of all, when we leaned heavily into this work, which was around the eighties, we decided that the only way we were gonna lean into it and think about it and get it right, was to become an anti-racist organization, and actually live the experience within our organization. And so we went on an effort to diversify our staff fully, diversify the leadership. Our board is now 60% people of color, our organization is 45% people of color, and our environment is one that embraces one humanity, everything we fund, we do.
So looking at that we then went to our portfolio, and we say, yes, we give away 5%, but we also have this 95% portfolio and determined that we could make that 95% work just as hard as our grant-making efforts, and so we looked at our portfolio and began to think about the financial services sector, and how that sector was less than 1% women and people of color, trillions of dollars, but yet less than 1% people of color and women, and so we took several approaches. We first set up a mission driven investing portfolio where we said we wanted only emerging managers of color and women to be a part of that portfolio and we set up structures to find those managers and to invest in them.
We then said that we wanted to even do more than that because that was only a small part of our portfolio. So we started creating, partnering and creating funds of color where the people who could not, who had trouble accessing the capital markets, would have special funds where they could access those funds as people of color and receive support and guarantees and other ways of accessing capital that they have been blocked from in the past and then most recently, what we also endeavored to do was to think about the entire financial services sector and say, if we had to change from within, they should change from within.
So we've launched an effort called Expanding Equity, where we're working with some of the largest money managers there and asking them to look at racial equity from their own internal organization as well as in how they invest their resources and many have joined us and they're starting to look at their own hiring practices and their own biases within the organization and how they can reach out and be an ally with us on improving racial equality in their sector and throughout the nation. So we're constantly focusing on this issue and looking at every way we can not only with our money, but with our leverage, with our influence, and with our leadership, to make systemic changes across the nation and the world.
Julia Stasch: Well, not only those three characteristics, but your buying power.
La June Montgomery Tabron:
So there'll be some conditions for someone who wants to be an investment manager in your portfolio.
La June Montgomery Tabron:
John, La June mentions the 5%. You know, this has been a perennial conversation within philanthropy which is, why do foundations actually want to hoard or preserve their, what they call their purchasing power over time? This keeps just like Tom was talking about money on the sidelines with ultra-high-net-worth individuals, this keeps institutional philanthropy money on the sidelines, in spite of, right now, incredible calls to increase spending to help number one, the nonprofit sector survive, to address the pandemic, generated economic devastation, and now to ensure greater equity. How are you just generally thinking about the 5%? But also tell us a little bit about, you know, foundations issuing bonds. I mean, that's a new thing too, so tell us.
Yeah, I'll come back around to the bonds, but maybe just kind of restating a rationale which is that, you know, I think that no one of us on this call and probably out of the 293 participants on the webinar would think that there isn't great need right now, in fact, maybe unprecedented need, in our lifetime. If we take the racial inequity topic, there's such a simple fact in Chicago. I was struck by the fact that in June of ’19, a year before George Floyd was murdered by police, there was the report that came out saying that in Streeterville, if you were a baby born on a certain day, that you had a 30 year lifespan expectancy advantage, over somebody born in Englewood and if you think about the Booth School, I think you have an office in each of those places right there, Gleacher Center in Englewood and you've got your home base closer to Englewood. So the fact that that's the situation in America right now and worst anywhere is in Chicago and then pile on COVID and so forth, there's real need and on this racial inequity front we have to do something.
So to say that knowing this and being focused on these issues, that we are simply gonna do what we've done always, in the same way, it strikes me as a bankrupt way to think about it, and I actually think it's an interesting phenomenon that philanthropy has decided that we're gonna follow what universities or schools or others that have endowments are gonna do which is simply to take 5% every year. The IRS tells us to do that, we'll spend that amount and when things go well, and the times are best on the stock market is highest, we'll spend a little bit more 'cause what that's 5% of that and when it goes badly, like it did last March, we're gonna spend less.
So I actually think we need a different approach to thinking about our spending rates, and of course the rule of 5% is a minimum by the IRS. So we can spend more and under the budget that you handed to me a few years ago, we were actually gonna spend about 7.8% as it turned out as of March so we were already spending more than the 5%. But when we met in March of last year we decided that we want to do something different.
So along with La June, along with the Ford Foundation, along with several others, so a group of five, we decided that we were all gonna commit to giving out billions of dollars more together than we had before and that our spending plan would allow for and the approach the MacArthur has taken, I let La June talk about her own funding plan for it, but we decided along with a couple others to raise bonds.
So to the point La June made about balance sheets, we figured we could, we were of course using the proceeds from the endowment, but we could use the endowment itself to be able to borrow money at a very low rate. So it turns out that we were able to borrow $125 million at a 1.299% interest rate, which is very cheap and then to give that money away, which we are doing and with a focus on the twin pandemics of racial inequity and COVID with a hope to bring about a more inclusive recovery.
So there's the immediate thing, how we do that and how we are accountable to the communities we are seeking to serve and so forth. But there's also the structural question is, can we, should we have a different formula at the foundations to think about the way in which we spend more, when there's greater needs? And you know, maybe even they spend a little bit less, when things are really going well in order to set aside money for the worst days, but that's a conversation to be had in future for sure.
Let me, a quick question for Tom, in your conversations with ultra-high-net-worth individuals, how much are they taken by the moment here? What is the challenge to them for their thinking about their responsibility or their commitment to this moment of racial reckoning?
Well, first of all, I'm probably getting skewed data, (laughs) since I'm talking to people that are leading in philanthropically and you know, are oriented toward these themes, but there's a big appetite, and I think there's huge untapped potential. If we can figure out, we, the big we, how to enable more capital flow. I'll give you one illustration where since this is to some extent, a business audience, where the business has done a disservice, and I was part of this.
You know, over the last 20 years, there's been a migration business concepts into philanthropy, and one of those was, you know, philanthropy as an investment. Well, you know, guess what? You're giving it away, Yogi Berra said, "When you give it away, you don't have it anymore." It's not investment like earning a return, it's charitable contribution.
But that idea of it being an investment has led people to move away from unrestricted capacity building money. So don't fund an organization that needs to buy a computer system, needs to hire chief operator— fund specific programs, don't fund their quote, "overhead." That idea disadvantages smaller nonprofits, community-based nonprofits, 'cause they don't have the capacity to measure things, they can't put together a brilliant PowerPoint, they don't have all that stuff. So it's kind of you know, because you want better results, you force people to think and act in ways that they actually don't have the capacity to do.
So back to your question, if philanthropists said, okay, I'm gonna broaden my sourcing and do what John was saying, I'm not gonna go, it's not the same folks, it's not the same networks. I'm gonna access more resourcing and then, you know what? I'm gonna not measure stuff, I'm gonna judge, and if I find organizations that I think have leaders that are, I'm just gonna fund them, I'm gonna fund the organization, unrestricted money. These organizations need unrestricted funds to build their capacity so they can absorb more money years from now. And they're starving. They're just starving. And big institutions aren't starving. They have development staffs.
They're not—but anyway, so I think there is, there's a way to take advantage at this, I hope it's not a moment in time, I hope it's a new era, to create new role models for people who are willing to move outside their philanthropic comfort zone and do things in ways maybe they haven't done before, but the society really needs.
So one thing I wanna, one of the things that I have always associated with Kellogg and with La June was your efforts, you know, which were launched in 2016, focused on truth and racial healing and transformation. You know, I have to say, when you did that in 2016, I was skeptical. I said, who is demanding this now? And so I wonder if you were actually prescient, and that this is an innovation whose time has come in this country. So how do you think about that at this moment in time?
La June Montgomery Tabron:
Yeah I mean, talk about getting out of your comfort zone. I think we've been out of our comfort zone at the Kellogg Foundation for at least the three decades that I've been there, and particularly when it related to some of our work around racial equity and racial healing.
When we launched our truth, racial healing and transformation effort in 2016, I had many calls from people asking me, why are we funding the soft stuff? Talk about general operating support, nobody would ever find healing, and I had many conversations about that, but actually now that we're looking at this moment what you see is healing is the most hardest work you can do, and it's risky to fund, because you don't know if it's going to happen or not. We've seen centuries where it hasn't happened yet, but we took that risk because we knew that in order for racial equity to materialize, we first had to heal the wounds of racism and that's what our truth, racial healing and transformation work, is all about and we invested $25 million in 2016 on top of $75 million, a few years before on healing.
And that's about building relationships, bringing people together, allowing them to face the truth of racism in their communities and nationwide and globally, but then taking that and turning that into productive transformative conversation that gets at the root of issues and, you know, I agree with Tom that many times philanthropy funds the symptoms, you know, what is manifesting that we need to fix, but we decided we wanted to fund some of the root cause issues. The root causes that when you're separated and you never get to be with someone who's very, very different, how does that impact your ability to come together, build relationships and grow communities?
So our TRHT, truth, racial healing and transformation, work is now going strong and prescient maybe, yes, and needed, definitely, and we'll need to scale and grow in the future and that's why we decided to increase our payout because we see a will now in our nation to address some of these root cause issues and to face some of our long historic systems and structures that don't serve all, and we want to be there and be a partner in this time and increase our payout in order to see if we can be a part of the solution in that regard.
Now, what I'm hearing from the three of you is in the aggregate, actually sort of a mandate for philanthropy which is: acknowledge the past contribution, be a partner in the healing that will change the, you know, the interpersonal, inter group dynamics, but go to the core of practices that have made it hard for people to see the value in organizations and leaders that have eluded them in the past and who have suffered from disproportionate investment. I mean, I see the, you know, just don't take the payout as a, you know, as a floor, think about it differently, challenge even high net worth individuals to meet the moment here. None of them thinks about 5% and so why do we have to, you know, presume that that's the contours of philanthropy? Streamline our procedures, don't make them onerous, don't go out for site visits and, you know, reports that make philanthropic staff feel good, but are burdensome on organization.
There's so much that philanthropy can do to meet the moment, but, you know, time doesn't even permit us to talk about, you know, what some other foundations are doing: shifting to a singular focus on racial equity and justice, new, large scale racial justice programs, like La June, is talking, a racial justice lands on all decisions inside and externally facing larger general operating grants that have the money for growth and that can be used in the, you know, in the way that makes sense for the organization. Then I think also openness that so many foundations are trying to do, being really open to the wise counsel from people in organizations that are closest to these issues.
So as in a moment, I'm gonna turn it over to Caroline Grossman, who's the executive director of the Rustandy Center, but I just wanna say in closing for this portion of the evening, the stakes are really high for this moment. You know, anti-Black racism continues to shape American society, and it's playing out in enormous loss of human potential that the country needs. Loss of life and diminished quality of life, intergroup and interpersonal conflict and really one of the saddest components of it, hopelessness, which actually makes the case for some of the things we've been talking about, sustained leadership and innovation, but also the thing that's gonna make the difference, over time, persistence in the quest for social equity, that's based on moral, economic, political, and legal grounds.
So let me turn it over to Caroline, who's going to take a look at questions and to each of the panel members. Thank you, Caroline.
Yeah, thank you so much. This has been a terrific conversation thus far, and we don't have nearly enough time to tackle all of the fantastic questions that have come in, but we'll start with a theme that's been raised around the nature of systemic change.
So I'm gonna combine two questions in one. One is really the general question asking, is the problem more basic? The structure of philanthropy provides a benefit to the donor without public accountability or without with any of the right of the people to control how those assets are used. So that's the overarching question, and then someone goes even deeper, and Richard says is not part of the problem structural in that philanthropic capital continues to be more concentrated and to move significant amounts is very difficult. For instance, most CBOs and underserved communities, are small grassroots organizations, 65% of nonprofits have budgets under a million, yet the capital flows to the larger organizations. So how do you grapple with those systemic questions?
La June Montgomery Tabron:
I'd like to start and we do grapple with those questions, but I want to share how we've done it at the Kellogg Foundation. 'Cause I think we understand that yes, we're a large foundation, but we can also be a small foundation and meet those smaller CBOs where they are. So we've identified priority places is what we call them and it's states, Mississippi, Michigan, New Mexico, and then New Orleans as a city and Haiti and Mexico, and we've named them our priority places and what that means is we're going to fund in those places for at least a generation, and it's not just one grant, it's a comprehensive look at community change and systems change in these places and fund the efforts of the people and the will and the aspirations of those communities.
So we've figured out a way to break down our resources into doses that are appropriate for the communities and those institutions, large and small within those communities, so that over time because they trust us, they know we're not going anywhere, we're gonna be there right alongside for a generation, changing and making these systemic, comprehensive investments over time. So I think there are innovative ways. We don't, just because we have a large investment portfolio, we don't have to limit ourselves. I think creativity and innovation has entered into philanthropy, and you see it in many different ways.
Great, thank you.
I may weigh in on that. I'm not sure I'm gonna answer the question exactly, but with individual philanthropists there's kind of a different dilemma. The pattern for the last hundred years has been, you know, people make money, they give away a little bit of it at the end of their lives, and then when they pass on it goes to the government, it goes to kids, and it goes possibly into a foundation set up in perpetuity. I didn't do a lot of analysis around this quote, "wealth transfer," of the wealth that's out there.
That's what is likely to happen, which means to the extent there's philanthropy out there, it's gonna start flowing in 20 years and it's gonna pay a nickel a lot of dollars for the following hundred years. The interesting question is how do you get some of that money to be more giving while living? This last week Chuck Feeney of Duty Free stores and Atlantic Philanthropies was broke, he gave away his last dollar, something like eight or $10 billion, amazing. But there aren't too many Chuck Feeneys. So here the philanthropic question is how do you get people to step forward when it's pretty easy to, I'm doing, to do enough and just wait till later on and let other people give the money away or what have you. So it's a different issue to motivate people to do something they don't otherwise have to do.
So I think one of the things that people are getting at with some of the questions around systemic change, is really the theme of this panel to begin with. Not just about race and social equity, but about poverty. So a question came in and said, this year the Economic Innovation Group published a study, the persistence of neighborhood poverty, showing that the turnaround of communities in poverty, in US cities has been very rare. This hearkens to the point earlier on about someone born in Streeterville, someone born in Englewood. Have you seen or been part of successful community turnarounds from poverty? And what do you see as key actions that made that possible? And how can philanthropy be channeled to these activities?
Somebody wanna take a stab at that? I mean, I know both La June and John are working in foundations that are, have some aspect of the work is very place-based.
La June Montgomery Tabron:
Yeah, and you know, what I would say is, you know, when we look at COVID and the impact of COVID, and you see the disparities very clearly, these disparities didn't just materialize by happenstance. The disparities exist because the structures and the systems created those disparities. They were created to advantage some and disadvantage others and so when you think about community change, I think it's interesting to say the communities have to change themselves when no one's interested in changing the systems that created those communities in poverty. And so those real, again, root cause questions about unequal investment in education from all the way to the very early stages of a child's ability to be educated, and that structure exists is based on a property, wealth formula, and if you're in impoverished community and you don't have the wealth of that formula, how are you gonna get the best quality education? And yet then those communities are blamed for their inability to succeed.
And so again, I think the answer is not just how are communities gonna change, it's how are we gonna change as a nation and look at some of these structural systems that we put in place and decide that we want to open them up and give opportunities for everyone, and I think as we take that journey, we'll see some change in people's ability to care for themselves, to access resources to start their own small businesses, where today they can't— and even those that they've started, we've now seen them flounder during COVID. So we have some systemic inequalities that if we don't own up to it through the truth of our knowledge of our history, we are gonna sit back and judge, or are we gonna understand these assessments and we'll go to work, trying to fix some of them.
But certainly vote for La June, but Caroline, would you like me to answer it? Or would you like to move to another one?
Well, I'd like to move to the next piece of this, which is another question that says, can philanthropy do anything at scale really? Is there an example of a philanthropic effort, that's been socially transformative at scale, in the past 30 years? And is that even, now I'm adding, is that the purpose of philanthropy?
I, you know, I think that there are many, many ways in which philanthropy has helped in society and there are lots of easy, easy critiques of philanthropy that one can level. So both of those are true, Philanthropy has done good and philanthropy has done harm. That is true today, that's been true for a long time, and I think you could look at the funding that has been going on in the City of Chicago, funded by MacArthur and lots of other people and you could say, you know, we are no better off than we were 50 years ago, 100 years ago from a racial equity perspective. I think that's fairly straight forward. That may be true in Abuja, Nigeria, where we fund, or in Delhi in India or in Mexico City in Mexico.
Now, does that mean that philanthropy should just give up? I don't think that's the answer for a variety of reasons. One is, you know, ditto, La June, she's doing all these amazing things, and we're right there with her roots striking along with and funding the truth, racial healing, and transformation, in Chicago, along her theory. But I also think it's very important to note that there are a bunch of ways to see success even in the macro sense, not the micro sense of a project, which is philanthropy might take something, that's going okay, and make it way, way better, that would be the transformation scenario. I think that has not been generally the case in community-based philanthropy. You could take something that's going a little downhill and keep it flat. That would be a success, right? We don't usually celebrate that, but it might be a success or something could be going really far downhill and you make it a little less far downhill and help some people along the way, and I suspect that in those latter categories, there is more to be said for philanthropy.
So I would take one particular example that a number of our foundations have helped to fund, which are CDFIs. So these are Community Development Finance Institutions that are having a bit of a moment right now. These are community-oriented organizations that Julia and others at MacArthur helped to fund these starting decades ago, and they have put a lot of people in houses. They have put a lot of money into the hands of people of color who are entrepreneurs and communities and so forth and they have shifted from the kind of standard Wall Street–based, pure capitalist, unfettered Milton Friedman style approach to an economic recovery or economic opportunity to one that actually is more community-based.
So I would say you could look at a bunch of housing units that exist, that wouldn't have existed but for these investments, and those are positive things in terms of people's lives. So I think it does, it matters what your frame of reference is and I think we are continually learning and hopefully from a position of humility that there's more we can do.
Great. Well, I'm gonna end with one last question from a student, from one of our Neubauer Civic Scholars who he, who asks, is it ever the vision of philanthropy to work itself out of a job? How does philanthropy play a role in supporting a world where corporations are paying living wages? By investing in corporations that internalize the costs of environmental destruction, by supporting a public sector, by supporting a world where ultra-high-net-worth individuals do not own a majority of the world's wealth. So it's always, I always say it's the students who ask the toughest questions. So I wanted to conclude with that one.
La June Montgomery Tabron:
I love that question. I've actually stated that question. I would love it if there was no longer a need to push in the issues of equality and racial equity because it existed. I would gladly sit down and stop talking about all of these inequities. So, you know, that's right, and the only way, I guess, in this day today, what I would say to that student and for all of us is we have to do our civic duty. We have to participate in the civic process and be a part, and anyone who's sitting on the sidelines complicit and thinking that somebody else's job it is to fix all this. That's an attitude that won't make the change that we need. We need every citizen of this nation to vote and to participate, and I think with that kind of engagement we can see better days.
Well, thank you. I know everyone could opine on this, but I do wanna make sure we conclude on time. So I will let you have the last word La June, thank you so much. Thanks to all of you, to Julia, John, La June, and Thomas for such a meaningful discussion. I hope that today's event has equipped you with some tangible takeaways and has sparked some new ideas.
Before leaving today I wanna share some information on upcoming ways for you to get involved in social impact at Booth. All of the events I'm about to mention are listed on the events page, at the Rustandy Center's website. So you don't need to frantically write everything down right now. So the next event is our Innovating for Social Equity: How Private Market Investors Affect Change, on Thursday, October 29, a month from today, and if you enjoyed today's event, we invite you to join us for the next one. We'll be examining how private market investors and entrepreneurs may utilize innovative strategies to bring about meaningful change. This will be moderated by Priya Parrish, Booth alum, a managing partner of private equity at Impact Engine, and the adjunct assistant professor here at Booth and the panelists will include Rob Gertner, on Booth's faculty, Brittany Henry, and Mike Asem.
Student group Booth Social Impact is holding an event, this Saturday afternoon, I will be moderating that. It's the kickoff that the student group is holding for their group philanthropy initiative, and this event will feature a panel discussion, on the problems that our city is facing, it really for those students in the group who are focused on place-based innovation and the needs of Chicago this should be a terrific event. Panelists include Jim Castleberry, Xavier Ramey, and Jane Kimondo.
Coming up on October 20, the Chicago Booth Distinguished Speaker Series, will bring Darren Walker to our virtual campus. Darren Walker is the president of the Ford Foundation. So for those interested in continuing the discussion on the role of philanthropy and change today, this should be a fantastic event. We're excited to partner with Booth for it, and it'll be a fireside chat with Chicago Booth Dean Rajan.
I also wanna draw something else to your attention. I gave our last question to a student, and that student is one of the Neubauer Civic Scholars. The Civic Scholars program has applications open right now. So for those of you who are on this call who are students and who have colleagues who work in the social sector, or for those of you who are alumni or leaders in the social sector who may know students interested in an MBA, please think about the Civic Scholars program. For any emerging nonprofit or government leader dedicated to a career in social impact, please encourage them to apply to Civic Scholars which offers tuition awards up to 100% to MBA students who work in a designated 501(c)(3) or for the government, and you can nominate an emerging leader, at the link on this slide.
If you're interested in learning more about the work of Bridgespan, the MacArthur Foundation or the Kellogg Foundation, we encourage you to visit their websites and follow them on social media. It'd be a great way to stay connected with these organizations.
Lastly, we'd love to get your feedback on today's event. We put together a short survey. When you exit the webinar, you'll see a pop-up in your browser with the survey link. We'd greatly appreciate it if you could take a few minutes, it'll be very short, and we appreciate it. Thank you, and on behalf of the Rustandy Center for Social Sector Innovation at Chicago Booth, we hope to connect with you soon.
From a global pandemic, economic devastation, and social unrest sparked by systemic racism, the past six months have laid bare the deep disparities that persist in our country. With billions spent by the public, private, and philanthropic sectors, why do profound inequities persist?
On Tuesday, September 29, the Rustandy Center for Social Sector Innovation launched its new “Innovating for Social Equity” event series, which aims to explore efforts across the philanthropic and private sectors to tackle the seemingly intractable barriers to a society and economy that work for all. Led by four of the nation's philanthropic leaders, the first session, “New Approaches in Philanthropy,” examined how new approaches in philanthropy may be employed to work toward social equity.
REDF CEO Maria Kim, ’12, on why 10 million people are boxed out of the economy—and how social enterprises can help.Overcoming Barriers to Employment
A message from Rob Gertner, Marianne Bertrand, and Christina Hachikian, the Rustandy Center leadership team, on recent events in the world.A Message To Our Community
Among the findings: 84 percent of Indian households have lost income due to the lockdown.How are Indian Households Coping Under the COVID-19 Lockdown? Eight Key Findings