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March 5, 2018 / WRAG

Tainted money: Is the problem that there t’aint enough of it…or is there way too much?

By Tamara Lucas Copeland
President, Washington Regional Association of Grantmakers

Many years ago, I worked with governors and state legislators in the South on the issue of infant mortality. Babies were dying before their first birthdays at a higher rate in this region than in other parts of the country. We were trying to understand the causes and the solutions and we were discussing how to raise funds to support the work.

One particular meeting hadn’t been underway very long, when the availability of funding from tobacco companies was mentioned. These companies wanted to support the Southern Governors’ Association and the Southern Legislative Conference, but there was a dilemma. Smoking during pregnancy was a major contributor to low birthweight births. A debate quickly emerged when a meeting attendee, the president of a major medical school, said “The problem with tainted money is there t’aint enough of it.” Wow.

Two recent events brought that story to mind. WRAG is having discussions on how to diversify our funding base, a conversation that is always simmering in social profit organizations. But the stronger contributor to re-surfacing this incident was last month’s inaugural Cafritz Lecture on Philanthropy with its focus on foundation investments. In her lecture, Meyer Memorial Trust’s Chief Investment Officer, Rukaiyah Adams, raised the reality that many philanthropic institutions are investing their endowments in industries that are creating the very problems that their charitable dollars are then used to address. She gave the example of foundations investing in the oil industry and then prioritizing the environment in their grantmaking.

As a funder, when was the last time that your institution truly examined your investment portfolio? Are you investing in industries that contribute to a stable, healthy, equitable society or are you solely focused on which investments bring in the largest financial returns? And as a nonprofit, even if financially strapped, do you, or would you, take funds from an industry that is contributing to the problems that you are trying to address?

My experience is that nonprofit leaders will usually respond, “no” calling that kind of support “blood money.” They can immediately see the cause and effect relationship. However, I suspect that the potential causal relationship between foundation investment portfolios and negative social outcomes may not be as immediately apparent for funders.

As Rukaiyah Adams noted, at most foundations, the finance and investment side of the house doesn’t talk with the program and grantmaking side. The program officers may not know how the funds are invested because a casual look at investment tools may present innocuous fund names not revealing where the funds are invested. For the finance side, their focus may solely be on bringing in the highest ROI. Rukaiyah, thank you, for prompting a new and important conversation within philanthropy. Alignment between investment policy and grantmaking goals will lead to greater social good. Wow.

One Comment

  1. Timothy McCue / Mar 6 2018 11:40 am

    Tamara, thank you for your thoughts on this challenging reality. While Foundations begin looking at their investment portfolios, non-profit development staff continue to struggle with do they or don’t they submit that request or work with that corporate donor.

    Years ago when I was on the grantseeking side of things writing grants at a public health department, our team struggled often with this very issue. We often debated whether to go after grants from Coca Cola, grocers and many others. Years later, I’m absolutely certain that countless non-profits still struggle with that question with the added pressure of potential backlash if the community doesn’t like a particular source of revenue.

    The issue certainly showed its face during last year’s Pride festivities with protestors even shutting down part of the parade route over various corporate sponsors that were in the parade. Further complicating the matter is that oftentimes it is the LGBT groups of a particular company’s HR system that put in the requests for that type of sponsorship and then march in the parade. Hence a dual edge sword of protesting x corporation without recognizing that fellow LGBT brothers and sisters work, many proudly so, at those same entities. Last summer, I remember pondering what role philanthropy should or could play in alleviating the need for this “tainted money.” Are foundations even partially responsible for non-profits even having to reach out and pursue those corporate dollars and “tainted money.”

    This is a very complicated matter with no easy solutions in sight for foundations or our grantees. Foundations that take the brave step of examining their investment portfolios for such conflicts may simultaneously want to review the annual reports of their grantees to fully understand the breadth and depth of this issue from the other side.

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