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“You’re not going to finance the movement with conventional financing.” So noted Clark Arrington, who was inducted last year into the national cooperative hall of fame and is a senior fellow at Seed Commons, a community development financial institution (CDFI) that supports worker co-op development in 30 communities. Arrington’s comment encapsulated a central theme of a day-long session on “Money and Movements” held last month in Philadelphia at the 2022 conference of the US Federation of Worker Cooperatives.

At NPQ, we have regularly looked at the question of community finance, including the need to develop more accurate standards for underwriting projects and assessing risk. In Philadelphia, in a series of four interconnected panels organized and moderated by Joe Marraffino, a loan and outreach officer of the Cooperative Fund of the Northeast (CFNE), participants explored these themes. The first panel set the stage by looking at the role of CDFIs and other sources of capital. The remaining three panels offered a series of case studies that delved into the details of what is working—and not working—in the field, as well as identifying potential solutions to ongoing financing challenges.

Mapping the Field of Community Finance for Worker-Owned Firms

The opening panel was titled “Understanding Socially-Aligned Capital.” Its five panelists were Daniel Wallace of Coastal Enterprises Inc. (CEI), a statewide CDFI in Maine; Josh Glickenhaus, director of lending at Local Enterprise Assistance Fund (LEAF), a Massachusetts-based CDFI; Sarah Kaplan, an attorney at the San Francisco Bay Area-based Cutting Edge Counsel, which advises community-based businesses on how to raise money through direct placements and other equity strategies; Zoe Schlag, a partner at Common Trust, which structures conversions of existing businesses into employee-owned trusts that distribute annual profits to workers; and Ellen Vera, director of co-op organizing and development at Co-op Cincy, a nonprofit co-op development incubator and small community-based lender in Cincinnati, Ohio.

Three themes emerged from their conversation:

1. Where Does the Money Come From? Schlag from Common Trust noted that conversions to employee ownership trusts commonly involve some form of seller financing, which is a fancy way of saying that business owners do not receive all the proceeds from the sale of their business in cash, but instead receive a significant portion of these proceeds through payments over time as the sold business generates profit. This part of an owner’s payment can be structured as a loan (ie, with scheduled monthly payments), redeemable equity (ie, shares that can be sold at a later date), or earn-out (ie, payments tied to the level of firm revenue or profits).

Wallace from CEI identified four major funding sources for projects that do not involve seller financing. One is banks, which have long supported CDFIs as a means to satisfy federal Community Reinvestment Act (CRA) requirements to invest in low-to-moderate-income neighborhoods. A second source of money is philanthropy. A third source is government—for CEI, the US Department of Agriculture (USDA) is the leading government source. The final source of funding are what in the philanthropy world are called “high net worth individuals” and in investment-speak are referred to as “accredited investors.”

Different types of funding sources offer varying mixes of costs and benefits. Bank money, for instance, has few restrictions on its use, but is generally more costly (higher interest rate). Foundation money, by contrast, is low interest (if a program-related investment) or free (if a grant), but it is “way less flexible.” Government money shares some of the traits of foundation money.

The last source—individual investments—Wallace noted, has become increasingly important to CEI, with 280 investors collectively providing CEI with about $18 million in funding. For the past dozen-plus years, Wallace explains, the organization has offered fixed-term investment notes, which are for a fixed term (say, three years) but are often rolled over (reinvested) by investors. “It has been a very effective funding source for us,” Wallace said. “Seems to be the best values alignment … They [accredited investors] are completely willing to accept a very modest return on their funds.” To keep its 280 investors engaged and informed about lending performance, CEI offers quarterly webinar updates to its investment note holders.

2. The tension between the need for local knowledge and the benefits of scale: Assuming the money is somehow raised, how is it deployed? “Local autonomy is critical to mission,” observed Glickenhaus. Schlag concurred that “Critical for success is integration of capital scale and local knowledge.” This, however, is easier said than done.

The basic concept behind matching local knowledge and scale is easy to describe. As Glickenhaus puts it, such matching involves a “hub and spoke” model, where the hub is the scaled capital, and the spokes are local co-op development organizations. This works somewhat but is still a challenge.

For instance, Vera at Co-op Cincy is one of about 30 spokes of Seed Commons, the national CDFI where Arrington works as a fellow. Vera observed that a key reason why local capital is important is that “when you’re working in your community, you want to have control.” Seed Commons, she noted, enabled Co-op Cincy to “focus on our community and raising funds locally” without having to worry about financial reporting. Seed Commons also assists with fundraising. The national Seed Commons fund does not support all the projects that Co-op Cincy wants to fund, but, Vera adds, “We have full control of any dollars we raise locally.” Effectively, the highest risk financing, such as early startup, is financed locally, with Seeds Common national financing available to scale up operations.

Kaplan, for her part, called for the development of more of what she labeled “middleware” (mission-driven finance)—funds such as Seed Commons that can help connect local groups with national mission-oriented funding sources and technical assistance to enhance the odds of successful business development. Kaplan also noted that startup costs for new investment funds are high; philanthropy, she said, could play a particularly important role here by enabling these nascent funds get past this startup cliff. Kaplan added that she did not believe that co-ops are higher risk than traditional businesses; therefore, as data becomes available, it should alter risk perceptions among investors, and the ease of financing co-ops should increase.

3. The tension between debt and equity: A major challenge in the field is that while loans to support employee ownership are relatively easily to obtain, equity investment is not. As Wallace pointed out, “Debt is the most conservative” tool of finance available.

Wallace added: “That’s another tension in the CDFI industry,” since most CDFI assistance takes the forms of loans, which typically require monthly payments regardless of business performance. That makes loans more secure for lenders, but often more dangerous for borrowers. Improperly used, Wallace emphasized, debt can be an “anchor that drowns the business.” He explained that to avoid this pitfall, CEI often structures its lending as more “patient capital” that doesn’t require monthly payments.

There also are some lenders, like Seed Commons, which, as Arrington notes, offer hybrid (part debt, part equity) products, where “you don’t repay the loan until you generate a profit.” Often, such arrangements involve the borrower paying back more than they would with a loan, if successful, to compensate for the risk the lender bears for accepting zero payments if the business fails. Still, debt investments remain more accessible than equity investments.

Of course, equity investments bring their own challenges. Unlike the typical monthly payments required for loans, equity repayment comes after profitability is achieved—and if the business fails, the outside investor must accept the loss. This means that cash doesn’t come out of the business until the business can afford to part with the cash. But repayment still needs to occur. As Kaplan pointed out, equity means creating “a slice of ownership to the investor with specific terms.” Efforts to structure businesses to facilitate “exit,” or buyout, of outside investors’ shares through purchases by community-based owners—sometimes called exit to community—exist but are in their infancy.

The Role of Public Policy

Public policy can play a role in supporting co-op development. In Italy, for instance, worker co-ops receive government support. For example, under Italian law, profits that are reinvested in co-ops are exempt from corporate income tax.

In the United States, public support for worker ownership is growing. For instance, Colorado has established a statewide employee ownership office. And since 2014, New York City has provided annual support for nonprofit technical assistance to worker cooperatives. This support now totals roughly $4 million a year.

The New York City Network of Worker Cooperatives (NYC NOWC) programs director, Tammy Shapiro, noted that not just the amount, but the type of support matters. Specifically, in New York City, while city government funds have helped to expand worker cooperatives’ presence, the program structure creates incentives that can get in the way of long-term business sustainability. As Shapiro explained, “We have all of these technical assistance dollars. We haven’t figured out the capital assistance.” As a result, the movement can get “trapped in a cycle of needing to create more and more co-ops, while existing co-ops need more support.” Advocates would like to fix this policy design flaw but in some ways feel locked into the current support structure.

Stories from the Field

It would not be a worker co-op conference if the session did not include direct stories from worker co-ops in the field. One of the co-ops featured is the Drivers’ Cooperative. Based in New York City, the business is structured as a platform co-op, meaning that its members have access to the profits generated by the app. At the conference, Eric Forman, an organizer and cofounder of the co-op, and Michael Ugwu, one of the drivers, spoke about their experiences.

According to Ugwu, 7,000 drivers currently participate as co-owners of the platform co-op. The business has recruited drivers by paying higher rates per mile and taking a lower cut of the fares collected (15 percent vs. 21.5 percent for Uber). At this stage though, most drivers work for both Drivers’ Co-op and investor-owned companies such as Uber and Lyft. Shared Capital Cooperative, a CDFI based in Minneapolis, provided a lead $200,000 investment. Other funding sources include LEAF, a co-op equity group known as Start.coop, and a regulation CF (crowdfunding) raise (ie, a federally regulated form of raising small-dollar equity investments from a large number of individual individuals through an online platform).

Forman estimates that between 100 and 200 drivers are core members who earn a substantial share of their income through the co-op. This, Forman adds, is an intentional strategy. Rather than compete head-to-head with Uber and Lyft and get crushed, the co-op aims to achieve scale first through anchor customers. The overall strategy, as Forman puts it, is to “get large contracts to bring in lots of trips” and reach breakeven early. To date, Drivers’ Co-op has provided customers with over 100,000 trips. Later on, the co-op will organize a drive for individual consumers. Having a mass driver membership in the thousands means that when demand is activated, the co-op will have the ability to scale quickly and meet that demand.

Another co-op featured at the conference was a union co-op known as White Electric Coffee, based in Providence, Rhode Island. As Aketzali Villanueva, a co-op member owner, explained, in 2020, in the wake of the racial justice uprising that took place after the murder of George Floyd, “my coworkers sent a letter to the owner to address social and unfair labor practices. In response to that, all coworkers but two who did not sign that letter were laid off, and those two were told to secure replacement hires.” But the laid-off workers organized, secured their jobs back, and formed a union. When the owner let the workers know that he was putting the coffee shop up for sale, the workers crowdfunded for the deposit. They also secured loans from CFNE and the Fund for Jobs Worth Owning Fund in Massachusetts. “None of that would have been possible but for the unionizing strategy and the organizing,” Villanueva added.

Two other case studies profiled were the formation of the Kalchē Wine Cooperative in Fletcher, Vermont, which was financed with support from CFNE and the Vermont Employee Ownership Center; and an effort by a Black community-led effort in Los Angeles—in which Arrington participated—that raised over $30 million to convert a shopping center into a 40-acre community-owned urban village known as Downtown Crenshaw. The community group outbid the Heritage Development Group, but Heritage was selected by the mall owners nonetheless. Arrington emphasized that the Downtown Crenshaw group was challenging the sale in court on civil rights grounds and as a breach of fiduciary duty. Efforts to preserve other Black-owned commercial property through community land trust structures in Crenshaw continue.

Arrington also emphasized the replicability of the financing structure developed by the group. To simplify, the nonprofit Downtown Crenshaw and an aligned developer became general partners of a limited liability corporation (LLC). They then raised funds through limited partnerships. By definition, as with stock shares, limited partners’ risk is limited to the amount of investment. Meanwhile, governance rights remain with the LLC general partners. Arrington noted that money was actually raised through three partnerships in order to raise funds at different rates of return for different classes of investors, with impact investors accepting the lowest rate of return.

The Road Ahead

Without a doubt, the financing structure that has emerged over the past decade considerably outpaces what existed previously. Many of the organizations described here, such as Seed Commons, did not exist a decade ago. Government support, though small, has also increased considerably. And new innovations, such as the financing strategy developed by Downtown Crenshaw, are also emerging. Even the funds that did exist a decade ago have grown in scale.

Yet, major gaps remain. Near the day’s end, Hendrix Berry of the Massachusetts Solidarity Economy Network observed that such tensions are common. “I want things to move faster, but I’m not in the daily grind,” she remarked. “Sometimes the vision moves fast, and the implementation moves slower, and we get out over our skis. I would like to see more of that vision,10 steps ahead, but moving together.”

This article originally appeared in the Nonprofit Quarterly. See the original article here.

This article is the fifth installment in our series co-produced by Bargaining for the Common Good and NPQ, titled Building a Movement for the Common Good. In this series, we learn how and why Bargaining for the Common Good (BCG) is the right strategy for our times of social crisis, featuring extreme wealth inequality and declining democracy as well as a renewed attention to labor organizing and mass uprisings for racial justice. The authors reflect on how the labor and environmental movements must work together to secure both economic and climate justice in our time.

Moving the US to 100 percent electric vehicles (EVs) is an important part of addressing the nation’s top source of greenhouse gas emissions—the transportation sector. It is also an opportunity to reorganize the auto industry and win workplace democracy, especially in the South, where corporations and politicians have staunchly opposed union rights for workers with stark implications for worker wellbeing nationwide.

It’s only by coming together as a united labor, environmental, and racial justice movement that we will have enough power to take on corporations and their political allies and ensure that this transition benefits people working in the automotive industry, our communities, and our planet.

This is undoubtedly a huge task. However, our current economic and political situation contains some of the ingredients that will allow us to succeed. First, Americans across the country are fighting for policies like the Green New Deal and are committed to a “just transition” for workers. This has laid the groundwork to ensure that workers benefit from and do not bear the burden of our nation’s shift to an economy that is not dependent on fossil fuels. Secondly, the Biden administration is committed to creating union manufacturing jobs, as well as addressing racial injustice and fighting climate change.

But even with this wind at our backs and partial public investment in electric vehicles, greening our economy and growing union manufacturing jobs is a complicated issue. It’s only by coming together as a united labor, environmental, and racial justice movement that we will have enough power to take on corporations and their political allies and ensure that this transition benefits people working in the automotive industry, our communities, and life on our planet.

Working with the environmental and racial justice movements is not new for the United Auto Workers (UAW). In 1970, the UAW, together with the Sierra Club and other environmental organizations, sent a letter to Congress as part of a strategy to address vehicle emissions. They suggested that Congress “make national air pollution standards strong enough that they would, in effect, phase out the internal combustion engine by 1975.”^[1] This was not a one-time action. The UAW’s visionary president, Walter Reuther, was an ardent fighter for workers’ rights, civil rights, and the environment. He fought to stop corporate pollution in the Great Lakes, where many UAW members lived, believing that everyone, not only the wealthy, should have access to clean air and water. Significantly, Reuther threw his clout behind the growing environmental protest movement, and under his leadership, the UAW was the largest financial backer of the first Earth Day in 1970.  According to Earth Day founders, the event “would have flopped” without the union’s support.

Despite this history, the transition to EVs presents many challenges for both the UAW and the Sierra Club as we fight to green the economy and grow union manufacturing jobs. UAW members are rightly concerned that automakers will take advantage of the EV transition to de-unionize auto manufacturing and drive down workplace standards, which has led to an internal push to approach the EV transition with caution. And the Sierra Club is concerned that vehicle manufacturers are moving too slowly to decarbonize and are pitting workers against the environmental movement as a cover for their own lack of investment in electrification and their workforces.

These challenges are real and part of a history of worker and union animus in much of the auto sector. For example, in recent decades, automakers have deployed aggressive lawful (and unlawful) strategies to undermine the rights of workers to organize. To reduce costs, they’ve also replaced an increasing percentage of factory labor through temporary staffing agencies and outsourced to external suppliers the manufacturing of auto components that were once made in house. Often, these external suppliers are non-union and provide inferior wages and working conditions. The drop in union membership following these changes in the industry has allowed employers to drive down standards, resulting in stagnant wages, weaker rights in the workplace, deteriorating working conditions, and rampant use of temporary workers. In the US, real wages in the automotive industry have declined nearly 20 percent since 1990.

Without intervention to secure strong labor standards, the shift to electric vehicles is poised to accelerate these downward trends. EV startups like Tesla have been willing to break the law in order to silence workers who want a union, while newer EV manufacturers like Rivan and Lion Electric (a manufacturer of electric school buses) are rapidly expanding but have yet to agree to a fair process for allowing workers to freely join a union without intimidation. Similarly, about 20 new vehicle battery plants are being built in order to meet EV demand, but battery makers have not yet committed to matching the middle-class wage and benefit standards and voice on the job that current UAW members enjoy as part of collective bargaining agreements.

In recent years, more and more automakers and manufacturers have also been funneling investments to the South, where corporations and politicians have staunchly opposed union rights for workers with stark implications for worker wellbeing. In Alabama, for example, one of the country’s top auto producing states, 40,000 workers are employed at nonunion manufacturers like Mercedes, Honda, Toyota, and Hyundai, as well as at related auto-parts suppliers throughout the state. Despite being a manufacturing powerhouse, Alabama is the 6^th poorest state in the country, with a general poverty rate of around 15 percent and even higher rates for Black (25.6 percent) and Latinx people (29.2 percent). Furthermore, Black communities in Alabama are heavily impacted by environmental racism. Last year, for example, the DOJ launched an unprecedented investigation under the Civil Rights Act to determine if Alabama health departments failed to provide basic sanitation to the predominantly Black community of Lowndes County, exposing residents to raw sewage and related infectious diseases.

The UAW and Sierra Club both know that if the growth of EVs results in real harm to workers, growing economic and racial inequality will not be the only outcome. Such harm will also embolden politicians affiliated with the anti-climate agenda to falsely equate greening the economy with lower working standards and fewer jobs, laying the groundwork for electoral defeats and slowing our ability to mitigate the climate crisis by further politicizing transition.

With this shared understanding, the UAW and Sierra Club are committed to working together to make the transition to a zero emissions future one with fair standards for workers and communities in the US. On the legislative front, Sierra Club and other environmental groups pushed to secure auto industry standards in the Build Back Better Act, insisting that subsidies for EV purchases should prioritize automakers whose workers have the ability to collectively bargain with their employers on everything from wages to health and safety on the shop floor. Although we did not win everything we wanted from the legislative process, the coalition strengthened our ties and has given us clear direction on how we must proceed together on the transition to EVs.

The good news is that, given the transition to EVs, transportation is one of the few parts of the economy with the potential to actually create more union manufacturing jobs as it goes green. And we have the power to make this happen. Most automobile and battery makers want public subsidies, tax breaks, and infrastructure in order to switch to EVs and manufacture in the US, giving the government critical tools to influence company labor and community practices.

We know there is no path to unionize the auto industry in the South without a broad coalition of auto workers and environmental and racial justice organizations.

The UAW and Sierra Club also had a hand in helping to pass the Inflation Reduction Act (IRA), an essential tool to fight climate change and create and onshore more green manufacturing jobs. But despite the best efforts of our strong community-labor alliance, we were unable to secure provisions in the IRA that would ensure that public subsidies prioritize the creation of stable union jobs. (President Biden’s original proposal to include higher subsidies for autos built by union workers was struck down by conservative lawmakers.) This omission means we must work closely with the administration and elected leaders to evaluate each subsidy before it goes out the door and ensure that public dollars promote high-road manufacturing in the EV sector.

But we must go even further and hold corporations accountable for violating workers’ rights. This is especially important in the South, where elected officials collude with automakers to undermine unions and protect weak workplace standards. We know there is no path to unionize the auto industry in the South without a broad coalition of auto workers and environmental and racial justice organizations. Together we will take on the automakers and their political allies when they oppose democracy in the workplace and at the ballot box.

We are also tackling government procurement, and our work together is already paying off. In May, the UAW, American Federation of Teachers, Sierra Club, Chispa, Jobs to Move America, and others launched a collaborative effort to replace our nation’s 500,000 diesel school buses with union-built electric school buses. Doing so will reduce airborne pollutants that predominantly impact low-income students and communities of color, mitigate climate change, and grow union manufacturing jobs. This is proof that greening the economy can work for all.

Unfortunately, we have not yet succeeded in our joint efforts to shape USPS’ procurement of new delivery vehicles. Under Trump Postal Board appointee Louis DeJoy, USPS ordered at least 50,000 new postal trucks to be built, but only 10 percent were to be electric. DeJoy’s chosen manufacturer, Oshkosh Defense, was awarded the bid in part because its experienced unionized workforce has a history of producing quality products on time. But as soon as Oshkosh won the bid, they promptly set up a new facility far from their unionized plant in Wisconsin. Workers in this swing state are up in arms over losing the work, and both the UAW and several environmental groups have sued the postal service to stop the contract. Although USPS has since responded to pressure by increasing the number of electric vehicles under order, we’re fighting to ensure the new postal trucks are 100 percent union-built and 100 percent electric.

The membership of both the UAW and the Sierra Club share common concerns around growing economic and racial inequality, protecting our democracy, and addressing the existential threat to life on our planet. This spring, the UAW held a convention in Alabama with 60 auto workers from almost every automaker in the US (from Rivian and Tesla, to Volkswagen and Hyundai). The Sierra Club was proud to be there. As the work in Alabama and other vehicle producing states grows, we look forward to strengthening the bonds between auto workers and Sierra Club members.

By building community amongst our memberships, deepening our collaboration, and working together with local partners in the labor, environmental, and racial justice movements, we can seize this unique moment and build mass popular support to re-unionize and decarbonize vehicle manufacturing in a way that benefits workers, our communities, and our planet. This is an “all-in” moment, and we can’t do it alone.

Notes

1. “Reforming the Auto Industry,” Give Earth a Chance: Environmental Activism in Michigan, website, http://michiganintheworld.history.lsa.umich.edu/environmentalism/exhibits/show/main_exhibit/pollution_politics/national-air-quality/reforming-the-auto-industry.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

When the New York Times broke the story of an eye-popping $1.6 billion charitable gift to a new, right-wing nonprofit, it raised a host of issues about inequality and democracy, and how philanthropy is connected to both. Former Heritage Foundation head Leonard Leo was tapped to lead the new advocacy behemoth, the Marble Freedom Trust. Reporters Kenneth Vogel and Shane Goldmacher write:

This windfall will help cement Mr. Leo’s status as a kingmaker in conservative big money politics. It could also give conservatives an advantage in a type of difficult-to-trace spending that shapes elections and political fights.

Donations in the billions are rare, and this may be the largest single gift to an advocacy organization ever. Progressives and others are understandably left worrying about how this will change—or distort—the American political landscape.

The mega-organization this gift created also raises another, more practical worry. On the Left, we might reasonably ask whether giving on this scale will crowd us out of the political commons. How do we make progress on political agendas rooted in fairness, equality, and human rights when the Marble Freedom Trust has the power to dominate the airwaves, scoop up lobbyists, and stand in the way of progress on such a vast scale?

We have our own billionaires; can we build our own multibillion dollar institution as a counterweight?

The answer is twofold: we probably can’t—and we most definitely shouldn’t.

Ecosystems and Monocultures

The reason progressives should not mimic the Marble Freedom Trust model is that it is inimical, in the end, to the kind of social changes that progressives seek. We focus on persistent structural inequalities and injustices that advantage a few and disadvantage many. Creating a fair society involves a multiplicity of distinct, evolving, sometimes divergent goals, each accomplished through a variety of policy changes, awareness campaigns, and other means. There is no Grand Unified Theory of social change: some of these goals will complement one another, others will clash. Solutions that are not informed by those who are affected tend not to be solutions at all.

As a strategy for making change in a complex environment, the Marble approach is likely to fail. To see why, we need first to consider the correlation of size and influence in nonprofit advocacy spheres. Marble will no doubt enter the fray with big ideas for social and policy change. In a sense, what makes an idea a big idea is not truth but power: the power to outcompete alternate ideas, to take up oxygen, to be the voice that is heard over the din. A $1.6 billion organization is sure to crowd out competitors on the Right. The ideas that it pumps into the right-wing communications ecosystem will be backed by prestige and airwave dominance, and as the rallying cries heard loudest, they will attract other advocates to the cause. As they do, other ideas will slip into the shadows, even fall out of favor. The likely effect of an organization so mammoth will be to leave the Right intellectually poorer.

The Marble mega-gift reflects a broader trend, a way of thinking that exists throughout the philanthropic sphere. Social change advocacy groups—including the modern American Right, which is now more radical than conservative in the traditional sense—operate with “theories of change” that guide our actions. In the heyday of strategic philanthropy, funders and advocates sought the magic bullet, the strategy that promised to best effectuate the shifts we desired. The right theory of social change, rigorously tested, would point the way to solving social justice problems, if only we had the discipline and collective wisdom to follow the illuminated path.

While strategic philanthropists were demanding testing and assessment to show the impact of an organization’s theory of change, there was also talk of consolidation in the nonprofit sector, mergers of like-minded organizations to create economies of scale. Tacitly, this idea shares the assumption that social change requires only the right theory, or at least, that a more diverse landscape of theories of change is not preferable to a sparser one. Reducing the number of organizations in the fray reduces the number of theories of change, too.

But this level of faith in any theory of change, as I argue at greater length here, is hubris. Social change is complex and mysterious, caused by an array of often unpredictable factors, including the collective action of a wide range of advocacy groups with widely divergent motives. The theories of change that we bring to the project are fragile. They address complex social conditions but necessarily simplify them—social problems are subject to extensive empirical research, and often, there is no consensus about root causes. It is beyond the capacity of most nonprofits to review all the scholarly literature, resolve conflicts, and develop a plan for effectuating change that takes into account the many complexities that create the problems they seek to address.

Getting the diagnosis correct is hard, but acting on it is also fraught: social change is rarely achieved in the way that we expect. For any given issue, there are multiple perspectives, and advocates push for different outcomes from different political directions. No one group achieves meaningful change on its own, and the changes that occur rarely reflect exactly what advocates hope to achieve. Change, in practice, is every bit as complex as the problems that motivate it.

We are not just apt to be wrong when we devise these strategies—it is almost inevitable. Theories of change are useful for strategic planning, but as military planners say, a strategy never survives contact with the problem.

How is this relevant to the issue of mega-nonprofits in the advocacy space? If the effect of Marble Freedom Trust will be to crowd out other ideas—other theories of change—the result will be a greater reliance by the Right on a smaller number of strategies and goals; the fewer the theories in play, the greater likelihood of failure. Meanwhile, as these big ideas fail to deliver, there will be fewer conservative alternates to pivot to. And those conservatives who have invested heavily in losing strategies will be loath to let go—the scale of expenditure that is possible for a $1.6 billion operation will make the myth of sunk costs a powerful inertial force. At this point, course correction will be exceedingly difficult for the Right.

Such are the dangers of an intellectual monoculture.

What is at issue here is not really megadonors but megagifts, donations so large that they create outsized nonprofits that crowd out smaller organizations and the alternative strategies they might create. Progressive megadonors seem to understand this. Fundamentally committed to democracy and equality, most donors on the Left embrace an array of causes and give to a wide range of nonprofits. Mackenzie Scott has become the face of trust-based philanthropy, but she is far from alone. Progressive donors, in a phrase the Skoll Foundation popularized a decade ago, tend to support ecosystems, funding many different organizations and approaches working on the same problem.

It is an apt metaphor for a more promising approach: rather than risking a monoculture, we should cultivate an ecosystem. The way to cure the imperfections and injustices rampant in our society is not with one big idea, but many small ones. Any one theory of change is unlikely to offer the solution we need. But it provides a way forward for activists pursuing a particular social justice goal. Others will find different theories of change more compelling. This is healthy: many theories providing different routes to the same outcome are more likely to succeed where any one is likely to fail.

Though it is sometimes taken as a sign of disunity, the intellectual diversity of the Left is its strength.

Here is where the larger point about theories of change can be made: the problem with a monoculture is not merely that your theory of change might be wrong—it’s that social change is not made by effectuating a correct theory. Change comes from a multiplicity of demands and advocacy by diverse activists and ordinary people. Theories of change help channel people into making those demands. What is important is less that the theories be true than that they be motivating. More theories motivate more people to enter the fray. In great enough numbers, people effectuate change.

Though it is sometimes taken as a sign of disunity, the intellectual diversity of the Left is its strength. Our fractious coalitions that share a passion for the cause and distrust one another’s strategies pump new ideas into our intellectual ecosystem, and as different groups follow divergent theories of change, we address social problems from many sides at once. The many demands activists make ensure that many people push in the same direction, knocking on doors and changing minds, laws, and institutions for the better. The result is multi-directional change that challenges entrenched power and tests alternatives, creates bigger coalitions at the intersections, and tailors solutions to the local needs and lived experiences of constituents and communities.

The way to counter the threat that Marble Freedom Trust presents to the Left is not to accept the arms race, pouring resources into mega-organizations to match theirs. We win, rather, by strengthening the many smaller organizations on our side. A thousand Davids is the best way to match their Goliath.

Philanthropy and Democracy in a Changed Landscape

We should not try to build our own mega-organizations to do battle with the Marble Freedom Trust (and its future ilk) because the likelihood of failure increases when the range of strategies in play shrinks. But there is a second reason: pursuing change by creating mega-organizations like Marble is fundamentally undemocratic.

In one sense, Marble is a reflection of the times. There is something troubling about what this one massive gift says about the nonprofit sector today. The landscape of philanthropy has changed over the last century, as inequality in the US has risen. In Diminished Democracy: From Membership to Management in American Civic Life, Theda Skocpol details how middle-class American donors were a philanthropic powerhouse throughout most of the 20^th century, contributing to civic organizations that looked out for the common good. But as NPQ authors have noted, giving by ordinary Americans is now on the decline, due in part to Trump-era changes in tax policy, but more broadly to wage stagnation and economic pressures on the American middle class.

Meanwhile, the 21^st century emergence of the megadonor casts a long shadow on philanthropy today. Indeed, in a sign of the rising prominence of ultra-wealthy donors making huge gifts, Giving USA recently redefined what counts as a mega-gift: considered anything above $30 million in 2011, they raised it to $450 million in 2021.

Megadonors benefit from a tax system that favors their gifts over those of ordinary people, who under the 2018 tax law largely do not itemize charitable deductions anymore. And, as more and more nonprofits depend on fewer and fewer donors, the legitimacy of civil society is called into question: do nonprofits speak for the masses in a democratic society, or do they, like so many others, answer to an economic elite? As Chuck Collins and Helen Flannery note in Gilded Giving 2022: How Wealth Inequality Distorts Philanthropy and Imperils Democracy, “the nation’s charitable system is in danger of becoming a taxpayer-subsidized platform of private power for the ultra-wealthy.”

Similarly, when the gifts of a small number of very rich individuals dominate philanthropy, it is difficult to see how the field stays true to the goal of solving social problems, for many of these problems are exacerbated, if not caused, by rising income and wealth inequality. Books such as Anand Giridharadas’ Winners Take All: The Elite Charade of Changing the World ask trenchant and urgent questions about the state of philanthropy and the nonprofit sector in this emerging Gilded Age.

This is not to say that many ultra-wealthy philanthropists do not support a robust and inclusive democracy or that they prefer monocultures to ecosystems. There has been excited talk of a new political donor on the scene, crypto-investor Sam Bankman-Fried, who is reportedly willing to commit up to one billion dollars in support of Democratic causes and candidates. His heart appears to be in the right place. As Politico’s Elena Schneider writes: “He’s more motivated by promoting new candidates in safe seats than the battleground combat that decides partisan control in Washington.… He’s guided by an arcane social philosophy that’s obsessed with doing the most good for humanity by tackling neglected problems, which led him to investing in certain types of endangered-species candidates.…”

It is not enough to promote a philanthropic ethos that has large donors spreading their largesse widely. We must address the rapid decline in giving by the rest of us and the financial and policy factors behind it.

There are some benefits to top-heavy philanthropy as it has developed. Large gifts have played an instrumental role in the growth and strengthening of the nonprofit sector in general, and the Left’s advocacy capacity along with it. And when the wealthy give with an ecosystems approach, they elevate the voices of the marginalized by supporting the many groups working on issues from community organizing to impact litigation, bringing these groups’ concerns into the national debate.

But in politics as in philanthropy, megadonors on the Left and Right have an outsized influence. It is not enough to promote a philanthropic ethos that has large donors spreading their largesse widely. To ensure a fair society, we must address the rapid decline in giving by the rest of us and the financial and policy factors behind it. The result will be good for the nonprofit sector and for democracy.

Marble, however, represents a more direct threat lurking in megagifts on the Right. We live in a time when American conservatives’ commitment to democracy is in decline, as evidenced by the warm welcome the Conservative Political Action Committee (CPAC) recently gave to Hungarian Prime Minister and promoter of “illiberal democracy,” Viktor Orbán. Against this background, the Marble mega-donation is especially salient. Autocratic governance is the logical extreme of the Big Idea approach to social change. In this strange moment, the rise of American illiberalism and the Marble Freedom Trust may be two sides of the same coin.

The classic argument for democracy has always been that it generates more ideas, more innovations, and thus better outcomes than systems where change is instituted from the top. The argument for ecosystems philanthropy is the same. Progressive nonprofits and philanthropists stand on the right side of this divide. The answer to the threat posed by Marble Freedom Trust is to sow many seeds, supporting and strengthening as many progressive institutions as possible. This approach will not only outcompete Marble Freedom Trust—it is a model of how a pluralistic democracy ought to work.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

Michaela! I’m so glad you found us okay! Welcome. What do you think?

Michaela

I think it’s amazing. I’ve never been on a film set before.

Darren 

You haven’t? Well, then I have to give you the tour. Sasha, this is Michaela. She’s our newest production assistant. Michaela, this is Sasha Sobel.

Michaela 

Of course, hi! I love your work. It’s such an honor to meet you.

Sasha 

Pleasure’s all mine. I’m so glad you’ll be joining us.

Nia 

Let me introduce you to our lighting designer, Darren. He’s the only Black person to have ever won an Oscar for lighting design.

Michaela 

Wow.

Nia 

Darren, this is Michaela. She’s joining us as a production assistant.

Darren 

Awesome. Nice to meet you, Michaela.

(To Nia) What do you think of this?

Nia 

For the final confrontation? I think it looks good. You know I love everything you do.

(To Michaela) This is for our new short. It’s going up at the Whitney next spring.

Michaela 

It looks amazing.

Nia 

Oh, I almost forgot to introduce you to Cass.

(To Cass) Cass, this is Michaela, our new P.A.

(To Michaela) Michaela, this is Cass. She’s my intern for now, but she’s off to do some crazy awesome things. She’s an animator.

Michaela 

Oh, awesome! So nice to meet you.

Cass 

You too! Would you like a lunchbox?

Michaela 

Sure.

Nia 

We don’t really ask around here. We just assume everyone’s hungry.

Cass 

And after a 12-hour shoot, it’s usually a safe bet.

Nia 

I forgot about the time. Let me tell you a little bit about the job before you get started next week.

Michaela 

Oh, yes, please. I’ll take all the knowledge I can get.

Nia 

Well, it’s pretty simple. For Monday’s shoot, I need you to help out Irene, our main actor. I’ll give you her call sheet morning of, and that’ll have everything you need to know. Your job is to get her where she needs to be on time. Budgeting in an hour for hair and makeup top of day, 20 minutes for costume changes, and at least for Monday, 30 minutes to an hour for transportation from location to location. Does that sound okay?

Michaela 

Yeah, it sounds great. That’s simple enough.

Nia 

Awesome. It’ll be clearer when you see the call sheet. I really just called you down here so you can meet everyone.

Michaela 

No, I really appreciate it, thank you. It was amazing to see what you’re working on and to get to meet the team.

Darren 

Oh shit, I’m late. 

(To Sasha) Sasha, we gotta get on that call.

(To Michaela) But, let me walk you out first. Let me know if you have any questions between now and Monday. You have my number?

Michaela 

Yes, I do.

Darren 

Awesome. See you next week.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

Dax-Devlon Ross: Writing my piece was important for me, because I have struggled as a consultant over the last couple of years with organizations who are really stuck with topographic like, superficial shift, and using Black people as a means by which to communicate to every, and signal something. And I’m just, I see the exhaustion, the pain, the way in which even, in particular, horizontal violence and horizontal harm really shows up relative to Black leaders in organizations—that they have been hired under the auspices of leading this organization but actually having to do a lot more than that.

And [I] wanted to maybe assert that there was some other means by which we could address these challenges beyond naming white dominant culture. I feel like there’s a stuckness sometimes that happens in only naming that, because it becomes naming what we don’t want, and [we] aren’t spending enough time around naming what we do want. And that’s hard to do that, because it requires courage. But it also requires some rootedness in history and understanding that we brought a lot to this country. We’ve actually taught this country—like, I always think about—this country has an obsession with liberty, but we actually brought a lot of the ideas around freedom. And so when we’re talking about freedom as a concept, I often find that most people in scholarship don’t actually draw upon Black thinking for anything. I bring [W. E. B.] Du Bois into some of my work with some of my clients. They’ve never met Du Bois! I’m like, how do you not, how can you have never even interacted with Du Bois? How do you not interact with these thinkers? It’s because they don’t really perceive us as having intellectual contributions. So I just really wanted folks to understand that the call-in isn’t just to bring new Black bodies into the space and Brown bodies into the space, but to bring in the actual ideas that we’ve always been contributing. And so they hear what I’m trying to present, and they assume, in a very narrow way, that in some ways it doesn’t include them. I’m like, actually, we’ve always included y’all. That’s all we ever do. We have always been inclusive. This whole notion that we’re narrow and only think about Black people, that’s just a lie.

This article originally appeared in the Nonprofit Quarterly. See the original article here.