Eight years ago, the Ford Foundation’s trustees appointed me president, the honor of my life. I pledged, then, that we would reimagine the way we use all of our assets, physical and financial. I’ve long believed that, across philanthropy, it is necessary but not sufficient to grant only the five percent required by the United States tax code. We also have a responsibility to use the other 95 percent, and beyond—to harness the full power of our assets in the fight for a more just and fair world.
Over the years, my colleagues and I have strived to optimize our resources in the best interest of our grantees, communities, and society at large—in a balanced, but ambitious way.
Almost five years ago, this was the guiding principle behind our $1-billion commitment to mission-related investments, which are proving the potential of capital markets to deliver both a financial and social return. Last year, during the worst of the COVID-19 pandemic, the same philosophy led us to finance a $1-billion social bond, effectively doubling our payout rate and injecting a capital booster to our grantees during a period of uncertainty and peril.
Today, we are pleased to announce another major step in the same direction: Going forward, the foundation’s endowment will not invest in any fossil-fuel-related industries. As with any significant decision in a dynamic organization, this choice did not come without trade-offs. One of the implicit challenges of preserving our grantmaking power in perpetuity is managing an endowment that grows ahead of inflation. As my partner on this journey Eric Doppstadt, Ford’s remarkable chief investment officer often reminds us, this is no easy endeavor.
Although just 0.3 percent of the Ford Foundation’s endowment is directly invested in fossil fuel companies, we take our duties as fiduciaries seriously and we’re mindful that if we put restrictions on our investments, we may forsake some amount of return for future generations.
At the same time, however, the Ford Foundation’s trustees, leadership team, and I recognize a risk graver than forsaken value: There is no perpetuity without a planet.
We face profound challenges on an existential scale. Fires and floods are worsening—and on top of it all, the distortion of our market system, and the inequality it’s produced, have overloaded the burden of these disasters onto the backs of the poor, the marginalized, and the vulnerable. I believe that the intersecting crises of climate change and inequality threaten to make an outmoded vision of perpetuity, at best, obsolete—and, at worst, destructive.
As a global community, our window for necessary change is closing. If we only do what we’ve always done, the worst may well sneak up on us while we’re safeguarding some old, rosy vision of economic perpetuity.
And so, here at the Ford Foundation, we’ve decided, our imperative must be to marshal the combined power of our resources, our policies and practices, and our position of leadership to help protect the planet from the existential threat of climate disaster. This includes renovating our headquarters in New York City to meet the LEED Gold certification standard.
With our endowment, our strategy is twofold: First, we commit to not doing harm. The consequences are too great to justify any additional investments in fossil-fuel industries.
Second, no less important, we will look for opportunities to invest in enterprises and funds that are fueling new technologies and capabilities, contributing to a renewable sector that is strong, diverse, and varied enough to sustain a green-energy economy.
This work is a crucial course correction. But in order to fully address the crises of our time, it must be paired with the generative work of investment in an alternative paradigm—a more sustainable way of life.
As a large institutional investor, the Ford Foundation can and will play a meaningful role here—by continuing to evolve our own endowment policies, thereby joining the vanguard of a wider change across our economy.
Absent change, sooner or later, our markets are sure to collapse under the weight of a poisoned planet. A system that treats environmental, social, and corporate governance targets as marketing is doomed to fail in an era of environmental, social, and governance catastrophe; as the problems we face multiply in both kind and proportion, so too should our solutions.
To be sure, some argue we should move further, faster. If climate catastrophe is so dangerous, one might ask, why won’t you just divest all of your fossil-fuel-related assets right now?
I respect this critique. I, too, am cautious of the word “wait” which, as Dr. Martin Luther King Jr. wrote, too often means “never.”
But the reality is, the relatively small segment of our endowment currently locked up in fossil fuel investments has not increased since 2017—and retreating from our limited partnerships or other positions at a loss would drain much-needed resources from our grantmaking. So, we reject the zero-sum thinking that our approach needs to be all or nothing, immediately or never. Instead, we are laying the groundwork for a forward-looking, evolving strategy—one that serves people and the planet alike.
Reaching this juncture has been made possible by colleagues at other foundations willing to generously engage with me, offering thoughtful and wise counsel, in particular Ellen Dorsey (Wallace Global Fund), Stephen Heintz (Rockefeller Brothers Fund) and Senator Tim Wirth (UN Foundation). Their courage, wisdom, and righteous impatience inspired me immensely.
Each of them helped me navigate my own personal journey toward aligning our foundation’s investments and values. In addition to Eric Doppstadt, I’m enormously grateful to Tom Kempner, chair of our board investment committee, board chair Francisco Cigarroa, and all the Ford Foundation trustees who were encouraging advocates for transforming our principles into policy and action.
To address the climate crisis, we must join together, with urgency and purpose. Let’s continue building on this new foundation—to ensure the work of justice lives on in perpetuity, as does the planet on which our very survival depends.