- Environmental causes have traditionally attracted only a small share of philanthropic support in the United States. But that may be changing as the impacts of climate change worsen and awareness of the links between a healthy planet and healthy society rises.
- Sonali Patel, a partner with The Bridgespan Group, which advises nonprofits and philanthropists on strategy, told Mongabay that philanthropy can be particularly impactful in the climate space by supporting innovative ideas that may be too risky for investors or governments and putting resources into areas that may not otherwise attract attention.
- “Currently only 1% of spend on climate change comes from philanthropy,” she told Mongabay during a recent interview. “Philanthropy can play a unique role in funding where either the risk is too great or there is a whitespace.”
- Patel said that her background in management consulting, helped prepare her for a role that involves working with organizational leaders to design, develop, and implement strategy. Having sound strategy in place can help position NGOs for what Patel could be the start of a trend that emerged during the pandemic: A rise in donors providing unrestricted funding to organizations they trust.
Environmental causes have traditionally attracted only a small share of philanthropic support in the United States: Between 1-3% of annual giving, depending on how the issue area is defined. But that may be changing as the impacts of climate change worsen and awareness of the links between a healthy planet and healthy society rises.
Sonali Patel, a partner with The Bridgespan Group, which advises nonprofits and philanthropists on strategy, told Mongabay that she’s seeing more interest among donors in climate issues. She said that philanthropy can be particularly impactful in the climate space by supporting innovative ideas that may be too risky for investors or governments and putting resources into areas that may not otherwise attract attention.
“Currently only 1% of spend on climate change comes from philanthropy,” she told Mongabay during a recent interview. “Philanthropy can play a unique role in funding where either the risk is too great or there is a whitespace.”
Of those gaps, Patel cited ocean acidification and climate equity as examples.
“The entire [ocean alkalinity/ acidification] field has about $5M of investment but the potential in the field is large,” she said.
On climate equity, she pointed to the gains that could be realized by strengthening Indigenous peoples’ rights.
“Indigenous peoples are the best stewards of current sinks and have few legal rights to their land. Protecting their rights and livelihoods can have significant impact on preserving our natural sinks and increase the economic productivity and support the communities who will be most impacted by climate change.”
Patel’s insights are informed by helping clients ranging from India’s Tata Trusts to the Rockefeller Foundation to the National Geographic Society design and scale programs to maximize their impact in the areas where they work. Before joining Bridgespan, she worked at Bain & Company, a management consulting company, where she focused on healthcare.
Patel said that her background in management consulting, both via an MBA and her time at Bain, helped prepare her for a role that involves working with organizational leaders to design, develop, and implement strategy.
Having sound strategy in place can help position NGOs for what Patel could be the start of a trend that emerged during the pandemic: A rise in donors providing unrestricted funding to organizations they trust. That approach enables recipients to put donor money to work where it can be most effective, while reducing some of the management costs associated with oversight and evaluation.
“Funders are now engaging in more trust-based philanthropy, which does not require hefty reporting requirements that take up significant amount of staff time,” she said. “We have for years been advocating for more unrestricted funding, and during COVID we saw a number of donors move in that direction and hope it will continue.”
Patel spoke about these issues and more during an August 2021 conversation with Mongabay Founder Rhett A. Butler.
AN INTERVIEW WITH SONALI PATEL
What is your background and how did you come to work in the nonprofit and philanthropic sectors?
I graduated from Duke University and The Wharton School of Business. I started my career after business school at Bain & Company, with a focus in the healthcare practice. In 2014, I made the shift from Bain to The Bridgespan Group, where most of my work is focused on our philanthropy practice, specifically within climate change and global development.
You previously worked at Bain & Company in the healthcare practice. What did you bring from those experiences to your current areas of focus?
Bain is a great training ground for any professional. I gained a deep appreciation for how to develop robust strategy, support organizational design based on those strategies, and work with a variety of organizations and leaders. That skill set has served me well at Bridgespan.
Has the pandemic affected philanthropic strategies among your clients? And if so, what are the areas that now seem to be attracting more attention?
Many of our philanthropy clients both increased the amount of funding and redirected their philanthropic spend to support urgent needs during COVID. We also saw new philanthropists enter the space as they saw it as a moment of great need – focusing on giving within their local communities and to those individuals most affected by COVID (e.g., immigrants, people of color, frontline workers). Bridgespan developed a variety of resources to support philanthropists and nonprofits during the time on our COVID resource page on our site.
We also saw an increase in unrestricted giving, which we continue to encourage, but it is too early to tell if it is a lasting change across philanthropy. Similarly, 2020 also saw an increased number of organizations indicating intention to fund racial equity (we just wrote about this in a recently released report with PolicyLink.) Again, it is too early to tell if this is a lasting change as numbers have not been fully reported, nor is it clear how donors are defining racial equity. That said, we are cautiously optimistic.
Given that philanthropic capital is only a small fraction of the money flowing into climate change mitigation at present, what do you see as the role of philanthropy in this space?
Currently only 1% of spend on climate change comes from philanthropy. I believe more dollars will begin to flow to climate change (one example is Bezos Earth Fund), and that philanthropy can play a unique role in funding where either the risk is too great or there is a whitespace. One example is ocean alkalinity (ocean acidification). The entire field has about $5M of investment but the potential in the field is large. There are multiple projects that are piloting different methodologies that require risk capital at the moment which is where philanthropy can play an outsized role.
Another area that comes to mind is climate equity, particularly globally. Indigenous peoples are the best stewards of current sinks and have few legal rights to their land. Protecting their rights and livelihoods can have significant impact on preserving our natural sinks and increase the economic productivity and support the communities who will be most impacted by climate change.
MacKenzie Scott has upended philanthropy through her charitable strategy of giving large amounts of unrestricted funds so NGOs can spend the money where it’s most needed. Do you see this as a one-off, or an approach that might become more widespread?
I am not going to comment specifically on her giving.
We have for years been advocating for more unrestricted funding, and during COVID we saw a number of donors move in that direction and hope it will continue. Bridgespan has done research on the benefit of unrestricted funding in our “pay what it takes” work.
Impact investing has grown into a major industry. Do you see impact investing intersecting with philanthropy or is it a separate space?
Both institutional and individual philanthropists engage in both philanthropy and impact investing. Rockefeller is a great example of institutional philanthropy and I have worked with many individual philanthropists who participate in both.
Specific to climate, we have seen many successful funds for impact investing (Prime, The Engine, etc.) that take risks on interesting technology that can have scaled impact on climate once proven. It is a great way to de-risk potential technology such as Carbon Dioxide Removal (CDR).
Are you seeing any changes among your clients in how they evaluate the impact of their giving? For example, is monitoring and evaluation something that’s becoming more widespread?
I do not see a change in monitoring and evaluation of individual organizations or impact, although funders are now engaging in more trust-based philanthropy, which does not require hefty reporting requirements that take up significant amount of staff time.
That said, we also see where there are gaps in evaluation. For example, in the carbon credit market there are many low-quality carbon credits traded. The hurdle needs to increase to ensure that credits are given for carbon that is permanently stored through independent evaluation.
Are you seeing any shifts in why people get involved in philanthropy?
We are at currently at 1.2 degrees Celsius of warming and the latest IPCC report says 1.5 degrees is inevitable by 2040. The impacts of climate change are also beginning to affect developing countries, for example the recent flooding in Germany and the heat wave and forest fires across the western United States and make climate change tangible to everyone. I believe recent news and the increasing tangible effects of climate are resulting in more people asking “How I can I help make a change, even if I do not have the resources of a billionaire.”
The critical issue now is helping direct resources to underfunded sectors and where the resources can have the most impact.
In the past decade, it seems like we’ve seen the development of more funders’ collaboratives, like the Climate and Land Use Foundation (CLUA), for example. Have these always been around or is this a trend in philanthropy?
Bridgespan has worked with multiple collaboratives over the years and think it is an important platform. We have a paper in SSIR on collaborative philanthropy, as well as one we launched in February of 2020 on collaborative philanthropy in India.
In regards to climate change, CLUA is doing great work and directing resources to some of the most marginalized individuals impacted by climate change. There are other platforms focused on equity such as CLIMA Fund as well.
We are also seeing individual philanthropists learn from each other and coordinate to increase the impact of their philanthropy by pooling resources to certain fields or organizations.
Do you see significant differences in philanthropy between the United States and other countries?
Giving globally has regulatory hurdles. For example, for a U.S. donor to grant to an organization in India the organization must either have FCRA approval or a registered US 501c3. Across the globe for a U.S. donor to give to a non-profit entity, equivalency determination is required. Those hurdles mean giving towards issues of equity, or environmental justice, are often focused in the U.S. and not globally where there is equal, if not greater, need.
We face daunting challenges. What do you see as the key levers for driving the kind of systemic change required to transform business-as-usual approaches?
I think the key role philanthropy can play in climate change, is providing the risk capital to enable pilots of technological advances. The path to success doesn’t require multi-billionaires to fill the $4 trillion gap, but a mindset shift to engage in the issue and provide funding in under-funded areas. Aggregated platforms could be one avenue, or small collaborations amongst individuals. But in the end, we need a mindset shift that everyone can have an impact through their dollars towards averting a climate disaster.
