“There’s a time and place just for grants, and there’s a time and place for gender lens investing, but if you can find that sweet spot where they come together, that’s what gets me going,” says Katherine Pease, Managing Director and Head of Impact Strategies for Cornerstone Capital.
For Pease, the two strategies of gender lens grantmaking and gender lens investing can play a complementary role, particularly when using the Donor Advised Fund (DAF) as an investment vehicle. For women’s funds and foundations, Pease sees an expanding use of DAFs to create new ways to reach women at all levels of society with resources to grow their power.
Pease is particularly attuned to the world of nonprofit foundations, having been Executive Director of the Gill Foundation for many years, which focuses on supporting LGBTQ rights. She knows from the inside how hard it is to find and maintain donors in the nonprofit world, and how urgently many progressive organizations need funding. She is a big fan of how Donor Advised Funds can be used specifically to support some of the most marginalized causes, including women’s rights, LGBTQ rights, and climate funding.
Pease is familiar with one of the main critiques of Donor Advised Funds — namely that they allow donors to park money somewhere without any requirement that the money be disbursed to charities. But if this money is being invested into organizations and causes aligned with the donors’ values, it can mean that the donor has more flexibility, while the host organization has a piece of funding to use in the future.
Pease gave the example of a donor creating a DAF at a women’s fund, and then investing that money to make loans to small businesses owned by women. The donor could make the investment by putting the money into a CDFI that specializes in microloans for women.
“My question is, if we flip the script and we help encourage donor advisors to put that money toward gender lens impact, then we’re talking about a totally different story,” says Pease. In addition to that money being held by a nonprofit that aligns with the donor’s values, now the donor can also reinvest the money multiple times before disbursing it in grants.
“Many women’s funds are now starting to create gender lens specific investor pools, so that donor advisors can know that the money is being invested for women and girls, either locally or globally,” says Pease. “That changes the whole perspective on this pile of money is just sitting her doing nothing for a really long time.”
Regarding the second big critique of DAFs — their lack of transparency, Pease was open to the idea that more transparency with DAF’s might be a good idea. “I generally think more transparency is better, and I think that is particularly true once you put money into the public trust, which is what you do when you give your money to a public charity in a DAF.”
But Pease is clear that DAFs are not a replacement for old-fashioned grants to nonprofits. “This is not in lieu of grantmaking. It’s a both/and situation,” she says.
Put it All Into Gender Lens Investing
The other important idea that Pease wants to get across to more women donors is the idea that they can put all of their foundation assets or personal assets into gender lens investing. “They often think they can only do it with a piece of their capital, but you can use a gender lens with all of your capital.”
How you do that can range from taking a more implicit or explicit approach, and it can frequently involve funding at the intersections of related issues like climate change, education, and women’s rights. A number of the foundations, families, and institutional endowments that Cornerstone Capital now serves have the goal of aligning all of their investments with Sustainable Development Goal #5, gender equality, and use a blended capital strategy to get at this target in multiple ways.
Pease gave the example of the Ms. Foundation, which Cornerstone Capital has worked with to move all of its assets into gender lens investing. In a report that Pease co-authored with Clara Duffy, entitled Mobilizing Donor Advised Funds for Impact Investing, the authors describe how the Ms. Foundation for Women allows donors to open DAFs that are put toward the foundation’s endowment, which is 100% invested in strategies that focus on gender. At the time that the donor wants to make grants with the money, the Foundation provides strategic recommendations with a gender focus.
Giving Circles + Donor Advised Funds = More Community-Based Collective Giving
With regard to giving circles, Pease says that middle-class donors have the opportunity to use DAFs in order to do more strategic investing and donating together with others. “Giving circles are an increasingly common method by which donor advised fund holders are using their DAF assets to support the charitable causes they care about. Less common is the practice of establishing DAF giving circles that allow DAF holders to align their assets in order to make impact investments,” says Pease.
“There is an enormous untapped potential for DAF holders to come together through giving circles to make impact investments in a variety of areas, such as making low-interest loans to women-owned businesses. As women come together to support a shared agenda of prosperity and opportunity, I think we will find that giving circles that provide opportunities for making charitable contributions and impact investments will become an ever-more important tool in the toolbox of women donors and investors.”
A lot is happening these days in terms of the giving circle movement. The Gates Foundation will be hosting a convening in April (more on that in a future article) specifically focused on designing infrastructure support for giving circles. Additionally, in September, leading feminist donors and gender lens experts will be coming together in Austin, Texas to plan ways to increase impact through both investing and grantmaking. All of these gatherings are places where women will be talking about and further exploring how to use DAFs (along with other financial and charitable vehicles) to increase impact for women and girls.
Pease referenced the centrality of women and girls to global sustainability. “On Project Drawdown, which ranks the top 100 solutions that could most comprehensively address climate change, Educating Girls and Family Planning are numbers 6 and 7,” says Pease. This should give philanthropists significant pause to think about how to align their strategies, whether using DAFs, foundation giving, or individual giving through grants. “When women and girls have power over their decision making, when they are educated and have access to reproductive health care, women and girls are change agents on our planet.”
I’ll be perfectly honest: I think DAFs should be transparent and have a mandatory payout. I hope when we get a new President and a more responsive Congress, these requirements will be put in place. In the meantime, it’s fascinating to watch the growth of DAFs for collective giving, and to see how women in particular use these vehicles to address equality, inclusion, and systems change.
“They’re imperfect,” says Pease, acknowledging that there are real risks to DAFs as they exist now. “There are advocates who are seeking to change the rules around those risks, and certainly a case can be made for why that’s a good thing.”