TCE Leadership Blog: Why This Bond?

In June of this past year – after we had witnessed the combined effects of COVID-19, the unjust killings of George Floyd and Breonna Taylor, and the divisive, white supremacy-promoting tactics of the Trump  administration and its allies – we had a deep and profound conversation in our boardroom at The California Endowment.

Frame by frame in our virtual boardroom, we heard from each of our 17 board members — each one reflective of the great diversity of California’s communities.  The sentiments expressed ranged from hurt and outrage to impassioned pleas to strive for transformative systems change — all through the lens of racial and health equity and justice.

Today, nearly six months later, the seeds of that generative and transformational conversation have borne fruit, and we are pleased and honored to announce that The California Endowment will finance $300 million in social bonds designed to help transform the outrage and pain of this past year into systems and policies grounded in justice, inclusion, equity, and community wellness for ALL Californians.

The COVID pandemic has unmasked the structural and racial inequalities that have served as an inescapable through-line in our nation’s history.  Black, Brown, Native and immigrant communities have been ravaged by the pandemic; our seniors and elders, likewise.  Frontline, low-income, restaurant, and retail essential workers have suffered disproportionately.  Gaping holes and deficiencies in our health, public health, public education, housing, and criminal justice systems have been laid bare for all to witness, and for the vulnerable to continue suffering from.

COVID has reminded us and taught us that there is a disconnect between the America we aspire to be, and the America that we are at present.  And the matters of race and racism are the root cause of this.

At The California Endowment, we are not laboring under any delusion that we have the power or ability to address the myriad, thorny layers of issues that undergird structural inequality in our nation.   But as a philanthropic institution dedicated to improving the health and wellness of all Californians, we are morally obligated and accountable to do what we can – and in meaningful partnership with community leaders, organizers, and advocates proximate to the pain and impact of injustice.  In the spirit and ethos of Dr. Martin Luther King, Jr., we believe in peacefully utilizing the tools of democracy and civic participation to drive needed change.

To quote one of our board members during the “open mic” portion of our board meeting: “No more gradualism – this is a moment for transformation!”

The Bond

With the need for transformative systems change in mind, we decided that the best course of action was to do our part to optimize the ability and capacity of organizers, activists, and advocates to continue to drive needed change and to trust their instincts and strategies on how to do so.

Over the past decade of our Building Healthy Communities work, we have tried to be better listeners as a foundation.   You have helped us see how philanthropy can be a more effective partner with whom recently departed civil rights icon John Lewis called “Good Troublemakers” – those who carry on the fight for Dr. Martin Luther King’s vision of “The Beloved Community” in America.  Our grantee-colleagues in social justice are demanding more general operating support grants and fewer short-term, project grants in their efforts to be Good Troublemakers – and we will do better in the years to come on this front.  In our programmatic evaluations and grantee feedback surveys over the years, we have also heard a fair amount about the need for foundations to invest in “infrastructure support” for the work of these leaders and their organizations: leadership support and training, organizational capacity building, communications and narrative change support — and space and opportunity for the purposes of envisioning strategy, alliance-building, and healing.

The bond proceeds are intended to support what we call “the power building ecosystem” in California: the infrastructure and institutional support for the hundreds of nonprofits across California that fight day-in and day-out for systems and policy change.

While this brand of support may be viewed as neither particularly innovative nor inspiring to much of our foundation world, we see it as critical.  Support the work and trust the leaders.

For our grantees, partners, colleagues and friends, here are the top seven things to know about how we plan to implement our $300 million social bond package:

  1. The bond-raised dollars are in addition to our planned, core grantmaking for the decade to come. As we commit to investing in infrastructure and institutional support for “Good Troublemakers” we want to avoid raiding core grant support for our grantees.
  2. The reason we opted for a social bonds approach — rather than simply spending funds from our corpus — is that it allows us to make bigger investments in infrastructure support now, while preserving our grantmaking budget for the work of our grantee-partners over the long term. With the cost of borrowing money at an all-time low, we could simultaneously provide a significant infusion of investments in this pivotal, transformative moment in our nation’s history while also better protecting TCE’s corpus of assets over a 30-year period. This approach was inspired by recent action from our colleagues at the Ford, Kellogg and Mellon Foundations, as well as the Duke Endowment.  Like a mortgage on a house, we will have 30 years to pay it back.  And we will.  We also plan to avoid tapping into our core grants budget to pay off the bonds. Therefore, the resources from our social bond offering will be in addition to our normal core grants.
  3. We plan on making the social bond proceeds grants within a two- to three-year period, but we anticipate that these will be longer term, multi-year grants. We have the opportunity to engage with many grantee and foundation partners, as well as our program staff, in the development of grantmaking strategies — and we will take the coming 12 months to do so.
  4. The dollars we invest from the social bonds should not be viewed primarily as “addendum” or as extra dollars for individual grantee organizations to support what they are doing now. These grants will have a focus on infrastructure and institutional support for those who lead California’s “power building” systems work. The investments from these social bonds are designed to answer the question: What resources or institutions do you need to win the systems-change battles you are fighting for?  These battles for transformation have been engaged in the areas of health reform, juvenile and criminal justice, inclusive community and economic development, and health equity in public education.
  5. It is our hope that the social bonds affirm an emerging, welcome development in California philanthropy: tearing down the perceived divide between funder and grantee. We have heard from grantees that more opportunities for shared vision-making and shared strategy-making are critical.  We must examine and build on opportunities to have statewide policy and systems change driven by regional approaches but incubated at grassroots levels.  If we want to see a different result – “transformation rather than gradualism” – we will need to think together and work together differently in the years to come.  We hope our implementation of the bond proceeds embodies the spirit of trust-based philanthropy – and does so unabashedly through a racial justice lens.
  6. While we emphasize infrastructure and institutional support, we neither seek nor expect the creation of any “new” institutions that will bear the TCE name or brand. None of the outputs of this work will be owned, operated, or managed by TCE.  While we intend to turbo-charge the work of systems change through our resources and investments, we know that the communities we serve are the lead drivers on the path of needed change.
  7. Lastly, we intend to execute the social bonds plan with racial equity and inclusion in mind. Fifty percent of the bond underwriting will include minority-led firms, as Black-led underwriting firms Loop Capital and Siebert William Shank partner with JP Morgan to move the investor recruitment and execution phase forward.  Likewise, on the legal front, our bond counsel, Hawkins Delafield &Wood, LLP and our underwriting counsel, Nixon Peabody, have each named women partners in their respective firms to lead racially diverse legal teams in support of TCE’s social bond offering.

In closing, a reminder that our follow up strategy to Building Healthy Communities – generically labeled as our “Beyond 2020 Plan” – is a ten-year, $1.5 Billion commitment that focuses on three grantee-informed big ideas: Power building, Reimagining Systems, and Health for All.  The bond proceeds strategy is additional, is hopefully synergistic, and signals that given the course of events over the past year, we must endeavor to stretch ourselves farther.  We hope that you agree.

Peace and blessings,

Professor Shawn Ginwright, TCE Board Chair

Bishop Minerva Carcano, TCE Board Vice-Chair

Dr. Bob Ross, TCE President & CEO





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