This book is about power — who has it, and how it’s used
By: Letting Go
Tags: Impact Investing, Participatory Grantmaking, Power, Philanthropy

This is an excerpt from the Introduction of Letting Go: How Philanthropists and Impact Investors Can Do More Good By Giving Up Control. You can learn more about the book at lettinggobook.org.

This book is about power — who has it, and how it’s used.

The two of us work in a field that could be broadly defined as the “social sector”: the foundations, impact investment funds and aid organizations that collectively go about funding solutions to the world’s thorniest problems, from economic inequality to climate change.

This kind of work can be very appealing, especially to a certain kind of young person trying to figure out how to use their privilege for good. Activist Courtney Martin has called it the “reductive seduction of other people’s problems,” writing that “if you’re young, privileged, and interested in creating a life of meaning, of course you’d be attracted to solving problems that seem urgent and readily solvable.” She notes that “There is a whole ‘industry’ set up to nurture these desires and delusions… encompassed so fully in the patronizing, dangerously simple phrase ‘save the world.’”

But over the past few years, we, like many of our pedigreed peers, have become more critical of this industry, its power dynamics, and our own role in it.

The social sector, like many global institutions, is at a moment of reckoning.

Books like Edgar Villanueva’s Decolonizing Wealth and Anand Giridharadas’s Winners Take All have punctured the air of righteousness around the architects of social change. Twenty years into philanthropy’s so-called golden age, the unchecked rise of global inequality raises questions about just how effectively those trillions of dollars have been put to work.

For us, and for many of our peers, this reckoning boils down to a reckoning with our own egos. When you’re watching a movie (particularly a bad one), you end up relying on a “suspension of disbelief” to get you through the plot. Some scenarios might seem like a stretch, but you’re willing to hold back judgment in service of the larger story. Similarly, when you work in the social sector long enough, you learn to suspend disbelief about the power of your own judgment. If a problem is out there, it must be solvable. If it’s solvable, then it must be within the reach of your own logic, reason and intellect. It’s a perfect philosophy for a generation raised on the can-do idealism of “The West Wing” and the clean logic of Freakonomics.

For most of our careers, we’ve leaned into that suspension of disbelief. Between the two of us, we’ve developed what is sometimes incredibly shallow expertise on an incredibly wide variety of topics, from voting rights to vertical farming. We’ve frequently been positioned as experts on topics that six months prior we knew next to nothing about.

The idea to write Letting Go came out of a conversation we had at a conference in 2019.

The conference was about impact investing, which had grown from a niche topic into a field representing half a trillion dollars’ worth of capital. It was held in an immense former stock exchange; the main hall was filled with investors from around the world who had paid upward of $1,500 to mingle and learn about the field.

The investors saw suffering in the world, and they nobly aimed to heal it. The ideas they were discussing — greenhouse gas reduction, microfinance, sustainable infrastructure — were all important. Still, the people in the room were mostly white, mostly male and almost entirely from the United States and wealthy European cities. Several times during the conference, investors (and, to their credit, the conference organizers) pointed out the lack of voices in the room from marginalized communities.

The investors were talking mostly to each other, about solutions to problems that many of them had never experienced. The setting of the stock exchange, with its cavernous ceilings that caused sound to bounce back, completed the picture of an echo chamber of privilege.

To change this dynamic, we need to change who has power. We need to challenge our assumptions about authority and expertise and rethink who has a voice in making decisions about our collective future. In short, we need an entirely different approach to the problem of problem-solving.

This book is about an approach to problem-solving that we call participatory funding.

To steal a phrase, it’s the biography of an idea. The idea is both simple and powerful: What if we shifted decision-making power away from expert grantmakers and investors? What if we gave that power to people with lived experience of the problems at hand?

You might be familiar with the idea of participatory funding in the context of local government. City budgets are essentially moral documents — setting the priorities for how tax dollars are spent. In the past few decades, cities from New York to Barcelona have experimented with handing over direct control of segments of city budgets to citizens, a process called participatory budgeting. In December 2020, the Seattle City Council voted to cut the police budget and simultaneously create a $30 million fund for social services that will be distributed by popular vote — a plan to defund the police that is more substance than slogan.

The operating philosophy behind participatory budgeting is that the best way to solve a problem is to follow the lead of the people who know it best. It narrows the distance that inevitably exists in any form of representative democracy: between mayor and citizen, federal and local, those who govern and those who are governed.

Can this approach be applied to the social sector? As you might have guessed, grantmaking and impact investing as practiced today are far from participatory. Both fields are shaped and dominated by a homogenous group of decision-makers: mostly white, mostly male and mostly from the West. And both fields are distinctly undemocratic. Decisions are made from the top down, behind closed doors, in a secretive and opaque way.

But that’s starting to change. Over the past decade, dozens of foundations have begun to experiment with participatory funding, which involves shifting power over funding decisions to community members who will be most affected by the outcomes. In this book we’ll tell several stories of participatory funders, including:

How Village Capital’s peer-selected investment process evolved into a viable alternative to traditional venture capital, and a check against the danger of digital recolonization in Sub-Saharan Africa.

How a group of racial justice activists in Boston created a new model for community-controlled economic development, the Boston Ujima Fund.

Why experimental foundations like the Disability Rights Fund and Young Feminist Fund are driving a growth in the popularity of “participatory grantmaking”.

Letting Go

In 2011, Kristi Kimball and Malka Kopell, two grantmakers experienced in participatory funding, wrote an essay in the Stanford Social Innovation Review about philanthropy’s control complex.

“We would probably be better off as a society,” they wrote, if the decision-makers in the nation’s large private foundations took up surfing:

“Why? Because surfing is about letting go….Surfing is incredibly humbling, an encounter with the enormous power, beauty, and unpredictability of the ocean. No surfer would attempt to change the shape of the waves or the schedule of the tides, because these forces are far beyond any one person’s control. Just as men cannot control oceans, individual foundations cannot control social systems….Such an approach underestimates the vast power and complexity of the systems in which foundations are attempting to intervene.”

Letting Go is a call to action for the social sector. We are asking grantmakers and investors to embrace previously unthinkable levels of intellectual humility. It will be hard, but it’s necessary in an increasingly complex world. In the Foreword, Edgar Villanueva envisions a world where at least fifty percent of the people who make decisions about funding have direct lived experience. We explore what that could actually look like, and how we might get there.

This book is not about any single cause, but rather about the entire spectrum of progressive causes. If you care about the success of the environmental justice movement, Black Lives Matter activism, or LGBT rights, it’s important to understand how the money moves behind the scenes at the world’s largest foundations. If you’re passionate about impact-driven tech startups, or the success of minority-owned small businesses in your neighborhood, then it helps to learn about the flow of funding in the opaque world of finance.

There are plenty of books about how to bring a strategic approach to grantmaking, or how to go about investing for good. What we’re suggesting is something entirely different: that the best way to step up for social change is to step back — and that the best way for powerful people to make an impact is to simply let go.