Purdue Pharma is the company that brought OxyContin to market and now stands accused of helping to spawn the opioid crisis that has devastated the lives of millions of Americans. The drug made the Sackler family, which owns and controls the firm, extraordinarily wealthy. The family has used some of its fortune to create the Sackler Trust and the Mortimer D. Sackler Foundation, which has donated tens of millions of dollars to nonprofits, including the Guggenheim Museum and the Metropolitan Opera in New York.
As the Sacklers face lawsuits and damaging press, the recipients of their largess are now under pressure to return or decline the money. The Metropolitan Museum of Art was the most recent prominent nonprofit to do so. And Britain’s National Portrait Gallery in March spurned a planned $1.3 million donation from the trust. (Nonprofits aren’t the only ones returning Sackler money: Elizabeth Warren’s presidential campaign recently donated to charity a $2,500 contribution from Beverly Sackler.)
On the face of it, this rejection of “blood money” might seem laudable. But if we start applauding the National Portrait Galleries of the world, we must ask ourselves larger questions: What money is “clean” enough to accept, and who decides? And at an even more basic level: Why do nonprofits need to exist at all? Why aren’t the profits that are donated to charity instead taxed to fund government programs whose scale nearly always exceeds the reach of all nonprofits combined?
Sources of Wealth at Odds With Mission
The nonprofit world is riddled with contradictions. Clothing manufacturers with abysmal global labor practices fund job-training programs in America. Makers of sugary beverages give to obesity-prevention programs. And fossil-fuel companies invest in environmental protection. These are the wellsprings of so much philanthropy.
Of course, not all philanthropic money is blood money, but the Sackler story raises questions about organizations whose survival depends on billions in corporate profit and personal wealth, a significant percentage of which is generated in ways that create or exacerbate the very problems nonprofits aim to solve.
Charitable organizations around the world do essential work. Without us, there would be immensely more suffering and injustice. Neither we nor the people we serve can afford rigid sanctimony, but the paradigm under which we operate needs to change. A quick glance at the consequences of the ruthless pursuit of profit — the accelerating global climate crisis, rising income inequality, persistent poverty — make plain that the sins of ill-gotten wealth cannot be washed away merely by donating to charity a fraction of one’s fortune.
Given this complex reality, what should nonprofit leaders, foundations, and small organizations that cannot afford to toss away a seven-figure donation do? Here are a few recommendations, gleaned from my 10 years of running Capital Good Fund, a nonprofit consumer lender.
Public policy is crucial.
No matter how many tons of food a supermarket donates and a food bank gives away, the impact will never equal that of an increase in food-stamp benefits or the federal minimum wage. This is just one of countless examples in which a slight change in public policy — government benefits, housing, health insurance, transportation, the tax code — can dwarf the reach of any one organization.
But public policy work is chronically underfunded: It’s not considered “sexy,” the way many direct-service programs are; it can be costly; it can take months or years to succeed — and sometimes it fails. Myriad organizations at the local, state, and federal levels are doing policy research and advocacy. They must be fully funded with flexible and patient money.
How money is made often matters more than how it is donated.
Most of the hundreds of billions of dollars in tax-exempt endowments, including family and community foundations and donor-advised funds, is invested for maximum return. This model makes no sense. Just as benefiting from the fruits of the Sacklers’ labor is of dubious merit, it’s ludicrous for a foundation to invest $1 million in, say, ExxonMobil and then donate $75,000 in annual dividends to Greenpeace.
Yet this is effectively how foundations operate. Defenders of this system, such as Larry Kramer, president of the Hewlett Foundation, argue that impact investing is riskier and less profitable, ultimately reducing the funds available for charitable giving. (Editor’s note: The Hewlett Foundation is a financial supporter of the Chronicle of Philanthropy.)
But it’s far more logical for an environmentally minded foundation to invest that $1 million not in ExxonMobil but in community solar projects and residential energy-efficiency, even if this means that the grant maker donates a smaller amount — maybe $25,000 — to Greenpeace. It’s simple math: The status quo does $75,000 worth of good, which may well be outweighed by the $1 million in ExxonMobil; the impact-investing model does $1.025 million of good (the funds donated plus the impact of the investment itself). We must, in short, radically rethink how charitable endowments are invested but also how pensions and retirement accounts are invested.
Have honest conversations.
In the grant maker-grantee relationship, foundations wield the power. But nonprofit leaders are in a unique position to bring up key issues with their rich and powerful backers. For instance, Capital Good Fund targets predatory payday lending by providing an alternative product, and we talk to many of our financial supporters about the importance of fixing the payday-loan system (with mixed success).
Others can advocate for their corporate supporters to raise the minimum wage for their employees, reduce their greenhouse-gas emissions, or hire more minority-owned businesses in their supply chain. That said, some of these conversations may require a level of candor that will jeopardize the funding relationship, which may or may not be worth the risk.
Thing big and think small.
Change happens one person at a time, but it also happens within a broader economic, social, and environmental framework. Much of the suffering and illness nonprofits seek to prevent result from systemic failures — of policy, of governance, of law. We cannot get so lost in the difficult day-to-day work of serving people that we forget about those failures. In fact, our work gives us insight into the causes of, and solutions to, injustice. This is knowledge we should share with other nonprofits, grant makers, and policy makers.
Be bold.
It does nonprofits and those we serve no good to take actions that threaten our funding or support — such as speaking out on matters of public policy unrelated to our missions or refusing a grant for ideological reasons — but only to a point.
Each of us has to decide where to draw that line. But clearly, there are moments when history and our conscience call on us to act in a way contrary even to the financial and operational interests of our organizations; times when, as Martin Luther King Jr. said, silence becomes betrayal.
For some, it’s when they are offered money from the Sacklers. For the Refugee and Immigrant Center for Education and Legal Services, it was when Salesforce offered a $250,000 grant, which the organization turned down because of the company’s contract with U.S. Customs and Border Protection. For King, it came in 1967 when he spoke out against the Vietnam War, knowing he might harm the civil-rights movement by alienating supporters and angering the president and other key legislators.
We are right to denounce the Sacklers for the deplorable ways in which they acquired their wealth. But our denunciations ring hollow if we are unprepared to acknowledge that nonprofits depend on the profits of a broken economic system. Recognizing that reality, in turn, raises even more difficult questions — questions that, if we are serious about social change, we must ask and act upon.
Andy Posner is founder and CEO of the Capital Good Fund, in Providence, R.I.
