18th Jun 2024 Gemini 1.5 Pro
Brad Leibov, CEO of EarthShare, discusses the organization's 30-year history in the environmental movement. EarthShare operates a donor-advised fund (DAF) and focuses on workplace giving to increase funding for environmental causes.
EarthShare partners with companies to offer environmental giving programs as part of employee benefits. They curate a list of vetted environmental non-profits, local and national, to which employees can contribute. EarthShare acts as an intermediary, processing donations and regranting funds to non-profits as unrestricted general operating support, which is crucial for non-profits to thrive. What distinguishes EarthShare is that it grants out donations nearly immediately, unlike the majority of DAFs.
EarthShare and moving hundreds of millions of dollars to the environmental sector, it really became a very valuable source of support for environmental nonprofits all sizes because these are funds that are unrestricted and they're directly supporting the general operations of really some of the leading non-profits operating today.
DAFs are the fastest-growing sector of philanthropy, with over half a million accounts in the US. While they offer tax benefits and streamline giving, concerns arise around payout rates and transparency. Leibov highlights the staggering statistic that less than 5% of funds are paid out annually across the industry, with a mere 4-5% of total DAF funds supporting environmental causes.
Globally, many different studies correlating these numbers and many studies indicate it's more like 2%. It depends on how you treat things like animal rights in those calculations.
This means a minuscule fraction of philanthropic dollars are actually reaching environmental organizations on the front lines of the climate crisis.
Leibov argues that DAFs affiliated with banking institutions face incentive misalignments. With fee structures based on assets under management, these institutions benefit from retaining funds rather than disbursing them as grants. This creates a conflict of interest, as maximizing payouts to support environmental causes would directly contradict the financial interests of these large institutions.
The banking system isn't going to save the planet. Let's look at Fidelity, you know, as an example. Fidelity Charitable, which is affiliated with Fidelity, the financial services company, is the largest donor-advised fund sponsor in the U.S. They warehouse over $48 billion in assets, and they earned over $112 million in fees.
Leibov emphasizes the critical role of general operating support in sustaining non-profit organizations. Unlike restricted grants for specific projects, general operating support provides flexibility for organizations to allocate funds where they are most needed. He advocates for trust-based philanthropy, urging donors to recognize that non-profit leaders are best positioned to determine how to utilize resources effectively.
General operating support really covers the core of operations. It helps support your overhead, your management, your fundraising team, your business. facilities, your equipment, your telecommunications, your IT, so you name it, these are things that are just absolutely fundamental to supporting an organization.
Leibov criticizes the common practice of DAFs investing in traditional stock and bond portfolios, many of which indirectly support fossil fuel industries. He advocates for shifting investments towards mission-aligned institutions and strategies that are actively working to decarbonize portfolios and support a regenerative economy.
What we want to see is an alternative. So at Earthshare, we have an investment policy and and an organizational mission to only bank with financial institutions that align with our mission. So we hold our assets at a mission-aligned bank that is not engaged in any fossil fuel financing. And we invest only in public equities and direct investments that align with our environmental mission as well.
He highlights the need for greater transparency and donor education regarding the environmental impact of their investments, urging a move away from simply "checking a box" for ESG options without understanding the underlying assets.
In addition to his work with EarthShare, Leibov is actively involved with One Earth, a non-profit focused on driving collective action to address climate change and biodiversity loss. He is particularly drawn to their bioregional approach, which prioritizes funding based on ecological boundaries rather than political ones.
One Earth is a pioneer in developing bioregions across the world. They've long recognized that there are many areas on our planet that are dramatically more underfunded than other areas and that the solution set for whether it's a bioregion conversion of agriculture to regenerative whether it is related to land and ocean protection or whether it relates to renewable energy we have significant needs and if we start looking at the landscape of the planet within natural bioregions rather than political borders that represents a fresh approach to driving resources and on the ground action.
He commends One Earth for its strong scientific foundation, effective communication strategies, and commitment to leveraging technology for data-driven decision-making in identifying and addressing funding gaps.
Leibov concludes with a powerful call to action, urging listeners to:
He emphasizes that time is of the essence, and a collective shift in mindset and financial practices is crucial to addressing the climate crisis effectively.
Airtable