In the Pacific Northwest, a Funder That's Been Ahead of the Curve

A pod of wild orcas travels north in the waters of the Salish Sea. Photo: Monika Wieland Shields/shutterstock

The Puget Sound in Washington State is part of the Salish Sea bioregion, famed for its striking mountains, coastline, and redwood forests. Sea birds teeming in its wetlands are a reminder that the area contains the second-largest estuary in the United States. Its shoreline, climate, and nutrient-laden waters support a rich array of wildlife, from fish, birds, mammals (including orcas and otters), and more than 3,000 species of invertebrates such as crabs, sea urchins, and octopuses.

But the Salish Sea is suffering from the effects of development, overfishing and climate change, including an uptick in storms, floods and ocean acidification. Pollutants and habitat loss have ravaged fish and wildlife populations. Since 2011, 113 species, including the blue whale and humpback whale, were listed as at-risk or vulnerable to extinction throughout the region. Melting glaciers and warmer waters have also caused a rise in sea levels, which threatens wildlife habitats as well as those of coastal dwellers. Floods, wildfires and smoky air have become the new normal.

The Russell Family Foundation (TRFF) has been working to combat these threats as part of its broader mission to improve its home region—most recently with $6 million in impact investments and another $380,000 in grants announced in October. Prior to this, the Gig Harbor, Washington-based foundation awarded grants totaling $41 million to Puget Sound counties over the past 17 years. Its funding includes major support to organizations representing low-income and/or communities of color, who are typically the hardest hit by climate change but often marginalized in environmental planning and the sustainability movement itself.

Collaboration and ensuring everyone has a seat at the table is crucial, according to CEO Richard Woo, who will retire next month after 20 years at the foundation. Discussing TRFF’s theory of change, Woo told Inside Philanthropy that the foundation “truly believes that in order for there to be sustainable solutions, those solutions need to come from the community itself. And the foundation has definitely made it an issue to raise up and empower communities that historically have not had as much of a voice.” 

How to better engage front-line communities in grantmaking decisions is a hot topic in philanthropy right now. Impact investing is even hotter. As Woo steps down from TRFF, he leaves behind an institution that can serve as a model to other foundations looking to move more boldly on both fronts.

An Inclusive Approach

The funding announced in October offers a good snapshot of how TRFF operates. It includes support for work to protect communities and life in the Salish Sea region, efforts to stop displacement of the African American community in Tacoma’s Hilltop community, and a push to strengthen a network of community banks and credit unions in the region. “What’s best for marginalized groups is best for the community as a whole,” Woo says. 

Among the new donations is a $100,000 grant to the Latino Community Fund of Washington which is the fiscal sponsor for Front and Centered (Communities of Color for Climate Justice) to support the work of the Salish Sea Collective. The collective is a coalition of 20 environmental and social justice organizations in the Puget Sound working to protect a marine ecosystem that spans the United States and Canada border. (Interestingly, fewer than 5 percent of the people in Washington State can identify the Salish Sea, even though many live right beside it, according to a recent survey by the SeaDoc Society at UC Davis and Oregon State University.)

TRFF’s grant supports the Salish Sea Collective’s work on equitable strategies to address water quality and pollution, and sea conservation with coordination from Front and Centered and the Washington Environmental Council.

The foundation also made a $75,000 grant to Clean and just Puget Sounds through the fiscal sponsorship of the Latino Community Fund of Washington, which supports organizing and education work among low-income communities and communities of color to protect the waters in and around Puget Sound. Water contamination from corporate polluters, the foundation notes, has hit low-income and people of color the hardest, making it hard for them to fish and farm on their land. 

Included in the foundation’s latest round of impact investments was a $1.5 million loan commitment for the redevelopment of a former Rite-Aid property in Tacoma’s Hilltop neighborhood—an effort led by residents of the predominantly African-American community. 

Woo explains that the old Rite Aid building was close to the light-rail system and in the heart of the African American community, which has been hard hit by rising home prices. “There’s a spirit of change: It’s important to have an anchor and cornerstone in that community and to support local leaders and community residents to determine the best use of that space,” he says, noting that the community is in talks with the Tacoma Housing Authority. “They are the ones who need to shape that future.”

The foundation, he says, is also committed to preserving biodiversity. Among other investments, TRFF made a $250,000 loan guaranty to the land conservation group Forterra for the purchase of property along Hood Canal in Seabeck, Washington. This 297-acre property is a “hub of biodiversity,” according to TRFF, which notes that Forterra is buying the land for conservation and environmental program purposes.

“Flipping the Switch”

TRFF began as mainly a grantmaking foundation, Woo points out, but the foundation took what it called “an exploratory leap” into impact investing in 2004. It upped the ante in 2013 when it joined the Divest Invest movement, which called on foundations to divest from fossil fuels and invest in climate change. Since that time, the foundation’s portfolio has surged from 7 percent mission-aligned investments to 80 percent.

In 2018, the foundation released a report on its journey in impact investing and its seven key takeaways. “We’ve been learning from our mistakes while charting a way forward from a little impact investment to a lot,” Woo says. 

One of the early mistakes involved the loss of an impact investment worth $500,000. The foundation converted the loan into a grant, then helped the program staff get more training in financial literacy. Woo remembers that the foundation discussed the loss publicly “to help prevent others from going down that same path,” and used it as experiential learning to improve. As he recalls with a laugh, Jane Russell, the foundation’s co-founder once said to him, “Richard, I don’t mind paying for your mistakes, I just don’t want to pay for the same mistake again and again.”

Through hard work and experimentation, TRFF now has the enviable record of not only 80 percent of its endowment in impact investments, but returns over a five-year period that surpassed the blended benchmarks by nearly 3 percent. “We’re flipping the switch to a better kind of investment—one that’s moving from private gain to the common good,” Woo says. “It has been a long journey to get where we are today, and some of the richest learning came from things that were not planned.”