Where Are Foundations on Climate Change? “Much Alarm, Less Action,” Says New Report

Foundation leaders are overwhelmingly concerned about the urgent threat from climate change and the damage it will wreak on the people and places they care about, yet even with relatively limited philanthropic funding for the crisis, most who do not currently support such work see it as outside of their mission, according to a new survey.

Even among climate funders, who tend to see global heating as an “extremely urgent” challenge, very few dedicate more than 1 in 5 of their grant dollars to climate action, according to “Much Alarm, Less Action: Foundations and Climate Change,” published Tuesday by the Center for Effective Philanthropy.

Even as some major new players like Open Society Foundations, MacKenzie Scott and Jeff Bezos have entered this field in recent years, the survey is sobering for anyone hoping grant dollars will rise to match climate rhetoric. There are, however, some reasons for optimism, albeit narrow ones. Almost half of foundations surveyed plan to increase their support for climate action, for instance, and none plan to decrease such funding.

The report offers rare, valuable insights into the thinking of both climate funders and those without any such grants in their portfolios, including many anonymous quotes from foundation leaders detailing their thinking. One of the most oft-repeated numbers in climate philanthropy is ClimateWorks Foundation’s finding that just 2% of global giving goes to climate mitigation. The report offers some additional texture and perspective beyond that figure.

It also reflects frustrating perspectives about climate change. For example, many foundations still believe it is “not their issue,” despite the ever-widening impacts of this pervasive crisis, and even though many non-climate funders find ways to integrate it in existing portfolios. Or the perception that divesting and impact investing will hurt grantmaking budgets, a fear frequently debunked by those with direct experience.

Funded by the William and Flora Hewlett Foundation, the survey is based on responses from 188 foundation leaders and 120 nonprofit leaders, which account for almost a quarter of those contacted. Of the philanthropic respondents, 61% said their institution funds efforts to address climate change, while just 25% of nonprofit leaders said climate change is a core focus of their work. Here are some key takeaways from the report.

Foundations believe climate change is urgent and will harm people and places

Virtually all philanthropic leaders are aware — and afraid — of climate change.

More than 97% of foundation respondents described it as an urgent problem, with nearly two-thirds calling it “extremely urgent.” Over 90% of foundation leaders believe that climate change will negatively impact both the people they serve and the areas where they operate over the coming decade. Even when considering only their foundation’s goals and the areas they work on, over 70% said the global emergency will have harmful consequences.

Interestingly, the survey showed a greater degree of concern among the leaders of foundations than of nonprofits when it comes to looming impacts on the people, places, issues and goals each sector cares about. Foundation leaders were nearly twice as likely as their nonprofit counterparts to say climate change would impact the lives of people it serves “a lot,” and more than three times more likely to indicate it would negatively affect the issues it works on and ability to reach its goals “a lot.”

Climate change is in the top three, but still not a No. 1 issue

More than two-thirds of both foundation and nonprofit leaders agreed that climate change is one of the top three most important problems to address right now. But that view had its limits. And less than 10% told the survey that climate change is the most important challenge requiring action.

Many see climate as outside their missions — and boards are unwilling to fund it

Among foundations whose grants do not address climate change, nearly 80% say that is because it is not part of the foundation’s mission. More than a third also say their boards are uninterested or unwilling (39%) or the problem is too big given their size (35%).

The likelihood for change here seems limited: Half of all respondents said they do not plan to fund climate action. For some, it seems the crisis is trumped by concerns for their community’s immediate necessities.

“While they are exposed to increased heat, extreme weather, fire, drought, like everyone else, our focus is on their needs,” said one foundation leader. “So while this is objectively a very serious issue, potentially threatening billions of people around the world, it is not our issue.”

Another survey question offers possible insight into the gap between foundation leaders’ expressed concern and lack of funding. When asked about philanthropy’s responsibility, only half (54%) indicated foundations have a “significant” role to play in addressing climate change, versus much higher rates for the public (94%) and private (89%) sectors. In other words, some may see it as primarily another sector’s problem. However, additional respondents did acknowledge a “moderate” (30%) or “small” role (14%) for foundations.

Climate funders are more concerned, but funding still doesn’t line up

It will surprise no one that the heads of climate foundations, who spend much of their time following the latest depressing news from the climate sphere, were more concerned. They were much more prone to call it an “extremely” urgent problem and also more likely to believe foundations were not doing enough to address climate change.

Yet the report suggests most climate funders do not grant as if climate change is their top priority. Of the foundations surveyed who the report defined as climate funders, more than 70% said that less than 20% of the year’s grant dollars would go to climate action. Only seven grantmakers (less than a tenth of those surveyed) said it accounted for 50% or more of their grantmaking.

Few are using their investments

Despite widespread concern over climate change, endowments remain relatively unused as a tool for change. Less than a quarter (22%) of foundations indicated they have divested from fossil fuels and other carbon emitters and less than a third (31%) are practicing climate-related impact investing. It’s worth noting that some foundation leaders say such moves would reduce their grantmaking budget and thus their impact.

For those hoping for more action, small slivers did indicate they plan to either divest (13%) or begin making impact investments on climate (14%). But slightly larger shares say they do not plan to end investments in fossil fuels (19%) or do make such investments (17%).

Among foundations who have taken such steps, it’s worked out quite well, at least by their accounts. Among those who divested, half reported their investments have outperformed benchmarks that include fossil fuels — and not a single one indicated their returns had lagged. Similarly, nearly three-quarters of foundations with impact investments said returns were the same or higher than other investments, including a quarter who reported they outperformed.

“If your investment advisor dismisses the conversation, find a new one,” one leader told the survey, adding that their institution’s “portfolio has not suffered in the least and has experienced double-digit returns.”

Many say they prioritize impacted communities and leaders

Nearly two-thirds of climate funders indicated their grantmaking prioritizes communities most impacted by climate change, such as people living in poverty or racial minorities facing legacies of racism and marginalization. Just over half of foundations said they prefer grantees led by individuals from those communities.

The survey did not ask about the share of funding going to such communities. But as it notes, other research suggests the proportion is small. Building Equity and Alignment for Environmental Justice and Tishman Environment and Design Center at the New School found roughly 1.3% of funding from the nation’s top 12 green grantmakers goes to climate-justice-focused groups.

Almost half plan to expand climate funding

For all the frustrating results, there is a glimmer of hope. Nearly half of foundations plan either to “significantly” (18%) or “slightly” (26%) increase their grantmaking on climate change — and none plan to cut such support. Moreover, a third of non-climate funders indicated they are “open to considering” funding such efforts. But they may need help.

“Give us the language and the strategy to correlate climate change with enhancing lives for all who live in our community, and my board would probably support climate change initiatives,” one leader said.

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