Philanthropy’s Role in Ensuring Renewable Power Creates Good Jobs and Community Benefits

Philanthropy is in a unique position to use its resources and bridge-building power to leverage billions of federal climate dollars to create more equitable local economies and jobs. But funders must act nimbly, and now, to do so.

The federal government is pouring money into the clean energy transition, like the $27 billion recently announced under the Greenhouse Gas Reduction Fund. These investments can not only curb climate change but also transform communities, as the public and private sectors mobilize to fund green energy projects.

But without targeted support from philanthropy, the benefits are likely, again, to bypass low-income, tribal and rural communities. Philanthropy can ensure that doesn't happen by directing funds and attention to renewable energy investments, bridging the gap between federal dollars and local impact.

A $500 billion opportunity that comes with challenges

Since 2021, Congress has approved nearly $500 billion to fund green energy, including $370 billion in the Inflation Reduction Act, $77 billion in the Bipartisan Infrastructure Law, and $52 billion through the CHIPS and Science Act. These investments and incentives are also meant to spur private financing. For example, the eight nonprofits that recently received funding via the Biden administration’s National Clean Investment Fund have committed to leverage nearly $7 in private capital for every $1 of federal investment.

Importantly as of now, 39% of new clean energy jobs, 27% of investments and 44% of projects are in low-income communities. So there is a major opportunity to transition to a green economy and also a more resilient and equitable one. Job creation and economic development through renewables projects can have a meaningful impact on racial, gender and geographic inequities.

There are, of course, challenges, like a history of disruption and extraction by large-scale energy projects in primarily rural and tribal communities. Benefits have typically flowed out to external shareholders and customers, while the local community sees minimal job and economic growth — and in some cases, doesn’t even benefit from the energy source.

And many low-income communities are rich with climate solutions, developed out of necessity because they are disproportionately impacted by climate change. But they lack the resources to get projects off the ground. A lot of specialized knowledge and capacity is needed to access and absorb funding, understand byzantine permitting processes and build the infrastructure to support projects.

Three ways that philanthropy can help

To address challenges and steer the green energy transition toward justice and equity, philanthropy can focus on three areas:

1. Facilitating community input and benefits agreements

Community input is vital from the outset of energy projects to avoid the extractive mistakes of the past, build projects and infrastructure that match local workforce and energy needs, and create public buy-in. In fact, the U.S. Department of Energy is requiring all grant and loan recipients for clean energy funding to develop community benefit plans. These are not legally binding like community benefits agreements but will encourage partnerships and shared benefits.

Philanthropy’s convening and bridge-building role can facilitate these conversations, support planning and help hold the private sector accountable on outputs.

Take, for example, the Redwood Region Climate & Community Resilience (CORE) Hub. The CORE Hub is facilitating community engagement around proposed offshore wind power projects in California’s Humboldt/Redwood coastal region. This includes negotiations between community organizations, tribal leaders, local government and project proponents. The aim is to finalize a community benefits agreement that outlines what the project developer agrees to provide to residents. This is especially notable because of the region’s history of resources being exploited, causing harm to tribal communities.

Community benefits agreements can codify the creation of things like good jobs and equitable pathways to those jobs, affordable housing, energy equity, and even services like health clinics or schools. Philanthropy can support nonprofits and coalitions in these negotiations to safeguard the rights and interests of communities and ensure that climate projects are a net positive.

2. Funding green jobs and workforce development programs

Analysis by the National Skills Coalition estimates that federal infrastructure and energy investments will support nearly 3 million jobs per year. This is a huge opportunity to get more U.S. workers into higher-paying, in-demand jobs. The Brookings Institution has found that low-income workers can earn $5-$10 more per hour in green energy jobs versus other jobs.

Philanthropy can improve these outcomes by, first, increasing workforce development funding to fill green jobs with skilled workers. Some efforts are underway, including the Biden administration’s new Climate Corps to train 20,000 young people in trades essential to combat climate change. The Families and Workers Fund also recently announced its Powering Climate and Infrastructure Careers For All initiative, funded in part by the Irvine Foundation, to train and connect workers in low-income communities to climate and infrastructure jobs.

A second philanthropic priority should be creating more equitable access to jobs. Currently, the clean energy workforce is 30% female, 16% Latino and 8% Black. A shift to a green economy could build a more diverse and representative workforce, and philanthropy can help ensure that job training and recruitment programs have an equity lens, and fund partnerships and apprenticeship programs that target nontraditional workers.

3. Advising state and local officials on how to use federal dollars

The public sector is responsible for allocating and distributing these funds, but philanthropy can advise it on how to do so for greater community benefits. This may require some education about what levers are available for public officials to pull.

For example, the Biden administration has introduced a new Direct Pay option that makes it easier for state and local governments to access tax credits for clean energy development. Rather than applying for a competitive grant or loan, any tax-exempt entity that meets the requirements will receive funding. This offers the public sector a new imperative to shape community readiness to meet the requirements for these investments. Philanthropy can facilitate awareness of funding opportunities, uplift community input and connect public sector decision makers with candidates for shovel-ready projects.

Another opportunity is new guidance from the Office of Management and Budget (OMB) that governs the administration of federal grants and contracts. OMB has eliminated the longstanding prohibition on having geographic preferences. That means that state and local governments can, if they want, implement local hiring and sourcing requirements in their projects. Philanthropy should help officials understand how they can use this guidance to incentivize the creation of good local jobs and increase community participation.

Poverty, poor infrastructure and climate change disproportionately affect certain communities. Philanthropy can mitigate those impacts by helping to steer massive federal and state funding to investable projects that improve communities and create good jobs. By leveraging the sector’s financial and convening power, we can significantly influence how clean energy investments reshape local economies for the benefit of all.

Don Howard is President and CEO of The James Irvine Foundation, which is focused on a singular goal: ensuring all low-income workers in California have the power to advance economically.

Matt Horton is Senior Advisor at Milken Institute and Director of State Policy and Initiatives for Accelerator for America, helping government officials and community leaders shape infrastructure, job creation, and equitable community development efforts.

Featured