Giving Compass' Take:
- Alyssa Ely and Denise Hearn encourage impact investors to focus on transfers in power -- not just capital -- in order to generate real equity.
- How do power dynamics affect capital investment? How can you change your investing strategy to transfer power?
- Read about your role as a donor in supporting power transfers for greater equity.
What is Giving Compass?
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Lack of capital access and ownership is a historic and systemic barrier to equity, especially for Black, Indigenous, and other racial groups, and women. A number of efforts are underway to address this issue: Investors and foundations representing more than $1.88 trillion in assets under management signed Confluence Philanthropy’s 2020 Belonging Pledge, and hundreds of foundations have committed to increasing philanthropic allocations to community organizations and initiatives led by the people most affected by the social issues being addressed.
But moving capital to communities of color or women, on its own, does not achieve equity. The way capital is shared, and the power dynamics underlying that process, is equally important. Uninterrogated investment processes risk replicating legacy systems and values in how investments are made, and may put misplaced trust in the power of capital alone to create equitable outcomes.
As investing in gender and racial equity gains more interest from institutional investors and foundations, we need tools to reveal and analyze how capital is allocated—not just where. Otherwise, power imbalances will continue to create inequitable outcomes. As Rodney Foxworth, CEO of Common Future has said, “We have to make sure that we’re marshaling resources and capital to the types of things that will make change in communities and [also] shift and disrupt power dynamics.”
Investors and funders must abandon the idea that capital alone is sufficient to transform inequitable systems. They must interrogate the power dynamics underlying their decisions and operations to meet the complex challenges of racial, gender, and economic inequality, moving from a “power over” to a “power with” approach. Failure to integrate this analysis will likely prevent deep and lasting change.
Read the full article about power transfers for equitable impact investing by Alyssa Ely and Denise Hearn at Stanford Social Innovation Review.