Tag Archives: Earth Fund

I come to praise Bezos, not to bury him

The Bezos Earth Fund May Be Just What NGOs Need to Reach the Next Level

The Quick Rundown: 

The Instigator champions private sector environmental leadership. But we also believe that NGOs are critical players. For NGOs to achieve their full potential, they need two things.  First, they need more and better funding. Otherwise, NGOs take the “lean and mean” concept too far. Second, NGOs need to offer greater disclosure so that their performance can be better understood. The Bezos Earth Fund can address both of these needs.

(Full disclosure: I served as CEO of The Nature Conservancy — an Earth Fund grantee — from 2008 to 2019.)

Last week, I wrote that I was excited about Jeff Bezos’s initial Earth Fund grants. Looks like I might be in the minority. Or maybe it’s a silent majority.  Either way, the Twittersphere was ablaze, and it wasn’t exactly praising his decisions about where to allocate capital. What I read was surprising to me for two reasons. First, the criticisms were pretty weak. Criticism is valid and important. But we can and should do better. Second, they reveal a lack of appreciation of NGOs as capable and important organizations. 

When Jeff Bezos originally committed $10 billion to a new climate-focused philanthropic fund, environmental journalists and podcasts immediately began to discuss and debate where the money should go. (See herehere, and here).

While lots of interesting and cool ideas were proposed—investments in education, new far-out technologies, ambitious R&D programs, efforts to build stronger, bigger, and more diverse political coalitions—none of these smart and well-intended commentators (so far as I could find) suggested that the money go to funding the big NGOs so they could build on their success and do more of their important work. 

But that’s just what Bezos did.  Bravo, I say.  

Unsung Heroes 

NGOs are the “essential workers” of the environmental movement. They know and can do things that neither the government nor the private sector know or can do. So why is their value so underappreciated? 

Back in 2005, after 20+ years as a mainstream investment banker, I was asked to lead Goldman Sachs’s brand new environmental initiative. I immediately did what we always did at GS. I reached out to the world’s best experts to ask for help. That meant calling environmental NGOs. My colleagues and I were amazed. The people and organizations we turned to were great—smart, creative, full of ideas backed by strong science and substantive experience, savvy about evaluating our new environmental business strategies. In short, they knew their stuff. Even us arrogant Wall Street bankers knew right away that the NGOs would help us get off to a much stronger start than we would get to on our own.

What the NGOs had in smarts, however, they lacked in capacity. They had a difficult time keeping up with us. Their teams were too lean and had too much work. In hindsight, we should have provided them more funding. And the NGOs should have asked for it. We’ll come back to this point. As for me, I was so enthusiastic about what NGOs could accomplish, I decided to leave my comfortable perch on Wall Street and join the fray.  

Target Rich, Short on Troops  

I was enormously fortunate to serve as CEO of the Nature Conservancy for 11 years.  Being there gave me a front-row seat into how talented and productive the staff of NGOs really are.  

Hands down, the hardest part of my job at TNC was saying no. We were overwhelmed with worthwhile project opportunities—opportunities that would have had a big impact and that aligned with our capabilities. 

For better or worse, there is just too much to do for environmental organizations. As military types like to say, it’s a “target-rich environment.” The limitations are on the supply side, not the demand. 

Even at TNC, the largest of the environmental nonprofits, we had to painstakingly prioritize and do our best to maintain laser focus. We didn’t want to spread our resources too thin. Just because a project looked worthwhile, and just because we probably could execute it well, didn’t mean we should do it. 

Our Board supported us in this effort, but it was difficult to sustain. Sometimes even they got excited about new, attractive but off-plan opportunities. I remember one Board member urging us to tackle the e-waste challenge— a noble cause, but definitely not on our priority list. And this happened immediately following a full Board discussion about the need to stay focused. I declined (politely, I hope).  It was right to say no but difficult. NGO leaders always want to please their supporters.  

 Sometimes project-specific funding would be offered for the new opportunity, making it even more tempting to say yes. But the incremental funding was usually insufficient to cover the full organizational cost of taking on a new initiative.

I admit, I often made the same mistake too. I’d come back to headquarters after a business trip excited by many great ideas and initiatives. My excellent and more disciplined team would stop me by quoting me. “No,” they’d say. “Remember what you said—we need to stay focused.” 

Why does this matter? It’s simple. Environmental NGOs are under-resourced relative to the huge, important, and urgent opportunities they face. And they stretch their resources too far too often.

Along Comes Bezos . . . and the Critics 

NGOs may be under-resourced in many respects, but one thing they don’t lack is critics. There are lots of them.  And that’s a good thing.  

When I was at TNC, I always said:  “Our critics are our friends. They usually want the same environmental outcomes that we want. If they see something they don’t like about how we are going about our work, let’s pay close attention to them. They might see something we miss. We might learn something.” 

But this time around, I think it’s the criticisms that can be improved.  

Let’s look at the initial reactions to the recent Earth Fund grants. Take this commentary from The Atlantic’s Robinson Meyer.  Meyer is a very good environmental journalist. I subscribe to his excellent newsletter, “The Weekly Planet.” But I’m underwhelmed by his arguments against Bezos’s grant allocations. 

“Bezos’ gifts indicate that he isn’t trying something new on climate so much as boosting an ancien regime“ [emphasis mine]. 

I’m not sure exactly what he means, but my Google dictionary says “ancien regimes” are “political systems that have been displaced typically by one more modern.” Ouch.   Is there any evidence that’s true here?

Meyer goes on to write: 

“…these first grantees represent an older and some would say [ed. nice hedge;who in fact says this?]— outdated [emphasis mine] approach to the problem of climate change.”

Outdated?  Really?  

Take another look at some of the Earth Fund’s grantees.  

  1. The Environmental Defense Fund is getting $100 million to launch a satellite to monitor methane emissions. Sounds like a cool project to me. Perhaps there are some shortcomings, but I don’t think we can reasonably call this strategy “outdated.”  It’s never been done before.  
  2. The World Resources Institute is getting $100 million to develop a satellite-based network for monitoring carbon emissions, as well as changes to forests, wetlands, and farms. Sounds worthy to me.
  3. The Salk Institute is getting $30 million to advance work in plant genetics to increase the ability of crops to capture and store atmospheric carbon via their roots in the soil. Who thinks that is an outdated approach?  

Does Size Even Matter?

Meyer is not an outlier. Turning to other journalists, many emphasized that some of the grant recipients are the biggest NGOs. They imply that’s a bad thing. But before we address whether their size should be a disqualifier, let me first ask the question, is it even true that they are so big?  

Yes, by the standard of NGO size, some of the Earth Fund grantees are big. But by almost any other benchmark, these organizations are not really big at all.

For example, compare the size of the biggest environmental NGOs to the companies that they engage with on the climate front.  It’s tricky to do this comparison because good data is not readily available when it comes to NGOs. And, of course, it’s somewhat of an apples to oranges comparison. But it doesn’t matter. Take a look at these bar graphs in comparison to corporations. NGOs are by all measures tiny.  

(per Charity Navigator) vs total revenue for the biggest companies (per Fortune 500)

Think revenue is the wrong way to assess relative size? Okay. How about the number of employees? That’s who does the work at both companies and NGOs, right?  See below. Again, NGOs are not big.

Are there too many NGOs?

People also complain that there are too many NGOs and they all do the same thing.  This really seems silly to me. NGOs are very few in number relative to companies, not to mention the size of the planet they are trying to protect. And they each have their unique strengths and areas of focus. Of course, if some of them were to consolidate the field by merging, they’d be vulnerable once again to the critique that they are too big. They can’t win. 

Wait — I Thought You Said that The Instigator Welcomes Criticism

We do. I don’t want to overstate this pushback. And I will also note that there were other balanced analyses about the Earth Fund grants.

Critics and analysts of NGOs have a valuable role to play. But they need to play it fairly. Criticism should be based on facts and careful analysis, not hearsay, or rumors, or general impressions. In fairness to the commentators, their task is not easy. Good information on NGO performance is lacking. See for yourself. Try doing some Google research to determine which of the environmental NGOs are most effective.  You’ll be frustrated. It’s not easy to do. You’ll find some opinions, but not much based on rigorous analysis on who gets what done. We need more data and more accurate information on who is doing what.

Therefore, One More Ask of Bezos

The Earth Fund can help us solve this problem. What if  Jeff Bezos and his team committed to a new level of transparency? They could set a new standard for NGO disclosure.  Here’s my ask. Please report publicly every year on how each of the grants is doing. 

  • What’s going well?  
  • Where are the NGOs behind schedule and why?  
  • What can we learn from any setbacks or better than expected progress?  

Please guide the grantees to report on a standard basis so that: 

1) we can compare progress on one Earth Fund recipient’s project to another; and 

2) other philanthropists can use the same format for their grants.  

This should be easy. It’s exactly the kind of information that Jeff Bezos must be asking for when monitoring his businesses, whether it be Amazon, the Washington Post, or Blue Origin. It may not be quite as easy to report on NGO progress as it is in business. But there are many ways to measure progress. Start— say—with five-year goals and clear annual milestones to assess progress along the way.

By requiring his grantees to track and disclose this type of information, Bezos would be acclimating these organizations to a new way of tracking and reporting on their work, while paving the way for others to follow. And it would not only help ensure he gets a better return on his investment, but it might also help NGOs more clearly demonstrate their value. 

Treehuggers, Please Meet the Barbarians at the Gate

What Environmental Philanthropists Can Learn From Wall Street Investors

The Quick Rundown:

The Instigator champions private sector-led environmental strategies. We also argue that better environmental outcomes are achieved when business collaborates with non-profit organizations. Environmental NGOs need to be well-funded to perform at the highest level.  Let’s explore what philanthropists can learn from the way Wall Street investors allocate capital.

A couple of weeks ago, Jeff Bezos announced the first recipients from his eponymous Earth Fund. The grants totaled nearly $800 million distributed across 16 nonprofit groups, including The Nature Conservancy, which I once led. It got me thinking about how the richest man in the world — one who built his fortune on data, metrics, and shrewd allocations of capital — might structure these new relationships. 

Now, I don’t know anything more than the public about the specifics of Bezos’s funding, but I do have experience being on the receiving end of philanthropic investments from my time at TNC. And I can say that, after spending most of my career in the business world, what I saw surprised me. 

A Strange Start 

Back in 2008, I was a brand new and eager non-profit CEO. Recognizing that our big donors were some of our most important partners, one of my first orders of business was a round of courtesy calls, beginning with a prestigious foundation that had been supporting us for years.

I did my homework beforehand. I was ready to discuss in detail each of the grants the foundation had provided to us throughout our partnership. I knew what had gone well on their projects, what hadn’t, the reasons for both, and what we had learned. And looking ahead, I was ready to present several new projects we thought the foundation might want to support. This will be fun, I thought. I was excited to represent my new organization.

I arrived early for my 11:00 am meeting and waited patiently in the beautifully appointed reception area.  

At 11:30 — still waiting — I started getting restless. A nice young person asked if I’d like a cappuccino or latte. Okay. But what about my meeting?

At about 11:45, the same nice young person offered me a tour of the foundation’s brand new LEED-certified headquarters building. Fine. We had a pleasant tour. And yes, the building was beautiful. But so what? Anybody willing and able to spend enough money could do this. 

At 12:15 I called my office. I asked my assistant to tell my next appointment that I’d be late. I was way behind schedule now.  

At about 12:30, I was finally ushered into the foundation CEO’s fancy office. Game time. I was ready to go. 

But, as you’ve probably sensed by now, things didn’t go according to plan. 

The CEO quickly introduced himself (with no apology for the late start) and launched into a monologue about how the foundation focused on metrics, accountability, and rigorous measurement.

“We’re all about achieving results,” he told me. “Great,” I responded. After all, I had come prepared. 

I wanted to jump in and explain that my team had done well on the projects the foundation had funded. Not perfectly, of course. But we had mostly accomplished everything we had promised. And where we fell short, we tried to figure out why so we’d be better going forward. But the monologue continued. 

“How about asking some questions about the projects you funded?  Hold me accountable.  Ask for some metrics if that’s what you like,” I thought. But before I could vocalize anything along these lines, another young person came in to inform the CEO that it was time for the next meeting. Sorry, time’s up. I was ushered out.

The foundation had invested tens of millions of dollars in our programs. The CEO told me that the organization’s top priority is ensuring they achieve measurable results.  But he didn’t spare a moment for questions or dialogue about any of that. 

“Toto, I have a feeling we’re not on Wall Street anymore,” I thought to myself on the way out the door.  

Kinder and Wiser Masters of the Universe?

When I was at Goldman Sachs, one of my jobs was running the IPO and follow-on equity offering business. (We called this business unit “Equity Capital Markets.”)  

Before every IPO, we’d organize a “roadshow.” The company’s CEO and CFO would spend two full weeks on the road with us, meeting with institutional investors every day from early in the morning all the way through drinks and dinner.  

When we first told them this was how it’s done, the CEOs usually balked. “Can’t do it.  I’m too busy,” they’d say.  

“Sorry,” I’d explain. “It’s mandatory. But two things you should know.  

“First, these investors are really smart. They’ll be prepared. They know your competitors inside and out. You’ll be impressed. Be ready to answer many tough questions.   

“Second, you only have to do this once. Afterward, your investors want you to be focused on running your company, not traveling and taking meetings with them. They want results.”  

The CEOs almost always ended up enjoying the roadshow. Yes, the investors were brash, sometimes impertinent, very young, and occasionally even rude. But they knew their stuff. Answering their questions was challenging. You could learn a lot through the back and forth. And nobody’s time was ever wasted, that’s for sure.  

One CEO even said to me, “Spending time with smart investors like this will help me run my company better.” Exactly, I thought.

One of These Things is Not Like the Other 

Everybody knows Wall Street doesn’t always get capital allocations right. (See: Enron, 2008 financial crisis, Theranos, WeWork, etc). But broadly speaking, things usually go pretty well.  

Enormous sums flow from capital providers (investors) to capital users (companies). Audited financial reports keep investors informed and facilitate comparisons and analyses. Analysts, journalists, and daily stock price quotes help everyone stay up-to-date. CEOs and management teams focus on running their organizations, not fundraising. More capital flows to better performers and better terms. Companies raise capital for “general corporate purposes,” which gives them the discretion to spend the funding where they think they can earn the highest return on investment. 

In the philanthropic world, it doesn’t work like that. I acknowledge it’s not as easy.  Financial reporting doesn’t capture the most important information about outcomes and impact for NGOs. There are no “equity capital market” banking teams organizing roadshows. There are no (or very few) analysts appraising the NGOs. No stock prices, no Wall Street Journal, or Jim Cramer on CNBC.

I also want to acknowledge and emphasize that professionals in the philanthropic world (usually working at foundations) are smart, dedicated, hard-working, and very good people. I enjoy working with them, and I’ll always be grateful for everything they do to support NGOs and to make the world a better place.  

But still… I think professional philanthropists can learn a lot from their Wall Street counterparts. It will make them better partners to the organizations they support, and they’ll get more accomplished.

A Few Ideas from Wall Street for Philanthropists 

Obviously, this is too complex of a topic for me to fully cover in a single email missive.  But it’s worthy of exploration and ongoing discussion, so I’ll make my contribution by noting a few practices that I think can make a positive difference. I know I would have appreciated the following approaches back when I was a CEO of a big NGO.

  1. Do the work, analyze results, make comparisons. Investors pay close attention to all of the companies in any sector where they invest. They know who’s doing what, where the innovations and breakthroughs are happening, and where their portfolio companies face risks or have big opportunities. This lets them see things that management teams sometimes miss.
  2. Ask management teams to explain their plans, identify desired outcomes, and provide specific milestones for the period ahead. Sounds obvious, I know. But this takes some discipline. This is where holding management accountable makes a lot of sense. All you have to do is follow up. When things go counter to plan, ask why. If management teams regularly miss their plans (or worse, drop their plans), get a new management team.
  3. Provide capital for what companies call “general corporate purposes” (known as “unrestricted funding” in NGO parlance). Please don’t use the term “overhead”  —  it’s offensive. When great companies invest in training, marketing, HR, R&D, information systems, and other technology — and the best companies invest huge sums in these areas — nobody calls it “overhead.” These investments are what enable great performance. It’s just as true for NGOs.
  4. Don’t micromanage. Even though investors pay extremely close attention to their companies, they don’t usually tell management or staff what to do. Resist the urge to dream up your own projects. Don’t ask NGOs to compete for the assignment to execute your initiatives. Rather, support great organizations in their efforts to achieve their mission and goals.
  5. Respect the management team’s time. NGO CEOs are always on the road fundraising. They joke about it with one another. I felt like my IPO roadshow continued every business day for the entire 11 years I worked for TNC. This is crazy. NGO CEOs have complex organizations to run. But they need your capital and will keep selling until you persuade them to stop. Agree on a set number of meetings per year. Do meetings by Zoom as much as possible. Provide your capital in a smaller number of much bigger grants. 
  6. Learn from for-profit investors. The analogy is imperfect but there is a lot to learn here.  Visit Fidelity or T Rowe Price and watch their investment teams in action. Add some of their executives to your boards. Read Warren Buffet’s annual reports.

A Donor in Buffet’s Clothing 

It’s not just about what foundations and their leadership can do for the NGOs. It’s also about what they can expect from NGOs and how to keep them accountable. Some philanthropic leaders get this right. I especially admired how one foundation CEO worked very hard to get to know me, my organization, our projects, and our marketplace when I was running TNC. It really felt like she was a long-term strategic partner.

I told her she reminded me of Warren Buffet back when he was a big investor in the Washington Post and worked very closely with the paper’s publisher Kay Graham. He knew everything he could know about the Post, its market, the competition, and the challenges that Graham faced. And he did everything he could to help her and the company succeed. (You can read about all of this in Graham’s superb memoir or in this great biography of Buffett. Both are great books for investors or donors to study.)

Here are a few of the things this leader did to be a smart and supportive backer of TNC.

  1. She visited TNC headquarters at least once per year. As I recall, no other foundation CEO visited me even once during my 11 years at the organization. If you’re investing tens of millions of dollars every year in an organization (as this foundation was doing), it should be a no-brainer to visit annually, kick the tires, check out the CEO, and see how she/he interacts with the team, right?
  2. She attended some of my board meetings as a guest and met with some board members privately. Again, common sense, right? Find out what’s on the board’s mind, see how they view the CEO, get a firsthand sense of what drives the organization.
  3. She required a one-on-one conversation with me before the foundation approved any grants.  She and her team knew I wasn’t writing up the proposals and wouldn’t always be hands-on with the projects. But if the proposals were important enough for her foundation to fund, then they were also important enough for me to explain why I viewed the projects as critical.
  4. She funded a special CEO project every year.  We’re not talking about a lot of dollars here. But the foundation funded a small grant annually for a project that otherwise probably wouldn’t happen. I still had to submit an official proposal.  The foundation CEO and I would always have a one-on-one conversation about my proposal before it was approved. And it wasn’t always approved. This practice was a great relationship builder and led to some strong new programs. It was also a smart way for the foundation CEO to see how I think. And, after a few years, depending on how these new projects went, it was also a good way to see if my ideas are any good. 
  5. She worked very hard and traveled extensively. I thought I worked hard as CEO.  TNC does projects in all 50 states and in another 70 countries. It felt like I traveled nonstop to visit them all.  But this foundation CEO visited more TNC projects than I did.  She always arrived very well briefed. And by the time she left, she had met with the full TNC team, most of our partners, had asked countless questions (no monologues!) and knew the work inside-out. There’s no substitute for hard work.
  6. She always asked us to list our greatest funding needs. She recognized that we were in the best position to identify the needs and opportunities unique to us, as well as to prioritize among them.
  7. She did so much more. I could go on and on here. The main thing is she and her team did everything they could to get to know us, our projects, and our people.  They were tough, demanding, and critical when things went wrong or we didn’t know our stuff. But it always felt like they were on our side, and together we achieved some great outcomes.

The private sector gets a lot of flack from the advocacy and nonprofit world. Some of it is well deserved, but some of it also feels reflexive and absolute. I think we should value progress over perfection and embrace more actors who have smart ideas and are willing to do their part. 

Jeff Bezos and his Earth Fund are already drawing a ton of criticism for thus far choosing to partner with  “mainstream” climate organizations, rather than experimental ones. I’ll have more to say about that next week. But for now, I’m just glad these organizations are getting much needed financial support, and I hope the fund’s management nurtures and holds those organizations to account the way they would any division of Amazon.