Current Trends in Philanthropy: U.S. Foundation Support for Climate Action

Released last month, the latest Intergovernmental Panel on Climate Change (IPCC) report paints a bleak picture of the disastrous consequences facing the planet if the average global temperature climbs 1.5 degrees Celsius above pre-industrial levels. The authors of the report warn that humanity will have to cut carbon emissions to almost half the 2010 level as early as 2030 in order to avoid long-lasting and potentially irreversible impacts from climate change, including the loss of many important ecosystems.

The issue of climate change and the impact of human activity on the environment has been hotly debated and has received significant attention from U.S. foundations. According to Foundation Center data, the largest one thousand U.S. foundations gave between $232 million and $261 million annually for climate-related issues between 2011 and 2015, with the exception of 2012, when a large infusion of funds into the ClimateWorks Foundation pushed the annual total to $340 million.

This represents about one percent of giving during that period but does not represent all giving that may contribute to the mitigation of climate change and its effects. Indeed, as much as another 3 percent of foundation giving over that period related to energy issues or sustainable agriculture may have supported efforts to address energy usage and current agricultural practices so as to lessen their contributions to global warming.

Energy efficiency and electrification, in particular, have been a significant focus of foundation funding for climate action, with 57 percent of all climate change-related grants funded by the largest one thousand U.S. foundations between 2011-15 related to energy efficiency or renewable energy efforts. Food and agriculture, on the other hand, represented only 3 percent of climate action funding over the same period. Increasingly, however, foundations are recognizing the importance of sustainable food production in tackling climate change and are approaching the issue through an intersectional lens, as evidenced by initiatives such as Project Drawdown.

The year 2015 also saw the adoption of the Paris Agreement, which the United States initially signed but, at the behest of the Trump administration, subsequently withdrew from. Given that the deployment of capital and funding is a critical factor in efforts to de-carbonize the global economy, the withdrawal of the U.S. from the agreement raises the question as to whether and how foundation giving has changed in response.

Detailed grantmaking data for 2016 (and subsequent years) is still being compiled, so it's difficult to draw any conclusions about the immediate response of foundations to the Trump administration’s decision. That said, several major foundations have announced significant commitments since the agreement was ratified in 2015.

Bloomberg Philanthropies, for instance, has announced climate change-related commitments or challenges totaling more than $200 million since 2015. The Ikea and MacArthur foundations have made commitments in the $40 million to $50 million range. And many private foundations announced large climate change commitments at the recent Global Climate Action Summit, the most notable of which was a $4 billion pledge over five years made by twenty-nine foundations from around the world.

A September 2018 survey of ten prominent foundations in Europe and the U.S. conducted on behalf of the Climate Action Pledge corroborates the largely anecdotal view that philanthropy in support of climate change-related action is growing. Among these ten funders, who collectively account for more than $240 million of climate change funding annually, seven reported that their funding in support of climate action increased between 2015 and 2018, while six expect to increase it over the next two years.

Grantmakers also are using tools such as impact or mission investments to fund climate change activities. One example: climate (or "green") bonds — bonds designed to raise funds for climate and environmental projects — have grown exponentially in value, from $9 billion in 2013 to $80 billion in 2016. And estimates by the Climate Bonds Initiative and Citigroup suggest that the green bond market could reach $1 trillion per year by 2020.

Commitments and investments such as these represent a good first step in what promises to be a decades-long project. But as the latest IPCC report makes clear, bold, collective action from both private and public actors will be needed if the global community hopes to avoid the most dire impacts of climate change.

Larry McGill is vice president of knowledge services and Supriya Kumar is a knowledge services research analyst at Foundation Center. The center would like to thank the King Baudouin Foundation for support that helped make this series possible.