SEWF 2020: LePage and Novogratz debate 'sunset clauses' for 'wacky' foundations investing money without impact

No charitable foundation should exist longer than ten years.

This proposal was made by David LePage, founder of Buy Social Canada, during today’s “Talkin’ ’Bout a Revolution” session at the Social Enterprise World Forum 2020, which this year is taking place online. 

LePage (pictured above right) was speaking alongside Jacqueline Novogratz, founder and CEO of impact investment fund Acumen. Host Andrew O’Brien, Social Enterprise UK’s director of external affairs, billed them as “two global legends of social enterprise”. Both have published books this year – LePage’s calling for a “marketplace revolution” and Novogratz’s for a “moral revolution”. 

Both LePage and Novogratz agreed that urgent action was needed in the face of climate change and other global problems, and that the capitalist system celebrated financial success at the expense of the environment and communities.

I don’t think capitalism is in trouble. I think community is in trouble because of capitalism

“There are billions of dollars of charitable money sitting in the stock markets, which is creating the problem that they are trying to fix with the 7 per cent they distribute,” said LePage.

He said he had spoken to someone at a foundation who was proud of having $5bn of the foundation’s assets invested in ESG funds, although the remaining $30bn was in traditional investments “so we can make money”. 

“That $5bn couldn’t possibly offset the other $30bn,” said LePage. “The whole thing is so wacky to me.”

Novogratz countered that 30 years might be a more realistic timeframe to allow a foundation to make an effective difference. She also pointed out that the Bill & Melinda Gates Foundation (which has an endowment of $47bn) has a “sunset clause” stating the foundation’s money must be spent within 20 years of the founders’ deaths.

Revolution or evolution?

Both speakers emphasised that the capitalist system needed to change. Novogratz said we needed to “flip the model of capitalism”, and instead of focusing on the requirements of a small group of shareholders “put our shared humanity and the sustainability of the earth at the centre”. 

LePage, however, argued for a more radical approach.

“I have a real problem of flipping capitalism on its head,” he said. “There needs to be a revolution in the marketplace.

“Five hundred years ago, we took a wrong turn,” he said. “When the Europeans came to the Americas, if someone said it’s not about extracting value, we would have taken a different course. We built this structure on an unequal footing.”

 “I don’t think capitalism is in trouble,” he added. “I think community is in trouble because of capitalism.”

The role of social enterprise

Novogratz and LePage discussed the potential of social enterprise to transform capitalism.

Social enterprise was the means to an end, argued LePage. “Social enterprise is the process to make that transition we need to a new economy,” he said.

Novogratz emphasised the urgency of the situation. She said: “We really have about ten years. In 2030, the world is going to look very different. There is a growing movement of individuals who know that capitalism has run its course.” 

She added: “We really need a new mindset. We need humility to see the world as it is. We need audacity to imagine what it could be. What is the most that each of us can do to create change?”

Marketplace Revolution: from Concentrated Wealth to Community Capital by David LePage is available from Buy Social Canada.

Manifesto for a Moral Revolution: Practices to Build a Better World, by Jacqueline Novogratz is available from Amazon.