Three Philanthropic "Truths" That are Killing Our Communities

In the last year, the same three arguments have become the default script in nearly every conversation we have with advisors and endowment managers. They are framed as "responsible stewardship," but they are actually the reason an estimated $2 trillion is sitting in the market instead of on Main Street.

It’s time to call out these myths for what they are.

Myth #1: "An endowment means your money keeps 'working' long after you’re gone."

The Reality: Your endowment is likely funding the problems your grants are trying to fix.

The typical foundation model gives away 5% and invests the other 95% to "ensure perpetuity." But where is that 95% invested? Often, it’s in the same extractive corporations, fossil fuel companies, and predatory real estate schemes that create the very crises—housing displacement, climate change, and inequality—that your 5% grants are meant to solve. 

You are "healing the future" with a sliver of your wealth while your investments "steal from the future" to pay for it. This is true of grants to nonprofit endowments as well as foundation endowments. If by working you mean that your money is doing good in the world, then an endowment is not a good solution and likely is contributing to the problem.

Myth #2: "An endowment is values-aligned because it’s managed by a diverse fund manager." 

The Reality: This mistakes representation for transformation.

Lately, the "fix" for extractive investing has been to hire a diverse manager but give them the exact same Wall Street mandate: Get at least market rate returns.

This puts BIPOC and female managers in a double bind. To prove they belong in a rigged industry, they are forced to be "more Wall Street than Wall Street" by outperforming on extraction just to keep their seats at the table. True alignment isn't about the identity of the manager; it’s about giving them the freedom to move capital into non-extractive, community-centered investments. If the benchmark is still extraction, it doesn't matter who is pulling the lever. 

Myth #3: "Market-rate Wall Street investments are better for Main Street in the long run."

The Reality: Wall Street is a siphon, not a fountain.

There is a persistent belief that "growing the pie" via the stock market eventually helps everyone. It doesn’t. Since 1980, the stock market has decoupled from the real economy. Today’s "market rate" is largely fueled by stagnant wages, stock buybacks, and financial engineering.

When you demand a 10% return, you are asking a local grocery store or a community housing project to out-compete a global monopoly and then wondering why they can't get funded. You are choosing a system that siphons wealth from your neighborhood into a brokerage account. If we want a healthy Main Street, we have to accept "right-sized" returns (3-7%) that allow communities to keep the wealth they create. That's not a concession. It's a local business that stays open, a housing project that pencils out, and wealth that circulates in a neighborhood instead of leaving it. Market returns of about 7% were the average return before 1980 and the shift to shareholder primacy,  with an exception in the ‘50s because it combined a unique post-war monopoly on global production with a massive, debt-fueled surge in domestic consumerism.

We don't need more "stewards" of capital with false precision. We need architects of deployment.

The "professional" choice isn't to protect the principal until the end of time while it funds the world's collapse. The professional choice is to trust the expertise of the community, fire the extractive benchmarks, and put the money to work where it actually belongs.

Stop investing in the collapse. Start investing in the community.