A Just Transition for Investing in Arts and Culture

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Sherylynn Sealy: Welcome to a podcast by Grant makers in the Arts, a national membership association of public and private arts and culture funders. I'm Sherylynn Sealy, GIA's program manager. In our recently released Solidarity Not Charity report, we point out the importance of commitment to long-term work, with multi-year grants, loans and equity investments for solidarity economy institutions and networks. To work in true partnership, grant makers must understand and respect the power of community-owned infrastructure, as well as the legal and fiscal challenges that informal, emergent, solidarity and cooperative institutions face.

The ultimate goal is systems change, but how is this done with a racial equity and justice lens? Well, we are glad to have Anna Raginskaya, investment advisor at Morgan Stanley and Quita Sullivan, who is Montaukett and Shinnecock and senior program director for theater at New England Foundation for the Arts and also GIA board member, joining us today to share how they are supporting investment efforts using the Just Transition framework. So thank you both for joining us and we are so glad to have you, so let's dive right in.

Quita Sullivan: Okay. [Foreign language]. Good morning friends, my name is Quita Sullivan. I am Montaukett and Shinnecock, and also black. I live here, in Massachusetts, on the lands of the Massachusetts [inaudible] Wampanoag Folks. I use she and they pronouns, they is probably more appropriate. My language doesn't have gendered pronouns, so it's a concept that's toward trans. I'm glad to be here this morning. As she said, I am the senior program director for theater at New England Foundation for the Arts, where I am the director for the National Theater Project that supports devised and ensemble new theater work, both in its creation and its touring. So I get to look at things from both local and national perspective, and I'm also a GIA board member, which I'm very proud of. And I love the approach that GIA is taking towards grant-making.

Sherylynn Sealy: Thank you, Quita. And Anna?

Anna Raginskaya: I'm Anna Raginskaya, I'm part of the Blue Rider Group at Morgan Stanley, which is a group that focuses on the investment needs of the arts and cultural community, and the majority of our clients are in the visual and performing arts, both foundations, nonprofits, and family. We also have a big focus on sustainable and impact investing, which is work that I've been really grateful to be able to share with GIA in years past on this podcast as well. And as an organization, we also give back to the art community. We supported the David Hammon's Show that just closed at the Drawing Center. We're supporting the Niki De Saint Phalle Show that's currently up at PS1, which I especially loved for her feminism and her activism, and a lot of other exciting projects we have in the pipeline. So thank you for having me here today.

Sherylynn Sealy: Of course. Thank you both for being here. So let's get into the questions. According to Climate Justice Alliance, adJust Transition is a vision led, unifying and place-based set of principles, processes and practices that build economic and political power to shift from an extractive economy to a regenerative economy. Does this framework feel connected to your work, and how do you engage with Just Transition in your own institutions? [crosstalk]. Yeah.

Quita Sullivan: Thank you. Thank you. So prior to becoming a grant-maker, I was an environmental justice attorney for 10 years. So this concept of unifying place-based principles with national and international global solutions is something that is a principle that moved with me from that work into this work. And I actually use that as just how I approach the team that I work with, the artists that I work with and the funders that I work with. And so all answers are local and global. All solutions have a place-based element, but they also have a global element to it. As I'm looking at the funding that we're doing, while it is predominantly national, the projects that we are supporting are often very place-based, and they're very individual artist ensemble based.

And so those are the people who are most effected by what is going on in their community, what is going on in the world, and one of the founding principles of environmental justice is that solutions come from those folks who are closest to the problem because they know the situation better. And so I use that as a way of guiding changes to the program, changes to how we, as a team, interface with artists. We take a lot of guidance from the artists themselves in order to create and modify our program.

And one of the things that has attracted me to GIA and to the GIA board is that GIA is looking at things systematically, globally. What is happening within the world of philanthropy funding for the arts, where are the issues and who are the people working to solve those issues? Because it's not just about the arts. It is about all of those things that intersect with the arts. Education, health, environment, all of those things are interconnected. And if we're going to move to something that is just, as in justice, how do we move all of those things together? And that's one of the things GIA is looking at right now is this intersectionality, and that's an approach that is very much adjust, transition approach. It is not solely about the arts over in this pocket, it is about the folks who are most effected by being part of the solution and helping guide that intersectionality.

Sherylynn Sealy: Great, thank you Quita. Anna, do you have any thoughts?

Anna Raginskaya: I think I'll pick back up on that thread and thinking about intersectionality, and maybe go back a little bit to one of the places that this term Just Transition started popping up, which is in this global effort we're all engaging in, to make sure that we stay below 1.5 degrees celsius warming, to basically avoid a climate disaster. And the issue is you can't think about that process in a silo, you have to be thinking about what the solutions are on a climate front, but also be thinking about the communities that are most effected by that transition, including communities who are largely sustained by the industries we're trying to move away from, because they're industries that are emitting a lot of carbon, for example, but at the end of the day, people's livelihoods also depends on those industries.

So the idea that Just Transition in a investment context, is we're obviously seeing a lot of demand from investors to both make sure that their portfolios are environmentally sustainable, or exposed to these new technologies that we think are extremely important for getting to a more sustainable and climate agreeable world, but it's also making sure that we're thinking about the social component of what these investment choices dictate. So ensuring good jobs for people in the future, making sure that companies are focused on reskilling, for example, or making sure that the companies that you're investing in have great policies in place around inclusivity, around supporting their workers, around supporting working mothers in those contexts.

So from an investment standpoint, all of these issues are very related because investors ultimately want to make sure that they're supporting companies that will continue to operate into the future, and that social contract isn't seen is critical. People realize that there's a huge liability to companies treating their workers poorly over time, and it's not something that would be a win-win for investors, companies, or society as a whole.

I wanted to share an example maybe of like how this works in practice, this idea of a win-win. So in the last couple of years, the New York State Housing Finance Agency has been issuing hundreds of millions of dollars of sustainability bonds that are underwriting multifamily affordable housing units in New York State, and these buildings are also developed to some of the highest industry energy efficiency standards. So we're really seeing these efforts on the part of financial institutions and the organizations that are investing in this bond, and trying to move us towards a Just Transition from a climate and social standpoint.

Sherylynn Sealy: That's great. Thank you, Anna. For our next question, I actually want to stay with you for a moment because you began to speak to this, and I'm not sure if you want to drive a point home. What does it mean to invest in culture while staying anchored in racial equity, or within the Just Transition framework?

Anna Raginskaya: Sure, so when I think of the actual term Investing in Culture, I think a lot of people in the GIA community will think of that as grant making and supporting arts institutions and artists. From my perspective, a very important part of that is ensuring that the communities are there for that great art to happen, and a lot of that is affordable housing, it's community infrastructure, it's education, it's access to capital. So I think when a lot of my clients who are in the arts and cultural space, think of investing in culture, they're also trying to ensure that the broader world that this culture is happening in, is one that's conducive to that thriving.

Sherylynn Sealy: Quita, do you want to add to that?

Quita Sullivan: The part of the problem that I have when people think of investing in culture, they're thinking primarily of investing in the arts, but culture is so much bigger than just the arts. Culture is often a way that people express themselves in their daily lives, when they're at school, whether they're outside doing stuff with other folks, family members, people within their culture, whatever that culture might be. And the investing in culture has come down to this very narrow window of… We're talking about theater, music, dance, painting, photography, writing. All of those things are part of culture, but they are not the only part of culture. One of the things when was doing environmental justice work, we always said that everyone has a right to a safe and healthy environment where they live, work, play, pray, and are educated.

All of those things are interconnected, and the siloization of investment in culture has come down to, "Can I get a grant to do my work?" And I fight that struggle all the time, that don't think about funding services so narrowly, it's more than the transactional, "Here's the money, go do your work, give me a report, and we're done." It's, "Here's the money to help you do what you want to do, and what else can I help you with?"

Sherylynn Sealy: Right, exactly.

Quita Sullivan: And that is a framework for funding that falls into that Just Transition framework, but it's also a more expansive version of the cultural economy, to use that two words that I have a hard time with putting together…

Sherylynn Sealy: Yeah.

Quita Sullivan: … cultural and economy.

Sherylynn Sealy: Yeah. Yeah, understandably. Well, speaking of separating art, and I'll say speaking of defining art in one very specific way in culture, in one very specific way, and separating the two, are there any practices that you might recommend funders do or stop doing in their pursuit of a more just funding ecosystem?

Quita Sullivan: Yeah.

Sherylynn Sealy: We only have a few minutes on this podcast, okay, Quita?

Quita Sullivan: Okay. Yes, can we get rid of the 501c3 model? Let's start with that. The idea that everyone has to incorporate, that one model fits all, is not just. We know that one model does not fit all. For some, maybe a 501c3, with a board and all of those things that go along with it, all of the reporting requirements that go along with it… That may be the model that works best for them, but I am finding in the work that I do with artists that most of them don't want a board.

So instead, what they have to do is get a fiscal sponsor, and that fiscal sponsor then skins money off of the money that they should be receiving. As funders, how do we change that model so that individuals can receive grants to do the work without having to have that extra burden, a reporting burden that we keep imposing on folks? We could advocate for a sustainable living wage, a basic income. Universal basic income is not a horrible idea for artists. It's a great idea for artists. The idea that you don't have to fight to live in order to do what you love, I think is a major thing that funders could be looking at.

Anna Raginskaya: So I think the idea of investing with impact is really that you're focused on both financial and some social return simultaneously, and a lot of the foundations that I work with don't see this as a trade-off. And in fact, there's a lot of data out there, including a study we put out on what happened in 2020 that showed that sustainable funds actually outperform their peers, 4.3% in 2020, which is really significant. And when you look at what happened there, a lot of it is understanding that companies that really invested in the social piece of that equation, in environmental, social and governance (ESG), were better set up to handle the challenges of what a shift to remote work and disrupted work looked like. So companies that built flexible, inclusive workplaces that enrich their employees, found those returns coming back tenfold at during a moment like COVID.

Sherylynn Sealy: Yeah.

Anna Raginskaya: So when our clients think about embracing some socially responsible investment strategy, there are a lot of different ways to do this, and it's not one size fits all. A basic version of this as restriction screening. People think about the kinds of industries they don't want to be in, based on their organizational values. Given this moment that we're in, we are getting a lot of questions around private prisons and the weapons industry, and foundations that are realizing that they're making grants to communities that are really impacted by the violence of these industries, but in the meantime, are invested in these industries and their endowments, just to put pretty glaring situation.

The second way people approach this as looking for investment managers that are proactively choosing companies with the best practices on diversity and inclusion internally, and using their role as investors to advocate for improvements at all levels of management. People are adhering to this, and we think that that work is really important, and a direct outcome of what investor pressure could look like, and changing what our economy really looks like. One practice encouragement would be to take this broader reading of mission, and really think more about what are the values that your organization stands for, which for a lot of the organizations involved with GIA, is about diversity inclusion. And that is a absolutely investible area.

The Knight foundation did a study a couple of years that showed that only 1.3% of the investment industry. $69 trillion in assets, are managed by funds owned by women and people of color. Women and people of color, so you can imagine how small that sliver is as far as people of color in significant ownership positions of investment funds. So if you think about the flow of capital in the US economy, it's so much driven by who's making these decisions around what companies get funded, and you see these crazy statistics about how low the investment in black entrepreneurs is. So I really think that this is one of the keys of this issue, and we're at a point where we're seeing some really progressive foundations ask for these funds directly, which is putting pressure on the financial industry as a whole, to make sure that we're sourcing diverse managers, and make sure that we're addressing our own structural barriers that have been in place for a long time, that hasn't allowed them to have access to investment capital around things like size of the fund, for example.

Firms like Morgan Stanley are now saying, "How do we run our own due diligence processes to make sure that managers of color have access to the investment capital that our pool of clients represent?" So I'm really excited about those efforts, and excited about seeing the financial industry be responsive to demand in that way.

Quita Sullivan: Anna, you had my mind going all kinds of places right now. It's really because there's so many different ways of thinking about this. As Grant-makers, that's just one portion of what we do. We have grant making that we do, but in order to do that grant making, the money has to come from somewhere, and there's all this investing that has to happen. And as you were talking about the perception around socially conscious, socially vested investing, I was remembering back in the early '90s, when I was an environmental justice attorney, and being told, "Well, you don't want to put all of your money into socially conscious funds because you will lose money. You are sacrificing your future by doing this." And now these are some of the most absolute best funds out, are the same ones that I was looking at 20 plus years ago.

So this perception is persistent, and still, the fact that people still have this fog around social capital and social investing being a negative thing for your own future. It's amazing to me, it's appalling to me, but I do see so much more positivity, and people thinking about that. I know that was one of my first board meetings with GIA, it was talking about the screens that are on the funds. So that was one thing, as you were talking, I was like, "Oh my God, it's still going on." It's really still going on.

Sherylynn Sealy: Yeah.

Quita Sullivan: But the other thing is, if you're looking at this from the artists side, there are things around general operating support that are addressing some of those same things that you were talking about. What about housing? What about childcare while doing work? What about insurance? And let's talk about a mega industry that needs some equitable investing, savings for retirement. All of those things, as funders, we could be supporting. And if we are being true to our mission around equity, then our money, whether it's invested in our endowment or whether it is going to the artists we're supporting, is in part about addressing the systemic and historical disinvestment in communities of color, in indigenous communities, in women, in micro-businesses by women, by people of color, by immigrants, the disabled community, all of those have been systemically disinvested in.

And I think it is one of those fundamental values. If we're talking about equity, if we're talking about Just Transition, that we need to be addressing that. And I would also put this out there, is that individual artists are micro-businesses. This is something that came to me from a group of artists. They are micro-businesses, and they're not being invested in, in the same way that some of these larger businesses are being invested in.

Sherylynn Sealy: That's fantastic, thank you both. For folks listening, who are really just getting familiar with Just Transition, and culture, and art, is there anything that you want to leave folks with in response to what it can look like, and all of the different ways it can look like?

Anna Raginskaya: If we go back to the Just Transition framework, there is a set of recommended activities that investors look towards if they're looking to embrace Just Transition, and I'll run through them quickly and maybe add some my own commentary. So the first is incorporating the Just Transition policy into investment statements. Oftentimes, your investment policy statement for an organization really dictates how you do this work, and we're increasingly seeing investors include language around values aligned investing in their investment policies. The second is integrating Just Transition into the procurement of investment services. So that might be to a point that Quita made around looking at who is making funding decisions. So similarly in the investment world, you're looking at who's making investing decisions, so trying to source diverse teams on the investment manager side.

The third piece of this is engagement. So engaging with companies to make sure that they're including Just Transition within climate strategies, making sure that as companies plan for their own work on climate, they're also taking care of the communities that those companies engage with and are invested in. The fourth piece is participating in place-based initiatives to channel capital to community renewal. A lot of the organizations in GIA, I know are part of like local grant making partnerships, or maybe statewide grant making initiatives, and making sure that these groups collectively are all on the same page, thinking about what the investment piece of this looks like. So those are just four of the implementation pieces of this Just Transition framework, but for me, the most important one is always understanding where you're at right now, and understanding what you own today, to chart out a course for how you might work yourself in some greater alignment over time.

Quita Sullivan: One of the things that I want people to think about when we're talking about extractive industry, is extractive grant making, is that the source of all of this wealth is built on the back of the stolen lands of indigenous people, and stolen labor of enslaved, indigenous Africans. Everything in this country is built on that, and so if you start with that understanding, then part of your mission needs to be to look at what I can do as an individual, what I can do as an organization, what I can do as a community to find new ways to reinvest that which was stolen?From an indigenous perspective, they're not resources, they are our sources.

And for me, the names of my nations come from the place where we are. Everybody looks at that as a resource, but for us, it is our source. It's a question to all of us, how do we, as human beings, as people within philanthropy, as people with investment, knowing that the foundation of what we are investing in, or what we are extending to other people, to our grants, how do we alleviate some of the harm that comes from the source? We're not going to get rid of the source in that sense, but we can be responsible about using it justly, and we can be responsible to be aware of what we are doing with those funds, and making the world a more just place by how we invest and how we give.

Sherylynn Sealy: That's great. So are there any changes that you've seen, or any that you've made in your specific institutions or investment work, that you can speak to that listeners can model after?

Quita Sullivan: Yeah, so one of the things, a couple of years ago, we did do a racial equity training with our board, and as a result of that, our investment committee started to take a good look at how we were investing our money, and has made changes to how that money is invested. They're not fully complete yet, but they are very definitely investing with a racial equity lens. That's very much what they're looking at, so that's on one level. Our source of money varies, whether it's from a quasi-endowment, because we don't actually have an endowment, or whether from other funders, who we are re-grantors. The other thing that I, and the team, the National Theater Project Team have been doing, is looking at who's making the decisions about who gets the grants, and those advisors who are making the decisions, because we don't make that decision, have been more, I want to say more diverse.

We're looking at it more with an equity lens, whose voice was not at the table? Whose voice has never been at the table? Whose voice is always at the table that we don't need to hear from again? Where are they within the field? How are they approaching their work as a whole? And those are the folks that are now making the decisions. They're making decisions within the world, who's going to get those grants? But they're within that world themselves. And so it is more of a peer decision than a funder down decision. And we're looking, even now, at what are the issues for people of color, for a disabled artist, for women artists, for trans artist in getting grants from us? What are the barriers? What's going on? We actually are piloting a few things to give extra support to those folks, to get through the application process.

So there are very specific things that we are using to try and do more just grant making, and I think it will change who is receiving grants, but I think it also changes the folks who are making decisions when they see what the result of their hard work is, and how we are actually addressing that, this investment that I talked about earlier, around those communities who have not been invested in.

Anna Raginskaya: There is there's really ample data out there, that diversity is something that is really rewarding for companies. For example, McKinsey did a study several years ago that showed that companies in the top core tile on racial diversity outperformed their bottom core tile peers by 33%, that's pretty incredible. The second thing I want to talk about actually alludes to Quita's point around how there's different activities within foundations, and just to give someone a sense at dollars scale of this trade-off around grant making versus investing, for a typical foundation, grant making is 5% of their asset base every year, and the investing piece is 95% of what's going on with the capital that they control.

So looking at whether the endowment is aligned with the foundation's broader values is really an elephant in the room for a lot of foundations, because it's a really large part of their assets. So on the client side, I've seen a lot more, very progressive demand and different approaches to how investments are sourced. So we're seeing much more specific asks from clients around what are the demographics of the investment management team of the funds that we're showing clients, which I think is really great. And Morgan Stanley has been collecting data on this for a couple of years already, but now there's a much more concerted effort to look at how our own platform is constructed around how we source managers, and how we can set emerging and diverse managers up for success when they're on a platform like Morgan Stanley. It's because often that comes with a very large influx of capital, so making sure that their own operating systems are best in class, and that's often a consultative relationship between our firm and investment firms.

So the other piece is, we recently published this racial equity investing guide, which is a resource that I'm happy to share with you and members of this community, but it really outlines a strategic approach to integrating racial equity within investment portfolio. And it goes back to some of the things we talked about from restriction screening and making sure we're taking out the industries that are most harmful to communities of color, to practice solutions, but it really provides a map, and also lays out the fact that it doesn't need to be an all or nothing approach. A lot of investors will carve out a portion of their portfolio to focus very specifically on racial equity solutions, and sometimes in the way that investment committees work, it's a little easier to get people to commit to a small piece of this, rather than revamp the entire whole at one. So it can be about incremental changes that can be very, very meaningful.

Sherylynn Sealy: That's great, thank you. And do you have any final thoughts for our listeners?

Anna Raginskaya: I think the final thought is these changes are… There is a pathway towards becoming more aligned here, and it requires work on the part of the organization to really understand what all these different terms mean, and the state of the industry is also evolving very rapidly. So this isn't something that needs to happen overnight for organizations, but the investment products are there, and the advisors that have fluency in these terms and approaches are there, and there's really visionary foundations that have paved the path and also shared their experience with going through this process. So I would say that there is a welcoming community here for organizations that are just thinking about taking the first step, and don't know where to start.

Quita Sullivan: Yeah, we have to all look at where we can be most effective. I think the idea that one grant maker or one investment is going to change the world is just not possible, the world's too big, society is too big. But even small changes can help make global changes, and it's a series of small changes that make big changes. And often people feel very frustrated because I don't see the impact of what I'm doing, but the impact may be that you change that person next to you, and that person over there, and that person over there. And then when all four of you are making the same change in the same direction, things started happening. Especially when we're talking about justice, it's those small moves that sometimes can change everything.

Sherylynn Sealy: Of course. Well, thank you so much for that. And I just appreciate both of you being on the podcast. I loved what you said, Quita, to move into a Just Transition a series of small changes make big changes, and I thought that that was really powerful. And to our listeners, we look forward to continuing these conversations, so be sure to tune into other episodes of the GIA Podcast Series, and be sure to follow us on Facebook at GIArts, Twitter at GIArts, and Instagram at grantmakersinthearts.

If you have any questions, feel free to reach out to me: sherylynn@giarts.org. And in our most recent Solidarity Not Charity report, one of our authors says, "The solidarity economy is not a buzzword and must be cultivated with longterm accountability to the communities that have been most harmed by our current systems of neoliberal governance, extraction, and narratives of racial difference." So we leave you with that today, and we thank you for listening.