Fossil fuel divestment gains momentum in philanthropy

Nov 1, 2021, 6:55 AM | Updated: 7:18 am

A movement to divest from fossil fuel is gaining support among foundations as activists push for funding to be shifted away from coal, oil and natural gas.

The call from activists to the charitable world is simple: Ditch fossil fuels and direct your investments into climate-friendly companies and funds.

The worldwide divestment campaign has sought commitments from universities, corporations and other entities. Now, two of the biggest names in philanthropy — the Ford and MacArthur foundations — are reorienting their investments away from fossil fuels, a move that leaders of the divestment movement hope will prove to be a tipping point for the charitable world.

“We’re calling on governments and corporations to act on climate aggressively and commensurate with the science,” said Ellen Dorsey, executive director of the Wallace Global Fund and a leader in Divest-Invest Philanthropy, which is pushing the philanthropic community to dump its fossil fuel investments. “Why aren’t we asking ourselves if we’re doing that?”

The announcements from Ford and MacArthur came in the lead-up to the United Nations’ climate summit in Glasgow, where activists, policymakers and scientists are pushing for far-reaching action on climate change. Both foundations are joining nearly 200 charitable organizations and firms that manage investments for wealthy families that have committed to divest, according to Divest-Invest Philanthropy.

“I’m glad that we were able to finally reconcile our financial imperative with our moral imperative as a foundation,” Darren Walker, president of The Ford Foundation, told The Associated Press.

About $1 trillion is sitting in endowments of private foundations, which are required to pay out only 5% of their assets annually. The rest is invested for growth. Traditionally, the two sides of their operations have been seen as separate: Grants were given to advance the foundations’ mission. The foundations’ money managers, meantime, sought high investment returns to maintain their organizations’ financial health.

But in recent years, activists have argued that it’s hypocritical for some foundations to fund initiatives that address climate change while potentially investing in fossil fuel-related companies. According to the ClimateWorks Foundation, global philanthropic funding for climate change mitigation totaled $6 to $10 billion in 2020, less than 2% of overall giving.

Critics of divestment counter that such changes could hurt investment returns and hinder foundations from maintaining their endowment size — thereby damaging what they set out to achieve. Ivo Welch, a finance professor at the University of California, Los Angeles, argues that foundations that divest won’t have much impact on the market and could even lose whatever leverage they might have with fossil fuel companies.

“I think it’s primarily a public relations exercise,” Welch said. “Let’s presume we really could bring fossil fuel companies to their knees, and they would be bankrupt now. The world would be in utter collapse. They cannot possibly want that.”

That said, many foundations see their shift away from fossil fuels as part of a broader effort to integrate the philosophies behind their donations with their investments.

“It was long overdue,” Walker said. “I don’t think The Ford Foundation deserves to be congratulated for doing the right thing.”

The Ford Foundation, which has $16 billion in assets, said in a statement last month that only 0.3% of its endowment is directly invested in fossil fuel-related companies. It said it has made no such investments since 2013 and won’t do so anymore.

Instead, the foundation says, it will invest in funds “that address the threat of climate change, and support the transition to a green economy.” Within five years, Walker said, the organization will also wind down its indirect investments in fossil fuels through partnerships with private equity funds.

For outside observers, it’s often been difficult to determine where Ford and some other foundations have been directing their investments. Some have been transparent about where their investments are landing. Others provide little information apart from how many assets they hold in various investment categories.

John Seitz, a former Wall Street portfolio manager who runs FoundationMark, which tracks investment performances of private foundations, noted that foundations are limited in what they can share if they’ve invested in entities, like hedge funds, that are not typically transparent.

The Ford Foundation’s 990 forms, which it must file annually with the IRS, don’t provide a clear picture of where its investments are landing. Walker says many of Ford’s investments are in private equity and hedge funds rather than directly in companies. He says the foundation will seek to be more specific about funds it invests in.

Another factor in the lack of transparency among foundations, Seitz suggested, is the desire to avoid outside scrutiny.

“It tends to create a lot of headaches,” Seitz said. “Because you’re just going to be questioned on every move you make.”

The AP reached out to a handful of sizable foundations that haven’t made a pledge to divest. Spokespeople for three of them said they were reviewing their investment strategy. One didn’t reply to an email seeking comment. Two others declined to speak on the matter.

The MacArthur Foundation, an $8 billion organization known for its “genius grants,” pledged two years ago to halt new investments in oil and gas. It went further in September, saying it would switch to U.S. index funds that exclude fossil fuel companies. And it’s aiming to change its global index funds to do the same within a year.

John Palfrey, the foundation’s president, didn’t specify how much money is involved but said the move was in “the billions.”

“Our goal is to be on a pathway to have zero fossil fuel-related companies in our portfolio over time,” he said.

Palfrey says the foundation had been working for a couple of years to divest more of its portfolio from fossil fuels. Recently, it chose to announce its plans partly to add momentum to the effort to address climate change at the U.N’s climate conference.

Last month, the McKnight Foundation, a Minnesota-based family foundation, committed to achieving net zero greenhouse gas emissions across its $3 billion endowment by 2050.

Some other foundations have been quietly shifting investments away from fossil fuels.

Don Chen, president of the Surdna Foundation, which has about $1 billion in assets, says the foundation has been reducing its investments in fossil fuels over the past decade and plans to phase out more in coming years.

“I do recognize the importance of using our public platform, profile and also our influence to be able to join the chorus of folks who are really trying to do more with our endowment assets,” Chen said.


AP journalist Emma H. Tobin contributed to this report.


The Associated Press receives support from the Lilly Endowment for coverage of philanthropy and nonprofits. The AP is solely responsible for all content. For all of AP’s philanthropy coverage, visit

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


FILE - Ohio Gov. Mike DeWine, center, and his wife Fran, right, talk with specialist Emily Milosevi...
Associated Press

Army Guard troops risk dismissal as vaccine deadline looms

WASHINGTON (AP) — Up to 40,000 Army National Guard soldiers across the country — or about 13% of the force — have not yet gotten the mandated COVID-19 vaccine, and as the deadline for shots looms, at least 14,000 of them have flatly refused and could be forced out of the service. Guard soldiers have […]
22 hours ago
Karen Sloan said she's a registered Republican who backs abortion rights, Friday, June 24, 2022 in ...
Associated Press

Dems hope to harness outrage, sadness after abortion ruling

YARDLEY, Pa. (AP) — The shock quickly turned to sadness for Victoria Lowe. The 37-year-old lawyer, working outside a cafe in suburban Bucks County, Pennsylvania, said she couldn’t believe the Supreme Court stripped away the constitutional right to abortion that women have had her entire life. She started to cry. “I don’t understand how they […]
22 hours ago
Associated Press

Today in History: June 25, Anne Frank’s diary published

Today in History Today is Saturday, June 25, the 176th day of 2022. There are 189 days left in the year. Today’s Highlight in History: On June 25, 1876, Lt. Col. Colonel George A. Custer and his 7th Cavalry were wiped out by Sioux and Cheyenne Indians in the Battle of the Little Bighorn in […]
22 hours ago
FILE - Chinese President Xi Jinping, left, and Hong Kong's new Chief Executive Carrie Lam attend th...
Associated Press

China’s Xi to visit Hong Kong for handover anniversary

BEIJING (AP) — Chinese leader Xi Jinping will visit Hong Kong to celebrate next week’s 25th anniversary of the former British colony’s return to China following a crackdown on a pro-democracy movement that has inflamed tension with Washington and Europe. Xi will attend an anniversary gathering and the first meeting of the new government of […]
22 hours ago
FILE - Planes sit on the tarmac at the Des Moines International Airport, Monday, June 13, 2022, in ...
Associated Press

Airlines aim to shift blame for flight problems to FAA

DALLAS (AP) — Airlines under scrutiny for widespread flight disruptions are renewing their criticism of the government agency that manages the nation’s airspace, saying that understaffing at the Federal Aviation Administration is “crippling” traffic along the East Coast. Airlines for America, which represents the largest U.S. carriers, said Friday it wants to know FAA’s staffing […]
22 hours ago
FILE - Investigators search for evidences outside Robb Elementary School in Uvalde, Texas, May 25, ...
Associated Press

Graduating Uvalde High School class remembers slain children

UVALDE, Texas (AP) — Almost 300 high school seniors received their diplomas Friday in Uvalde in the shadow of the massacre of 19 elementary school students and two teachers one month earlier. The 288 red-gowned Uvalde High School seniors sat in 100-degree heat at the school stadium on the one-month anniversary of the mass shootings. […]
22 hours ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

ADHS mobile program brings COVID-19 vaccines and boosters to Arizonans

The Arizona Department of Health Services and partner agencies are providing even more widespread availability by making COVID-19 vaccines available in neighborhoods through trusted community partners.
Fossil fuel divestment gains momentum in philanthropy