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By Phil Henderson and Michelle Knapik, Surdna Foundation
The art and science of social change in this era of declining public spending and economic doldrums has philanthropy stretching to meet unprecedented needs in new ways. We have long counseled that grants from philanthropy cannot fill the gaps left by decreased public investment; the scale of the dollars involved is just too different. At the same time, we recognize that we need to do more with our money and the constellation of conventional and unconventional partners. As such, foundations are searching for the right blend of grants, mission related (endowment) investment, and the networking of ideas and people, including private investors and institutions that will stimulate high impact investment patterns that deliver triple or quadruple bottom line benefits. Given this backdrop, the Surdna Foundation is determined to go deeper in our mission to build just and sustainable communities and we are directing our environmental focus to bedrock systems: the infrastructure that connects people to jobs and services and through which we manage water, energy, food and other critical resources.
The factors that drove this decision are abundantly clear throughout America’s metropolitan areas, most starkly in our older cities, and they are worth spelling out in shorthand: 1) much of the infrastructure on which this country depends for its economic growth and prosperity is decades old and nearing the end of its life; 2) the government funding available for renewing, replacing, or reinventing these systems is severely constrained and cannot (alone) meet the urgent needs in our nation’s urban areas; 3) extreme weather events and climate change are putting stress on fragile and aging systems; and 4) growing populations and shifting demographics place issues of equity, affordability and access to high quality infrastructure and services at the core of any new investments.
If we want infrastructure that improves transit systems, makes buildings more energy efficient, better manages our water systems and rebuilds regional food systems, and we believe in solutions that can connect these four systems and improve them in ways that maximize impact and minimize negative environmental consequences (all Surdna tenets), we will need to support the pathways from here to there. Philanthropy cannot fill the gaps left by the sharp declines in public spending, but we can help with creative solutions to this deep financing hole we find ourselves in.
For example, philanthropy can provide funding to groups that are focused on ensuring that there is high “public value” in public private partnerships (PPPs) to support next generation infrastructure. This requires research, the education of our public officials, and the vetting and adoption of standards for PPPs that emphasize financial, social and environmental returns (Surdna is funding the Eno Center for its work on public benefit PPPs). And it never hurts to have a few high profile demonstrations of how this can work in practice, which philanthropy must invest in as a way of building confidence in this kind of institutional shift.
What about utilizing existing public bonding mechanisms to support next generation infrastructure? That too will require early dollars from foundations to work out policy and finance adaptations and to educate and support leaders who shepherd these changes (Surdna is funding the Clean Energy Group and the Council of Development Finance Authorities on this front). A greater understanding of various types of infrastructure banks and their potential to fuel next generation infrastructure investment is also critical. The Brookings Institution (a Surdna grantee) just released the next in its series on papers on this topic, along with a paper on clean energy finance. Philanthropy is also making strides in endowment investing, with an ever greater number of foundations joining the Mission Investors Exchange and pushing the envelope of what’s possible when foundation grants and investments are working in concert. In addition, Living Cities, which has a long track record of putting foundation and financial institution capital to work for social good, has recently turned its attention to infrastructure needs, so we are likely to see significant financial participation by foundations in promising next generation infrastructure as well.
We will also need to look at the scale of next generation infrastructure. Early indicators point to more decentralized and smaller projects with the potential to support regional economies, but more learning is needed (Surdna is funding the Center for Neighborhood Technologies as they look at water retrofit projects—the equivalent of building energy retrofits that will help cities manage stormwater runoff and flooding—at a neighborhood scale). Underlying all is the need for civic infrastructure that will enable people and communities to be engaged in infrastructure designs and decisions. Infrastructure investment past and present has been infused by issues of race, power and privilege. There is no shortage of infrastructure projects that have physically fragmented communities, cutting people off from necessary services, restricting access to opportunity, wasting money, and damaging the environment. To get the next generation infrastructure that has the transformative power we desperately need, we cannot afford to repeat these mistakes.
We are encouraged by the growth of intersections between the social investment and philanthropic sectors, yet we will need to strengthen our relationships in order to accelerate the shift from a narrow view of infrastructure investment. Later this year, you will see a Surdna Sustainable Environments grant portfolio that looks into four areas of promising next generation infrastructure: affordable and efficient transportation systems that increase access to and connectivity among jobs, services, schools, and housing; energy efficiency that will make homes, businesses and related buildings more affordable and comfortable; urban water management systems that will capture stormwater and slowly release it into the existing network of pipes or reuse it where it falls to cultivate green spaces that help reduce pollution, provide park and garden spaces, and cool our cities; and a rebuilding of regional food supply that will make it easier to get food from our farms to the markets closest to where it’s grown. Across these four areas, we will promote innovative finance solutions to advance and integrate these approaches to infrastructure renewal, help better meet the needs of traditionally underserved communities, and promote sustainability for the long-term. Part of our learning agenda is to understand where and how private and public funding can converge in new ways, and we are interested in keeping this conversation going.
As a first step, we invite your feedback and ideas to this concept of next generation infrastructure (email Michelle Knapik at firstname.lastname@example.org).