Editors’ Note: Continuing the forum on philanthropy and political science, Leah Stokes details how the funding strategies of the Energy Foundation led to policy innovation.
Foundations are often interested in catalyzing policy change. In the United States, however, this is a difficult task to accomplish. The political system is fragmented, with many policy venues. Individual politicians are often able to block change and the two parties have grown farther apart on many issues. Overall, these factors make the system oriented towards the status quo, rather than policy change.
Despite these obstacles, philanthropic funding can lead to policy innovation. In my research, I examine how energy and environmental policies have evolved in the United States over the past several decades. Overall, there is a clear philanthropic signature behind several important policies.
One foundation in particular—the Energy Foundation—strategically funded NGOs in a network across the US to change energy and environmental policy. This philanthropic organization succeeded through long-term commitment to grantees, bringing state groups together in a national network to debate policy ideas, and by funding both grassroots and technical NGOs. This case provides evidence for policy-oriented foundations that there is great value in long-term funding and supporting both large professionalized organizations and grassroots groups simultaneously.
The Energy Foundation is a charitable philanthropy founded in 1991 with an annual budget approximately of $100 million. Given the dispersed nature of energy problems, the Energy Foundation was consciously oriented towards making policy gains outside the federal level, with its headquarters in California rather than DC. Throughout the 1990s, the foundation funded a network of NGOs across the states that, over time, led to new and expanded energy and environmental policies.
Since the 1970s, advocates had been envisioning a cleaner electricity system relying on renewables and energy efficiency—what Amory Lovins called the ‘soft energy path.’ Rather than burning coal and building large nuclear plants, technologies like wind and solar energy would provide new resources, while energy efficiency would reduce overall electricity needs. But this approach was largely ignored in policy circles. Instead, by the 1990s, electricity restructuring was on the agenda across many states. This policy would move away from monopoly electricity utilities towards increased competition.
In its early years, the foundation saw electricity restructuring as an opportunity to catalyze policy that would favor renewables and energy efficiency. However, it was still not clear what policies would further these goals. For this reason, the Energy Foundation focused on generating and incubating new policy ideas through a “utility advocates network.” As Alan Nogee, who worked for the Union of Concerned Scientists throughout this period put it, “At the time, the Energy Foundation was the leading funder for renewable energy work, not only in the amount of funding, but in helping the NGO community develop strategies. At the time, none of us knew what policies would successfully catalyze renewable energy technologies.”
Examining the network’s structure is particularly important to understanding why this funding approach proved successful. The foundation first studied energy policy and recognized that it occurred across states, in legislatures and state regulatory agencies such as Public Utility Commissions. With this in mind, they reasoned that they needed to fund a broad group of NGOs who could work on building the local relationships necessary to change policy in low-profile state-venues. The network was intentionally structured to include both regional capacity, so that groups could target specific states, and national groups with particular policy expertise in efficiency and renewables, which the foundation saw as ‘common resources.’
The foundation then convened these groups regularly across states to debate and develop new policy alternatives. As Eric Heitz, CEO and co-founder put it, “We don’t pretend we can tell grantees what to do. We create a forum for debates to happen…a diversity of approaches.”
In California, where the NGO community around energy and the environment was the strongest, groups fiercely debated policy options to spur renewables, efficiency and other environmental solutions. At the time, tax credits were common state and federal policies, but they had significant flaws. Instead, some groups favored placing charges on electricity bills to create funding for new energy technologies. Other groups believed that if consumers were just offered the opportunity to buy cleaner electricity, they would do so. And some favored a new idea: the Renewable Portfolio Standard.
A Renewable Portfolio Standard—or RPS—sets a goal to require utilities to procure a portion of their electricity supply from renewable energy sources by a given date. For example, in 2006 Arizona established a goal of 15% renewables by 2025. In the early-1990s, this was a new policy idea—although a few states had small targets, the policy was not diffusing across states. After the policy was incubated in this NGO network, it spread like wildfire: RPS targets now exist in a majority of states.
Why did this approach work to change policy? First, the Energy Foundation’s funding was long-term and local. This allowed groups to create lasting relationships in their state, with politicians and regulators. When strategic opportunities arose to get new policy ideas on the agenda, advocates were ready. They had both the policy ideas and the relationships necessary to catalyze change. As Hal Harvey, one of the foundation’s co-founders, said: “we would fund the whole strategy—the big parts and the little parts. And we stuck with people for years and years because social change has decadal time scales.”
In politics, it’s not enough to come up with a great idea—you also have to get that idea onto the agenda, and create political pressure to pass the policy. While technical groups are skilled at designing and negotiating policies with other political elites, they typically lack the grassroots networks necessary to get the policy signed into law.
Critically, the foundation funded a mix of groups in a given state: both insider, elite NGOs focused on the technical policy details; and outsider, grassroots NGOs interested in creating political momentum for action. These grassroots groups were funded from the beginning, and treated as equal players in policy debates within the NGO network. And both groups worked together. When policymaking windows of opportunity emerged, this approach positioned policy ideas and mobilization strategies to push environmental policies onto the agenda and ensure their passage.
Current estimates suggest that environmental NGO funders prioritize large, technical insider groups over smaller, grassroots organizations. As Mark Dowie, a preeminent investigative journalist and expert on environmental philanthropy estimates, 70% of foundation funding goes to the 25 largest organizations, while the remaining 30% is distributed among 15,000 largely small, local and grassroots organizations. He argues this ratio is problematic, and proposes a 50/50 funding split across large technical NGOs and smaller grassroots organizations.
Today, some philanthropic funders, such as the Rockefeller Family Fund, rely on this more balanced approach and provide significant support to grassroots groups. But overall the amount of money flowing into environmental and energy groups is skewed towards large professionalized organizations. The Energy Foundation’s success in catalyzing new policies through NGO funding shows that both insider and outsider groups are necessary to create policy change. To address climate change and the numerous other environmental issues more money may need to flow into grassroots groups. Such a shift may help the environmental movement move from designing ideal environmental policies towards getting them on the agenda and enacted into law.
Leah Stokes is an Assistant Professor in the Department of Political Science and affiliated with the Bren School of Environmental Science & Management at the University of California, Santa Barbara. She is currently working on an academic article examining how foundations change public policy and a book on energy and environmental policy in the United States.