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How Donors Can Maximize Impact for Fighting Climate Change

Date: April 20, 2023

Daniel Stein

Founder, Giving Green; Chief Economist, IDinsight

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This post originally appeared on the blog in October 2021.

With the effects of climate change becoming starker, climate philanthropy is taking off as never before. New players like the Bezos Earth Fund are making a splash and overall funding is rising each year; a report from the ClimateWorks Foundation estimates climate philanthropy in 2020 at $6-10 billion, an increase of ~14% from 2019. But increasing funds is only part of the battle — money must be used effectively to have a real impact in the fight against climate change.

As donors move into the climate space for the first time, the options can be overwhelming. The climate landscape is exceedingly technical and multifaceted, with myriad possible solutions vying for attention and funding. These range from political movements to technological research to behavior change. Larger donors can navigate this landscape by hiring experienced program officers and participating in donor networks such as those facilitated by the Climate Leadership Initiative. But for smaller foundations and individuals, it can be difficult to find an entry point.

I founded Giving Green, an initiative to help donors find the most impactful, evidence-backed, and cost-effective ways to fight climate change. Based on our research, I wanted to share four guiding principles for budding climate change mitigation philanthropists as they seek to be effective in fighting climate change through giving.

Focus on THE Big Issue

There are lots of important environmental concerns, from conserving natural areas to protecting vulnerable species to avoiding air and water pollution. But there is only one environmental issue that dramatically threatens life as we know it for all species: human-caused global warming. Philanthropists who want to stop climate change should focus on climate mitigation projects, without getting distracted.

Admittedly, it’s easy to get distracted, because everything is intertwined. For instance, ending plastic pollution is a well-financed cause célèbre in recent years. No one likes beaches full of plastic, but is this really a climate solution? Certainly, producing plastics emits carbon, so lowering production will reduce emissions. But fundamentally, plastic is extremely stable. Plastic waste is ubiquitous because plastic doesn’t break down, meaning it doesn’t contribute to emissions post-production. (Unless incinerated, which removes waste at a cost to warming!)

We recommend that climate mitigation philanthropists focus squarely on solutions that reduce emissions, remove emissions, or otherwise directly contribute to changing the temperature on the planet (such as researching solar radiation management).

Target Systems Change

Given that almost every activity we do in the modern world causes emissions, there are tons of small actions individuals or organizations can undertake to fight global warming. A commuter can ride a bike instead of driving; a rancher can manage grazing to sequester carbon in the soil; anyone can plant a tree. And philanthropists can support organizations working on all of these activities.

But projects directly working to reduce emissions are necessarily limited in scope. It is impossible to win the fight against climate change by blanketing the world with little projects. Instead, we need to change the laws, norms, and systems that make emissions part of everyday life. In practice, this means investing in policy or technology. For instance, philanthropists can affect climate policy by funding policy research and advocacy organizations. As for technology, our capitalist system is pretty good at commercializing promising interventions, but it’s much worse at funding basic research and too-risky-for-VCs early-stage tech. These are areas where philanthropy (both grantmaking and impact investing) can play an important role. At Giving Green, we’ve estimated that the best systems change grantmaking opportunities are roughly an order of magnitude more effective than the best direct emissions reduction intervention programs.

Maximize Expected Returns

While there are almost innumerable smaller-scale projects to fight climate change and, of course, each organization will have its niche, in general effective philanthropy should be funding solutions that can cause huge decreases in emissions.

As an example, we at Giving Green modeled the potential climate impacts of many of the climate provisions being discussed as parts of upcoming U.S. federal legislation. While there are many good provisions being discussed, the Clean Energy Payment Plan (CEPP) towers above all of them, providing more than 20 times the expected emissions reductions compared to any of the other proposed policies. So, organizations working to design, pass, and implement super-impactful provisions like the CEPP are likely to be a good outlet for philanthropists’ dollars.

Find Neglected Spaces

As more money flows into key parts of the climate fight, certain issue areas can become saturated with funding and battles become harder and harder to win. It’s certainly not a rule set in stone, but in general there are decreasing marginal returns to additional money for many initiatives. Therefore, new donors can have greater impact by using innovative strategies that are different from larger and more established funders.

Of course, this is easier said than done. It can be hard to figure out where the neglected spaces are and to ensure that they are not neglected for a good reason. Sometimes all it takes is following the news, as we’ve recently seen announcements for big new philanthropic commitments for conservation and reducing methane emissions, as well as a flood of for-profit climate tech venture capital. It’s safe to say these initiatives aren’t neglected at the moment. Finding what is neglected but still important can be hard, but there are some analyses, like ours or this one from Founders Pledge, that focus specifically on determining neglected opportunities. These can help focus donors’ interests and direct dollars to valuable, underfunded areas.

Fighting climate change is hard. But donors can play a catalytic role if they really focus on the issue at hand, prioritize high-impact work, and collaborate to make fundamental changes to our polluting society.

Daniel Stein is the Founder of Giving Green and the Chief Economist at IDinsight. You can find him on Twitter and LinkedIn

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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