In an essay written by its president, Clara Miller, the New York City-based is calling on "its philanthropic peers to jettison outdated operating models that leave resources untapped in the face of systemic social ills."
The essay, "" (19 pages, PDF), argues that the twenty-first century global economy demands a different model of philanthropy, one that "makes use of all of its resources to actively engage with the capital markets for the public good." Miller further argues that such a shift is necessary if philanthropies are to avoid undermining with their investments the progress they are helping to support with their grants, and she highlights the changes Heron itself is making with respect to the way it invests its capital.
In 2012, for example, the foundation pledged to commit all its assets to fighting poverty without becoming a spend-down foundation. In her new essay, Miller appeals to foundations to abandon the common practice of separating grantmaking from endowment investments and, instead, to focus on merging mission and finance functions into a single office that looks at both the financial and social impact of every outlay of capital.
"Baked into [the traditional philanthropic] structure," she writes, "is the sacrosanct belief that mainstream profit-making cannot be philanthropic and philanthropy cannot be market-connected, that grants could not be available without the profits that only unfettered capitalism can provide, and that furthermore, the best use of philanthropic grants is to finance nonprofits to be a cleanup crew for the inevitable mess real capitalism leaves in its wake."