Climate change is one of the biggest challenges today, but less than 2% of global philanthropic giving in 2022 went toward addressing it. Foundations have a unique ability to take risks and act quickly, making them key players in tackling this crisis. Here's how they can make a difference:

• Align with Climate Justice: Direct more funding to frontline communities and BIPOC-led organizations, as they are often the most affected yet underfunded.

• Simplify Funding Processes: Use multi-year, flexible grants and reduce application/reporting barriers for grassroots groups.

• Focus on Measurable Impact: Track success with clear metrics like emissions reductions and community benefits.

• Collaborate Across Sectors: Build partnerships with governments, private companies, and other funders to amplify efforts.

• Explore New Funding Models: Use mission-aligned investments and regenerative finance to combine financial returns with climate goals.

Foundations can lead by centering equity, supporting systemic solutions, and scaling their efforts to match the urgency of the climate crisis.

How targeted philanthropy can help fight climate change

Aligning Grantmaking with Climate Justice Principles

Climate change doesn’t hit everyone equally. Low-income communities and communities of color often bear the brunt of its effects while having the fewest resources to adapt. This stark imbalance makes climate justice an essential focus for grantmaking. Yet, the numbers tell a troubling story: only 1.3% of $1.34 billion in environmental grants from 12 national funders went to BIPOC-led, justice-focused groups in 2016 and 2017 [2].

On a global scale, the disparity is just as glaring. Only about 25% of total climate funding reaches Low- and Middle-Income Countries, even though these nations are among the most vulnerable to climate impacts [2]. This funding gap undermines both equity and the effectiveness of climate action, highlighting the urgent need for justice-driven reforms.

"The fact that philanthropy resources groups on the frontlines confronting some of the worst impacts of climate change with a fraction of their dollars is simply unfair and perpetuates the effects of racism. How can we acknowledge that many Black and Brown communities have more than their fair share of climate-induced challenges, and less than their fair share of resources?"
– David Beckman, President, Pisces Foundation [6]

Foundations that prioritize climate justice principles not only address inequities but also enhance the effectiveness of their investments. Frontline communities often hold the most innovative solutions and firsthand knowledge of what works. By recalibrating funding strategies, these foundations can correct disparities and amplify their overall impact.

Centering Frontline Communities in Grantmaking

True climate justice starts with shifting power to the communities most affected by climate change. This goes beyond merely seeking input - it’s about giving these communities real control over funding decisions.

The St. Louis Regional Racial Healing Fund is a powerful example of this approach. Created by the Deaconess Foundation, Forward Through Ferguson, and the Missouri Foundation for Health, the fund is managed by a Community Governance Board composed of Black St. Louisans and St. Louisans of color. This board oversees the entire grantmaking process, from setting priorities to allocating funds [8].

Here are some ways foundations can center frontline voices:

• Create advisory boards led by community members that hold real decision-making power. These boards should represent the communities most affected by climate change and environmental injustice. Foundations can also integrate dedicated community engagement roles into their structures [7].

• Incorporate Indigenous Knowledge and local expertise into program planning. Many frontline communities have developed deep insights into climate adaptation and mitigation through lived experience. Their expertise should play a central role in research and strategies to address pollution and manage climate impacts [7].

• Remove barriers to participation by offering services like childcare, transportation, translation, and stipends. Scheduling meetings at convenient times and locations also makes it easier for community members to engage.

The story of the ReGenesis Institute in Spartanburg, South Carolina, illustrates the transformative power of community leadership. Founded in 1998 by Harold Mitchell Jr., a local resident who suffered health issues from toxic chemical exposure, the organization partnered with government and private entities to revitalize the Arkwright and Forest Park neighborhoods. The result? A community health center, grocery store, and community center now stand where contaminated sites once existed, alongside newly created green spaces [7].

Designing Equitable Funding Structures

In addition to empowering communities, foundations need to overhaul traditional funding processes that often exclude grassroots organizations. Simplifying application and reporting requirements can make a huge difference, especially for smaller groups that lack the resources to navigate complex systems [2].

Multi-year, unrestricted grants are another impactful change. They provide the stability and flexibility that organizations need to adapt to changing circumstances and build long-term capacity [2].

Some foundations have already made strides by rethinking their funding structures. For example, the Libra Foundation increased its funding to BIPOC-led groups from 78% in 2019 to 91% in 2020 by focusing on power-building grants for existing grantees [5]. Similarly, the Pisces Foundation boosted its funding from 17% to over 40% after committing to the Climate Funders Justice Pledge [6].

"BIPOC communities are in a historic moment, and the core mission of the pledge is to re-organize and re-center the conversation of what a winning climate movement looks like with communities of color that are on the frontline. We have already helped move millions of dollars to groups and programs that will play a central role in hitting our ambitious climate goals."
– Ashindi Maxton, Executive Director, Donors of Color Network [5]

Data-driven decision-making can help foundations identify and address funding gaps. Tools like Demographics via Candid, developed through a partnership between GivingData and Candid in 2023, provide demographic insights into nonprofit applicants and grantees. This data allows foundations to track and adjust funding distribution [9].

Standardizing application review processes can also reduce bias. Clear evaluation criteria, bias training for review committees, and diverse perspectives in decision-making are all steps in the right direction [9]. Additionally, providing transparent feedback through grantee portals helps organizations - especially smaller ones - improve their applications and builds trust [9].

"An inequitable funding strategy is also an ineffective funding approach because it fails to ensure some of our most insightful and effective advocates can do their work."
– David Beckman, President, Pisces Foundation [6]

Aligning grantmaking with climate justice principles isn’t just about fairness - it’s about tapping into the knowledge, leadership, and solutions that frontline communities bring to the table. By doing so, foundations can drive meaningful, lasting change in the fight against climate change.

Developing Effective Climate Evaluation Frameworks

When it comes to turning vision into action, foundations need solid evaluation frameworks to ensure their climate initiatives create lasting change. Tracking success in climate grantmaking involves much more than just monitoring how funds are spent. It’s about developing systems that measure both immediate results and long-term progress. Striking the right balance between accountability and flexibility is key, as traditional methods that focus on short-term outputs often miss the bigger picture of systemic transformation.

"If you want to see progress and see if you are having impact, you have to understand what problem you're trying to solve. If you don't know what kind of change you're trying to make, it's going to be hard to figure out if you're making any progress." – Melissa Berman, CEO, Rockefeller Philanthropy Advisors [10]

Climate initiatives often deal with complex, interconnected systems where change unfolds slowly and unpredictably. This makes it essential to define clear, measurable metrics and incorporate systems that can adapt as circumstances evolve.

Setting Metrics for Systemic Impact

The first step in effective evaluation is choosing metrics that reflect both environmental and social outcomes. Foundations can assess their grantmaking opportunities using five key criteria: scale of emissions reductions, speed of impact, cost-effectiveness, leverage, and probability of success [11]. These factors help identify which investments are likely to deliver meaningful results.

Some examples of important metrics include:

• Environmental indicators: Tons of CO₂ reduced, megawatts of renewable energy added, or acres of land restored.

• Social equity measures: Percentage of funding directed to BIPOC-led organizations, leadership roles held by frontline community members, or improvements in air quality for disadvantaged areas.

• Systems change indicators: Policy advancements, shifts in market dynamics, or the formation of new partnerships.

Using tools like logic models can help map out the relationship between funding, activities, and outcomes. These visual frameworks show how investments lead to both environmental and community benefits over time [14].

It’s also crucial to collect baseline data before awarding grants. Establishing these benchmarks allows foundations to track progress accurately and measure the true impact of their initiatives as they unfold.

Building Learning Systems That Adjust

Identifying the right metrics is only part of the equation. Foundations also need adaptable evaluation systems that can evolve alongside the dynamic nature of climate work. Rigid frameworks often fail to capture the full scope of change, whereas adaptive systems can incorporate new information and adjust strategies in real time.

Real-time data plays a big role here. Digital dashboards, for instance, can monitor key indicators and flag when projects need extra support or a strategic shift [12]. Regular feedback loops - such as quarterly check-ins with grantees, community members, and other stakeholders - provide valuable insights and allow for quicker course corrections compared to traditional annual reporting.

Stakeholder engagement is particularly important. Honest feedback from grantees and partners can highlight what’s working and what’s not. However, power dynamics in these conversations can sometimes make grantees hesitant to share challenges. To address this, foundations should create safe spaces for open dialogue by separating evaluation discussions from funding decisions and emphasizing a shared commitment to learning [13].

Technology can also simplify data collection and analysis. Tools like mobile apps for field reporting or automated systems for surveys reduce the administrative burden on grantees while ensuring consistent and timely information gathering.

Finally, regular portfolio reviews can help foundations spot patterns across their grants. By learning from both successes and setbacks, they can refine their strategies and ensure their evaluation frameworks remain flexible and effective. As Bill Gates once said, "We should be willing to lose money to accelerate innovation" [1]. Adopting this mindset allows foundations to view setbacks as opportunities for growth, ensuring their climate investments continue to evolve and deliver meaningful results.

Building Cross-Sector Collaboration

Foundations are increasingly turning to cross-sector collaboration as a way to expand their impact on climate issues. Tackling climate challenges effectively often requires partnerships that bring together foundations, governments, and private companies - commonly referred to as 4P models [15]. These alliances open the door to innovative and targeted solutions.

"The climate crisis calls for unprecedented collaboration among governments, the private sector, and civil society. Philanthropy is uniquely positioned to help catalyze the transformative shift we need toward more sustainable, just, and resilient energy and food systems, societies, and economies." – Helen Mountford, President and CEO, ClimateWorks Foundation [4]

Foundations bring specific strengths to these partnerships. They can take on higher risks, think long-term, and address equity concerns that other sectors might overlook. This broad perspective helps align diverse organizations toward shared goals [15].

Despite the urgency of the climate crisis, only 2% of philanthropic giving supports climate mitigation, and less than 0.5% of institutional capital goes to climate finance [16][3]. Foundations have the opportunity to fill this gap by fostering partnerships that amplify their reach.

Creating Public-Private Partnerships

Public-private partnerships work best when they focus on solutions that are impactful, align with stakeholders' interests, and have a reliable anchor partner [15].

A great example of this approach is Initiative 20x20, which operates in Latin America and the Caribbean. This partnership has brought together 150 organizations and committed $2.5 billion in private funding to help governments restore over 50 million hectares of degraded land. By addressing land degradation, this initiative showcases how well-coordinated efforts can create lasting change [15].

In sub-Saharan Africa, the Power Africa initiative demonstrates how government leadership can anchor effective partnerships. Led by the U.S. government, this initiative unites political leaders, companies, and financial institutions to improve energy access and promote low-carbon growth. To date, Power Africa has enabled 37.5 million new energy connections and closed deals on 14,000 megawatts of clean energy projects [15].

Urban-focused partnerships also offer promising results. For instance, Breathe London, initially funded by the Clean Air Fund, aimed to improve air quality in London by collaborating with Bloomberg Philanthropies, Clarity, the Mayor of London, and the Social Innovation Partnership. Its success led to the global expansion of this model through the Breathe Cities initiative, which now partners with organizations like Bloomberg Philanthropies, C40 Cities, and the Clean Air Fund [15].

Strong governance is essential for these partnerships. For example, BlackRock plays a central role in the Climate Finance Partnership (CFP), which focuses on channeling investments into climate-related projects in emerging markets. Having a credible anchor like BlackRock ensures stability and attracts additional participants [15].

By building structured partnerships like these, foundations can further enhance their impact by joining or forming funder collectives.

Joining Funder Collectives

Funder collectives enable foundations to pool resources and align their efforts toward shared goals, often requiring a common vision and shared risk [15].

One example is the Drive Electric Campaign, which grew out of ClimateWorks Foundation’s work on transportation. Through convening key stakeholders, the campaign evolved into a coalition of philanthropic partners, demonstrating how one foundation can spark a larger movement [15].

Interestingly, 87% of current 4P models focus on emerging economies, and 71% are multinational in scope, either from inception or through growth. Additionally, over 90% of these models emphasize deploying existing technologies rather than developing new ones. This creates opportunities for foundations to support both innovation and implementation [15].

When forming collectives, leveraging existing relationships is key. The Food and Land Use Coalition exemplifies this by creating multiple core partnership platforms while also allowing affiliate platforms to join. This flexible approach encourages diverse participation while maintaining shared objectives [15].

Such collectives also highlight the broader benefits of climate action. Around 40% of climate and nature-focused 4P models explicitly mention socioeconomic co-benefits in their mission. By linking climate solutions to other development goals, foundations can attract partners who might not initially prioritize climate issues.

Even small-scale collaborations can make a difference. For instance, the Seychelles Conservation and Climate Adaptation Trust was born from a debt-for-nature swap. It supports ocean conservation and adaptation projects through grants under $1 million, demonstrating how creative financing can unite sectors around shared environmental goals [15].

New Funding Mechanisms for Climate Action

Expanding on earlier discussions about collaboration, new funding methods are emerging as powerful tools to advance climate action. While traditional grants remain important, these newer approaches combine philanthropic goals with investment strategies, creating pathways to drive meaningful change. With foundations managing over $1.5 trillion in philanthropic capital [22], these methods can align financial resources with climate-focused objectives.

Using Mission-Aligned Investment Vehicles

Mission-aligned investment (MAI) vehicles offer foundations a way to diversify their funding strategies. These tools range from traditional grants to investments that aim for both financial returns and positive climate outcomes. By leveraging MAI strategies, foundations can support initiatives that not only achieve social impact but also ensure long-term financial growth [20].

Two key types of investments play a role here:

• Program-related investments (PRIs): These focus on achieving charitable goals and count toward annual distribution requirements.

• Mission-related investments (MRIs): These aim for market-rate returns without affecting distribution requirements [23].

A standout example is The Rockefeller Foundation, which committed in November 2023 to achieving net-zero greenhouse gas emissions for its $6 billion endowment by 2050. This makes it the largest private U.S. foundation to adopt such a goal [17]. Dr. Rajiv J. Shah, President of The Rockefeller Foundation, explained their approach:

"We are putting The Rockefeller Foundation's money where our mission is: investing our endowment in ways that will help lift up people around the world and lower emissions." [17]

Chun Lai, the foundation's Chief Investment Officer, highlighted their broader vision:

"Ultimately, this is about more than our endowment; our ultimate objective is to drive real-world changes. Because net zero is a collective goal that can be realized only by acting alongside other stakeholders, we will encourage our fund managers to engage with companies on emissions reduction plans, invest in climate solutions, and use our convening power to advance net zero adoption among investors." [17]

The Skoll Foundation offers another example of this strategy in action. Starting in 2009, it supported Water.org with a $765,000 grant, later providing first-loss guarantee capital and two PRIs to back water credit investment funds. Eventually, a $10 million mission-aligned investment anchored the market-return-generating Water Access Fund, enabling Water.org to raise $150 million. As a result, over 65 million people have gained access to water through microfinance and blended finance tools [20].

Other foundations are also stepping up. The Rockefeller Brothers Fund, for instance, plans to allocate an additional $100 million over the next decade to climate initiatives. In 2023, nearly 50% of its grantmaking budget focused on climate-related projects, and its endowment is now more than 99% free of fossil fuels [18].

For foundations adopting MAI strategies, having clear policies and governance structures is vital. Drafting a written MRI policy ensures alignment with broader goals, while assigning oversight to advisors with expertise in both programmatic and investment areas strengthens execution [23].

Using Regenerative Finance Models

Regenerative finance offers a different perspective by focusing on solving systemic challenges and restoring both communities and ecosystems. Instead of merely avoiding harm, this approach uses capital to create shared value and prioritize healing [21].

The Climate Justice Alliance (CJA) provides a compelling example with its Our Power Loan Fund, aiming to redirect $100 million from philanthropy and impact investors toward climate justice initiatives [22]. This model redefines traditional notions of risk and return, centering equity and community impact.

Several organizations illustrate how regenerative finance works in practice:

• Candide Group's Olamina Fund: This fund provides low-cost, flexible capital to community development lenders, with at least 80% of borrowers being women or people of color who play a central role in governance [21].

• Boston Impact Initiative Fund: Supporting entrepreneurs through loans, equity investments, and grants, this fund emphasizes economic justice by applying a race-based lens to ownership and worker participation [21].

• RSF Social Finance's Racial Justice Collaborative: This fund offers diverse forms of capital to social enterprises led by BIPOC communities, with external advisers ensuring accountability to those served [21].

Collaborative investments amplify the impact of regenerative finance. For example, in August 2024, the Nathan Cummings Foundation, The Rockefeller Foundation, and the Schmidt Family Foundation jointly invested in Aligned Climate Capital's Fund 2, bringing total commitments to $70 million. This fund supports companies advancing clean energy, efficient buildings, electric transport, and sustainable land use [19].

Peter Davidson, CEO of Aligned Climate Capital, highlighted the opportunity:

"It is incredibly exciting to have the support of these leading mission-aligned foundations. We firmly believe that the climate transition is a unique opportunity for investors to generate strong returns, while creating new jobs and economic opportunities for all." [19]

Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation, added:

"Low-income households, which typically spend a higher proportion of their income on energy, have been largely left out of the clean energy transition. Financial vehicles like the ACF2 help scale the deployment of proven climate technologies which deliver deep community impact, ultimately increasing access to affordable clean energy for those so often left behind and helping to combat the climate crisis for everyone." [19]

Foundations exploring regenerative finance should rethink traditional ideas of risk and return. Nonextractive terms, such as 0% interest, and community involvement in decision-making are key steps. Supporting initiatives that address challenges holistically reinforces a strategy that combines financial returns with community empowerment [21].

Building Internal Capacity for Climate Grantmaking

While external partnerships and funding strategies are vital, the success of climate grantmaking also hinges on strengthening internal operations. Foundations need to develop their internal systems and expertise to effectively manage climate programs. This involves a mix of staff training and operational adjustments that align with climate-focused objectives.

Training Staff in Climate Skills

Managing climate-related grants requires staff to develop specialized knowledge. Expertise in areas like climate justice and carbon accounting can significantly improve their ability to assess proposals and grasp the broader implications of their funding decisions. For example, understanding how a project addresses both environmental goals and social equity is critical in today’s climate philanthropy landscape [25].

In February 2025, The Kresge Foundation highlighted this need by hiring a Program Officer for its Environment Program. This role was designed to address climate change while promoting racial and economic justice. Responsibilities included managing grants under the Climate Change, Health, and Equity Initiative (CCHE) and supporting equitable climate solutions in cities across the U.S. [25].

Staff also benefit from interdisciplinary skills like design thinking, effective collaboration, and stewardship. These abilities help integrate climate action into broader philanthropic goals. Additionally, fostering learning in areas like foresight and systems thinking enables staff to see how climate issues connect with health, education, social justice, and economic development, paving the way for systemic solutions [48, 49]. With technology playing a growing role in both grantmaking and climate solutions, digital literacy and critical thinking are becoming equally important [24].

Jon Cracknell, Director of The Hour Is Late, emphasizes the importance of comprehensive climate training:

"Integrating climate action into your work can feel daunting. This course will give you the confidence to take effective action. It will help you situate yourself in the wider ecosystem of climate philanthropy and equip you with the skills and expertise needed to take immediate next steps." [25]

Similarly, Louise Driver, Executive Director of the Independent Philanthropy Association South Africa, shared how professional development helped her prepare for climate-related challenges:

"The course equipped me with valuable insights into climate challenges, preparing me for COP, and offered practical guidance on integrating climate considerations into funding strategies." [25]

Beyond staff training, operational changes can embed climate priorities into the foundation’s everyday work.

Embedding Climate Criteria into Operations

To fully integrate climate considerations, foundations must rethink how they evaluate and manage grants. Climate change touches nearly every area of philanthropy, so adding specific climate-related questions to grant applications can uncover important insights. For instance, applicants could be asked how their projects contribute to climate solutions or reduce environmental impact [2].

In practice, this might mean a health grant supports community resilience to extreme weather, or an education grant funds programs that teach climate literacy. These adjustments ensure climate considerations are woven into all funding decisions.

Foundations should also evaluate their investment practices. Aligning financial strategies with climate goals - such as divesting from industries tied to fossil fuels or deforestation - demonstrates a commitment that extends beyond grantmaking [2]. Simplifying grant applications and reporting processes can further support grassroots organizations, while offering multi-year, unrestricted grants provides flexibility for these groups to adapt their approaches as needed [2].

Other impactful strategies include collaborating with like-minded funders to share knowledge and coordinate efforts, commissioning research or reports, and advocating for climate policies [2]. Foundations can amplify their influence by using their platforms to publish progress on climate initiatives, inspiring others in the philanthropic community to take action [2].

Conclusion: Driving Change Through Climate Grantmaking

Foundations now have a clear path to create meaningful climate impact by leveraging innovative strategies, building partnerships across sectors, and strengthening their internal capabilities. Turning ambitious climate goals into measurable outcomes requires simplifying and sharpening grantmaking approaches. To address the pressing climate challenges affecting our communities, bold actions and strategic collaborations are no longer optional - they’re essential.

Despite progress, significant funding gaps remain, presenting an opportunity for foundations to redirect resources in ways that amplify their impact.

"We cannot create what we cannot imagine." – Lucille Clifton [4]

Adopting systems thinking and committing to long-term funding are key to driving transformative change. Some of the most effective climate grantmaking happens when foundations offer general operating support to strong, capable organizations, rather than limiting funds to narrowly defined projects.

Equity must be a cornerstone of all climate funding decisions. Communities on the frontlines of climate change - those bearing the greatest burden - deserve both direct access to funding and an active voice in shaping solutions. This requires rethinking application processes, backing grassroots initiatives, and ensuring that climate strategies promote both environmental and social justice.

The climate crisis also calls for foundations to consider increasing their annual payout rates to 10–15% and aligning their investment portfolios with climate objectives, including full divestment from fossil fuels [1]. Foundations are uniquely positioned to provide the kind of high-risk, patient capital that governments and markets often shy away from, fueling innovations that can drive real change.

Evidence shows that collaborations across sectors can unlock billions in clean-energy investments. By balancing funding priorities and empowering communities, foundations can create interconnected strategies that lead to systemic change.

What sets foundations apart is their ability to take risks, bring together diverse stakeholders, and support solutions that traditional funders might overlook. By fostering partnerships among unexpected allies, backing a mix of proven and experimental ideas, and prioritizing community leadership, foundations can pave the way for meaningful progress.

The moment to act is here. By reallocating resources, adopting long-term approaches, and centering the voices of frontline communities, foundations can lead the charge toward a more sustainable and just future. The opportunity is immense, and the responsibility is clear.

FAQs

How can foundations incorporate climate justice principles into their grantmaking strategies effectively?

Foundations can integrate climate justice principles into their grantmaking by putting equity and inclusivity at the forefront. This begins with actively connecting with frontline and marginalized communities to better understand their specific needs and the challenges they face. Listening to the voices of those most impacted by climate change ensures that funding decisions are grounded in real-world experiences and priorities.

Using participatory grantmaking models is another way to empower these communities by giving them a direct say in how funds are allocated. Alongside this, practicing transparency and accountability - like openly sharing funding criteria and decision-making processes - builds trust and strengthens relationships with local organizations. By emphasizing collaboration and fairness, foundations can take meaningful steps toward advancing climate justice.

What innovative funding strategies can foundations use to support climate goals while achieving financial returns?

Foundations have several tools at their disposal to support climate initiatives. One option is blended finance, which merges public and private funding to boost investment in climate-related projects. This approach helps pool resources effectively, creating a larger impact.

Another strategy is using performance-based grants, where funding is directly linked to achieving clear, measurable environmental goals. Similarly, outcome-based financing focuses on allocating resources based on tangible climate results, ensuring funds are used efficiently.

Foundations can also consider social impact bonds, where private investors provide upfront funding for climate projects. Investors are repaid only if the project successfully meets its climate targets. These financial models not only tie returns to environmental progress but also promote accountability and measurable outcomes.

Why is collaboration across sectors vital for foundations to drive meaningful climate action?

Collaboration across different sectors is a key ingredient in tackling climate change. Governments, businesses, non-profits, and communities all bring unique resources, expertise, and perspectives to the table. When these groups work together, they can address the complex and interconnected nature of climate challenges more effectively.

By joining forces, it's possible to develop solutions that are not only better for the environment but also practical for the economy and inclusive of diverse social needs. This teamwork helps climate initiatives make a bigger impact, while also ensuring they are durable and broadly supported. Foundations, in particular, can play a powerful role by building partnerships that spark bold policies, scalable projects, and meaningful, long-lasting progress.