Positive Sum

CHAPTER SIXTHE MIRACULOUS POWER OF POSITIVE SUM: HOW PHILANTHROPIES CAN REMAKE CAPITALISM

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.

—John Maynard Keynes¹

Some years ago, a colleague told me a joke about how modern philanthropy had become an ecosystem of investment companies that do a little grantmaking on the side. The joke went something like: “Did you hear about the Lung Cancer Prevention Foundation? They made a killing in tobacco stocks and just rebranded themselves the ‘Lung Cancer Foundation.’” It made me want to laugh and cry at the same time.

A man named Luther Ragin, Jr., changed all that.

Ragin's name recognition rose as a co‐founder and former CEO of the Global Impact Investing Network (GIIN). But before that, he worked as the Chief Investment Officer of the F.B. Heron Foundation, a New York–based philanthropy dedicated to helping people and communities help themselves. Soft‐spoken and professorial, he had spent decades navigating the relationship between organizational money and mission.² He understood Wall Street. He understood capital markets. And with a growing sense of frustration, he understood how and why foundations were squandering their most powerful resource.

When Ragin joined Heron in 1999, he inherited a typical philanthropy portfolio. The endowment was being managed for maximum returns, of which only ...