When most of us donate our time or money to a nonprofit, we expect it to go to a mission we support, but a News4 I-Team investigation found some of the world’s biggest environmental groups have been investing in the oil and gas industry for years.
This information came to light as a result of the Paradise Papers, a trove of 13 million leaked documents that offer a rare glimpse into the secretive world of offshore investing.
One such document, a credit agreement, shines light on some members of a $2 billion private equity fund invested largely in things like oil drilling and exploration, which directly contradicts their environmental mission.
“When I heard it, I was appalled and shocked,” said Gracie Brett, a rising Senior at American University. She’s fighting to get her school to pull its investments out of fossil fuels and has volunteered with a number of environmental groups.
“I would be livid if I was giving my money and then found out it was going to something like that,” she told the I-Team.
In promotional videos on its website, World Wildlife Fund touts its public mission to combat climate change and its opposition to the fossil fuel industry.
“Oil companies want to drill for oil and gas deep beneath the sea bed. it’s a dreadful idea,” says a narrator in one video.
But the leaked documents show the DC-based WWF privately invested more than $2 million with Denham Capital, an international private equity firm that’s specialized in oil and gas, mining and energy investments.
“You’re literally handing money to polluters. That makes zero sense,” Brett said.
The fund is called Denham Commodity Fund Partners Group V, and its initial collection of funds from investors totaled $2 billion. The Paradise Papers document lists 152 separate entities comprised the original investor group, including nonprofit organizations, foundations, universities, other investment firms and a handful of wealthy individuals.
Denham Capital, which manages the fund, declined NBC’s request for comment.
World Wildlife Fund declined our request to speak on camera. By phone, WWF told the News4 I-Team it started unloading its oil and gas investments five years ago, but found some, like the Denham fund, posed a greater challenge.
“Those funds are set up to last you know up to, say, 10 years, and those are going to be extremely difficult to divest from and maybe even costly,” said NYU professor of entrepreneurial finance Robert Whitelaw.
World Wildlife Fund said that agreement started in 2008 and is slated to expire by 2020. The nonprofit pointed out that Denham also funded some renewable energy projects.
WWF also created a separate financial instrument to offset income — so it’s not profiting from its fossil fuel investments — but acknowledges that doesn’t negate its funding of mining, drilling and other practices it deems harmful to the planet.
WWF said it spends money it gets from donors fairly quickly, so donor money does not go into these long-term investments. It’s also shifting toward investments in sustainability and renewable energy and has vowed to avoid any new investments in funds that include a hydrocarbon focus, like oil and gas.
The American Museum of Natural History in New York City committed $5 million to the Denham fund despite featuring numerous exhibits on global warming and touting itself as a leader in the public understanding of climate change.
“It feels very disjointed, I don’t see how their financial investments reflect their public-facing mission,” said Maggie Wiggins, who bought a family membership to the museum. “We are going to look for an organization that tries to do really good things in the front of the house and the back of the house.”
The museum said it’s been working to reduce its fossil fuel investments and actively consider opportunities to invest in companies that advance renewable energy.
“It’s hypocrisy at its core,” said divestment advocate Ellen Dorsey. “Any fund that is channeling resources to those industries is part of the problem.”
Dorsey runs the $156 million Wallace Global Fund, which supports environmental causes, and began divesting from the fossil fuel industry in 2009 as an ethical decision.
“We said it was not OK as a leading climate funder to be invested in the companies driving the problem,” said Dorsey.
She admits breaking ties with private equity can take longer, but she said it is doable and it’s also a sound financial decision as fossil fuels become riskier.
“There is a plethora of investment funds that are fossil fuel free with good performance returns,” she added.
NYU professor Whitelaw said there is no definitive proof whether investing based on your values helps or hurts your portfolio. But he says an “ESG approach” focused on environmental, social and governance factors has gained recent popularity in investing.
“The data right now suggests that even in the U.S. about one in every five dollars is invested with some ESG component,” he said.
Dorsey said 170 foundations around the world have committed to join what she calls a “movement” to divest from fossil fuels and instead invest in energy solutions, like solar and wind.
“It’s a direct connection: You own fossil fuels, you own climate change,” Dorsey told the I-Team, but she knows many investors remain committed to that industry.
The David and Lucile Packard Foundation defended its $50 million investment in a fund which finances oil and gas projects, saying fund managers have complete discretion to maximize profits. It has given grants to the Nature Conservancy and the Natural Resources Defense Counsel.
The William Penn Foundation awarded grants to dozens of environmental projects last year including some that fight fossil fuels. But it has millions invested in an offshore fund that supports oil and gas exploration. A Penn Foundation spokesperson said the group doesn’t comment on its investments.
The University of Washington in Seattle also declined to explain the $9 million it committed to the Denham fund. The university is part of a highly touted coalition to combat climate change.
The documents show the University of Virginia’s Investment Management Company also committed $50 million to the same Denham fund. The institution has publicly said it continually strives to be a global leader in sustainability across all aspects of the university, including efforts to reduce its carbon footprint and building energy use. But after an extensive review of the possibility of divestment, it opted to instead stick with its current investment strategies.
Gracie Brett said divesting would send a better message.
“I think especially with universities they have even greater of a responsibility to divest because they’re in the business of young people,” she said.
The Paradise Papers are leaked documents from the Bermuda-based law firm Appleby, which specializes in offshore financial deals. The leaks were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, which selected and organized collaboration among news organizations around the world, including NBC News, to sift through and research the millions of files.
NBC News found more than 200 nonprofits listed in the trove of documents. They include museums, charities, universities and others — with endowments worth more than half a trillion dollars.
All of these nonprofits said the fossil fuel investments represent a small sliver of their total endowments.
The tax forms nonprofits file do not require a detailed list of private equity investments, so many would have remained hidden without the Paradise Papers leak.
“It’s really great to see the truth come out and so people don’t get duped,” said Brett.