Why Fiduciary Duty Must Serve Place-Based Investment in Philadelphia
In her Nonprofit Quarterly essay, Sandhya Nakhasi challenges a long-standing assumption embedded in investment governance: that fiduciary duty should prioritize financial returns above all else. Instead, she suggests that fiduciaries — whether in foundations, asset management, or institutional endowments — should adopt a framework centered on community care, partiality to impacted populations, and loyalty to community wellbeing. In this reframing, fiduciary duty becomes not just a legal obligation but an ethical commitment to the people most affected by investment decisions. (Nonprofit Quarterly)
Traditional fiduciary norms emphasize care, impartiality, and loyalty to an institution’s financial interests. But Nakhasi and others argue that this narrow framing has historically supported the very systems that extract wealth from marginalized communities rather than invest in their sustained health. Rethinking fiduciary duty means shifting from asking “What financial return can we secure?” to “What community outcomes are we enabling?”. (Nonprofit Quarterly)
This shift matters not just in theory but in the everyday lived experience of Philadelphia’s neighborhoods. Right now, the Philadelphia School District is proposing a sweeping reorganization of its facilities that would close up to 20 schools in the coming years and merge or relocate students to other campuses as part of a multi-billion-dollar facilities plan. (Chalkbeat) These closures respond to long-term enrollment declines and infrastructure challenges, but they also carry profound implications for learning ecosystems, community cohesion, and the supports that extend beyond the school day.
For neighborhood schools, especially those serving low-income families, closures mean not only the loss of a building but often the loss of after-school programs, hubs for family engagement, and trusted spaces where students receive enrichment and stability — all elements critical to healthy childhood development and community resilience. Moreover, each shift in school boundaries or program location can strain families’ logistics, fragment social networks, and require new partnerships to re-establish support structures.
In this context, the traditional interpretation of fiduciary duty — concerned primarily with preserving institutional capital — feels misaligned with what these communities need: place-based investment that supports continuity, equity, and opportunity. For example, universities like Penn that partner with community and assisted schools (such as through Comer and Community Schools frameworks) are uniquely positioned to rethink how capital and influence are deployed. These partnerships often extend beyond academics to include health, youth development, mentorship, and expanded learning time. But their success depends on sustained, multi-sector investment that sees community outcomes as central, not peripheral.
The idea of fiduciary duty reframed for community care pushes institutions to consider how their capital commitments contribute to or detract from long-term local wellbeing. In practice, this could mean:
Prioritizing investments in community-centered programs that support after-school enrichment, mental health services, and youth engagement where school closures disrupt traditional infrastructures.
Redefining success metrics to include social and developmental outcomes alongside financial stability.
Structuring partnerships with local organizations, families, and students in ways that share decision-making power, rather than imposing top-down solutions.
Considering mission-aligned investing or impact allocations that accept non-traditional returns in exchange for measurable community benefits.
These shifts echo Nakhasi’s proposed duties — where investment care includes community wellbeing, partiality acknowledges historical disinvestment in specific populations, and loyalty places the long-term prosperity of neighborhoods at the center of decision making. (Nonprofit Quarterly)
As Philadelphia faces structural change in its educational ecosystem, the need for place-based investment grounded in equitable fiduciary thinking becomes especially urgent. Closing schools — even with the intent to bolster quality and modernize facilities — risks destabilizing ecosystems if long-term enrichment opportunities and youth supports are not intentionally and sustainably resourced.
For impact investors, community partners, and institutions like Penn, this moment presents a chance to lead in reimagining how fiduciary duty can serve not just balance sheets, but people, places, and futures. Place-based investment that centers community outcomes isn’t just ethical — it’s essential if we are committed to building resilient schools, thriving children, and equitable cities.
