A FAMILY FOUNDATION OR NON-PROFIT ORGANIZATION CAN USE THE INVESTMENT PORTFOLIO TO ENHANCE
THE FOUNDATION OR ORGANIZATION MISSION WHILE USING THE EXISTING INVESTMENT MANAGERS
At the foundation of an institution
lies its mission. Mission should impact all aspects of an institution's activities, including the management of its financial
resources. For many people, this relationship between mission and investment is not obvious. Mission for them is something
accomplished with the proceeds of investments. But, think of investments as an easy add-on to enhance the mission.
Of the 100 largest economies of the world, the United Nations states that 51 are actually corporations. Think of the enormous
influence that corporations have and how many of them may actually intersect with the mission of your foundation. Even smaller
corporations have the power to influence positively or negatively the objectives of your mission.
a mission that may include educational opportunities for lower income children can be offset by corporate actions that fill
and support the airwaves with material that is culturally reducing the attractiveness of an education by promoting bad civic
behavior. Have you thought of using your portfolio to improve public decency?
A mission that desires to improve
health conditions can leverage their ownership of tobacco companies to reduce promotions and advertisements directed toward
What kind of community do you want?
You can use your investment holdings as well as their financial
returns to help you on your path to effect you mission.
How a family foundation invests can be an additional means
for achieving mission. Just because a company has high brand-name awareness does not mean that it is a “good company”.
How did you feel when AT&T became the “Porn King” of America in the period 2000-2003? Did you know they were?
They finally sold their whole cable TV and XXX-rated porn business and exited that terrible phase of their public life. Did
you know that the largest porn producer was associated with organized crime? AT&T knew it because we brought it to their
attention What a terrible lesson in American civics. The bad decision makers that brought porn to AT&T eventually left
the company. (That AT&T was acquired by SBC which retained the AT&T name but it is not the same management or company).
The objective of mission-enhanced investing may be said to be the alignment of investments with mission. But, it can
go far deeper than a mere refocusing. Mission-enhanced investing can lead to complementary, mutually reinforcing approaches
to investment and grantmaking, on one hand, and philanthropic mission and fiduciary responsibility on the other.
An institution's mission can play a driving role in its investment policies. First and foremost, its investments must generate
total returns for its programs, but they can also be consistent with the institution's mission. Consistency leads to clarity,
and clarity about mission reinforces an organization's institutional integrity and extends its influence.
investing emphasizes that mission comprises the core of all decision-making. It makes clear to both internal and external
constituencies that the principles embodied in its mission affect every aspect of institutional life. The process of defining
an investment policy makes an organization's mission congruent with its financial stewardship. It works toward consistency
because it recognizes that growth and profit are illusory to the extent that they come at the price of a compromised mission.
An institution's investments can give it an additional means for achieving its mission. Since the mission statement
guides the organization as a whole, it should direct investment decision-making. Mission enhancement through investments begins
with the institution itself, with a process of self-examination and self-understanding. A part of that process must be an
analysis of the purposes an institution's financial resources may serve. This process permits an informed -- and effective
-- advocacy that reinforces the organization's purpose.
Another important means of implementing an advocacy program
is social screening. Social screening is the inclusion of ethical, moral, or religious criteria in investment decision-making.
Family foundations do not choose these criteria randomly. Implicitly or explicitly, foundations look to their missions for
their expressions of their core issues and sustaining values. Thus, their investment policies represent an elaboration of
part of their mission.
There are many investors interested in these concepts. A conservative estimate made by
the Social Investment Forum in 2004 would put the figure at about 15 percent of all professionally managed investments which
is over $2 trillion dollars.
You may be aware of socially responsible investing. Socially Responsible Investing
(SRI) is the incorporation of an investor's social, ethical, moral, or religious criteria in the investment decision-making
process. Mission enhanced investing, a form of SRI, is the incorporation of a family foundation's or non-profit organization's
mission in its investment decision-making process. It has much more flexibility. For example, many SRI investors blacklist
offensive companies. Mission enhancement investing can be as simple as reviewing the existing portfolio and identifying companies
where changes can be made through professional advocacy. There is no need for immediate blacklisting. Change can be attempted
and then a decision can be made to blacklist or not if the advocacy is not successful. Our experience is that most companies
can be influenced when the advocacy process is given enough time.
This approach uses your existing money managers
–there is no need to change managers.