Investment impact – Foundations separate mission, investments

Most foundations do not consider the social implications of where they invest their endowments, the New York Times reported June 11.

“You would think that foundations have a clear mission in social policy issues and would look at the portfolio as another tool they could use, but by and large they don’t,” Scott Fenn, executive director of the Investor Responsibility Research Center in Washington, D.C., told the Times.

When the Council on Foundations last surveyed its membership in 1997, it found that less than 15 percent screened investments for social or ethical considerations.

Small foundations, with assets of $10 million or less, were almost twice as likely to screen their investments as foundations with assets of $100 million or more, according to the survey.

While many foundations were active in the campaign against investing in South Africa in the 1970s and 80s, they have not gotten involved in more recent investment issues.

A few high-profile groups, like the nearly $9 billion Robert Wood Johnson Foundation, have rid their portfolios of tobacco stocks. Many high-profile foundations that support health issues, including the Bill and Melinda Gates Foundation and the Commonwealth Fund of New York, still invest in tobacco.

“If you have a large endowment, the power of that money to create change is probably more than the power of your grant-making,” said Jill Ratner, a foundation executive who advocates socially responsible investments.

Ratner said foundations should think more about the potential impact of the principal of their portfolio, which typically dwarfs the investment income they give away in grants.

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