By Todd Cohen
Playing a more active shareholder role can begin simply with voting proxies in favor of issues that support a foundation’s mission.
“You vote your proxies,” says Michael Passoff, associate director of the corporate responsibility program at the As You Sow Foundation in San Francisco. “That’s basic fiduciary responsibility, although most institutions don’t even carry that out.”
The next step, he says, would be to try to educate a company about particular issues, participate in shareholder “dialogues” with corporations, or file shareholder resolutions.
And if they conclude they cannot or do not want to invest the staff or time to become more active shareholders, he says, foundations can hire a professional proxy-voting service, join a coalition that works on shareholder issues or contact one of a small but growing number of foundations that are trying to provide guidance to other foundations on shareholder activism.
The Interfaith Center on Corporate Responsibility at iccr.org in New York City, for example, works on behalf of religious organizations that have big pension funds and, with the Coalition for Environmentally Responsible Economies at ceres.org, co-managed an effort this year asking 24 companies to disclose any of their own initiatives to reduce emissions of greenhouse gases, says Caroline Williams, chief financial and investment officer for the Nathan Cummings Foundation in New York City.
Investor Responsibility Research Center at irrc.org provides research and analysis on proxy issues, while the Shefa Fund in Philadelphia provides guidance on shareholder issues for Jewish foundations, and the Rose Foundation in Oakland, Calif., provides information for other foundations on issues such as environmental fiduciary responsibility and Securities and Exchange Commission rules, Passoff says.
The As You Sow Foundation, the only group in the U.S. that handles shareholder solicitation campaigns on environmental and social resolutions for foundations and nonprofits, offers a broad range of shareholder advocacy services for its clients, Passoff says.
Operating since its founding in 1915 as a trust, with its assets controlled by five bank trustees, The Boston Foundation could make grants only from interest income and dividends on its stock, says Jim Pitts, an adviser to The Boston Foundation and its former chief financial officer and chief investment officer.
In 1997, unhappy with those limitations and with the trustees’ investments that had made cigarette-maker Philip Morris their largest single holding, the foundation board voted to move to a “total return policy.”
Two years later, the foundation secured approval from the bank trustees, and from the state’s attorney general and highest court, to adopt a corporate structure.
But, lacking the staff to track and pursue shareholder issues, the foundation hired what is now Institutional Shareholder Services, a firm in Rockville, Md., that is the largest proxy service, to help it develop a proxy policy, Pitts says.
That policy, available on its website at tbf.org, spells out roughly 130 positions the foundation has taken on shareholder issues.
The firm also acts as the foundation’s voting agency, voting according to policies the foundation sets.
With funding from the three individual clients who were interested in shareholder activism, Rockefeller Philanthropy Advisors teamed up with the As You Sow Foundation to produce “Unlocking the Power of the Proxy,” a comprehensive guide to proxy voting and resources available to foundations that want to become more active investors.
Nearly all its 3,000 copies, published in February and also available at rockpa.org and asyousow.org, have been distributed, while several thousand more have been downloaded, and a new printing is in the works.
“We’re literally in the beginning of this journey,” says Doug Bauer, senior vice president at Rockefeller Philanthropy Advisors in New York City.
Next: Foundations use proxies to link investments, program interests.
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