Skip to main content
Philanthropy Journal Home

Philanthropy Journal News

Proxy power: Part 4

 | 

By Todd Cohen

For many foundations, “proxies are just considered paperwork that has to be filled out,” says Caroline Williams, chief financial and investment officer for the Nathan Cummings Foundation in New York City.

What’s more, she says, the idea of proxy voting typically is far removed from a foundation’s mission and program priorities.

The gap that can exist between a foundation’s investments and its program interests became clear to Williams two years ago, an insight she says led the foundation to become a more active shareholder, and to treat its stock as an asset to protect its philanthropic mission.

In April 2002, the foundation’s board of directors approved guidelines that said its actions as a shareholder should reflect its values, including “transparency” and “accountability.”

The guidelines also said that, in voting its proxies, the foundation should consider its programmatic interests and “engage and help convene dialogues” involving corporations, nonprofits, foundations and other shareholders, Williams says.

At that same meeting, the board approved several grants to address pollution resulting from agribusiness.

In reviewing its stock portfolio two weeks later, Williams says, she found the foundation owned 31,000 shares of stock in Smithfield Foods in Smithfield, Va., the largest hog producer and processor in the world.

“And hog waste is a big environmental pollution issue,” she says.

As a first step in helping it become a more hands-on shareholder, she says, the foundation joined a group that was filing a shareholder resolution seeking more information from Merck about its ethical policy for seeking extension of its pharmaceutical patents.

Companies like Merck that make prescription drugs raised two important concerns for the foundation, Williams says, because it makes health grants, and because it invests for the long-term, and so pays attention to the long-term business models of companies in which it invests.

Patent extensions also involve intellectual-property issues of concern to the kinds of arts and cultural groups the foundation also funds, Williams says.

At Merck’s shareholder meeting in the spring of 2003, the resolution received 7 percent of the votes, considered a strong showing, and exceeded the 3 percent needed for the resolution to be automatically allowed to be placed in the proxy next year.

Next: Foundations say proxy activism can boost returns, mission


Other stories in the series:

Part 1: Foundations flex proxy muscle.

Part 2: As shareholders, foundations can take a stand.

Part 3: Foundations have options for being more active shareholders.

Part 5: Foundations say proxy activism can boost returns, mission.

Leave a Response

Your email address will not be published. All fields are required.