Active investors needed

By Todd Cohen

The Bill & Melinda Gates Foundation is missing a great opportunity to put its money where its heart is.

By focusing its grants on the root causes of problems like disease and illiteracy, and deciding to spend all its assets within 50 years of the death of its last trustee, the foundation has set an important example for other foundations.

But in its approach to investing its assets, the foundation is proving to be as blind as its peers to the impact a philanthropy’s investments can have on causes it cares about.

As the Los Angeles Times reported, the foundation has investment holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights or unethical practices.

In response, while conceding that shareholder activism can help shape corporate behavior, the foundation says it wants to “stay focused on our core issues” through its grantmaking.

While required by law to pay out at least 5 percent of their assets in grants and overhead, foundations can do a lot more to advance their mission by being more thoughtful and active investors of the remaining 95 percent of their assets.

Todd Cohen is the Editor and Publisher Philanthropy Journal.

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