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Foundations Increase Impact Through Mission-Aligned Investing
By Michael Schweibinz

By Betsy M. Markus and Michael Schweibinz

In recent months, organizations like the Association of Small FoundationsMission Investors Exchange, and The Forum for Sustainable and Responsible Investing (US SIF), have published guides to assist foundations with aligning their investment portfolios with their missions. The message is simple, though implementation can seem daunting.

In general terms, foundations “dedicate their resources to some of the most difficult social and environmental problems in the world.” So why not ensure that foundations are investing for intentional positive impact, by aligning 100% of their dollars with the foundation’s mission? Foundation boards and investment committees that have made the shift to invest their assets in a sustainable, responsible, positively impactful (SRI) manner realize that they are stewards of all of the foundation’s money, that it is their duty to use all of the foundation’s assets in the best possible ways.

Current estimates state that private foundations alone control $840 billion in investible assets within the United States. These foundations put considerable resources into deciding how to have the most impact with the approximately 5%, or $42 billion, that they give philanthropically each year. It’s exciting to observe that many are beginning to consider the additional achievements that could be realized when the other $798 billion are also aligned with the foundation’s mission.

These recently published investment guides call on foundation staff members and trustees to “encourage their institution to align a broader portion of their assets under management with their programmatic goals or to factor environmental, social and corporate governance (ESG) issues into their investment decisions to help fulfill fiduciary duties.” Given the leverage held by foundations on a global level, even a small shift to SRI investments could have material impact on the world.

Association of Small Foundations

http://www.smallfoundations.org/tools-resources/browse-by-topic/investments/impact-investing/

Mission Investors Exchange, Field Guide to Impact Investing

https://www.missioninvestors.org/CommunityFoundationFieldGuide

U.S. SIF, Unleashing the Potential of US Foundation Endowments

http://www.ussif.org/files/Publications/unleashing_potential.pdf

First Affirmative is proud to have been one of the first firms in the responsible investing space in 1988, and is quite pleased to see such widespread implementation taking hold. The growth of SRI assets over the past two decades demonstrates the strength and continuing evolution of investment strategies aimed at a sustainable future.

The first US SIF Trends Report in 1995 measured $639 billion in SRI assets, a fraction of the $3.74 trillion in SRI assets under professional management in 2012. While there is still progress to be made, more than 100 U.S. foundations partake in some form of responsible investing. Hopefully these and similar reports will catch the attention of foundations worldwide, persuade them to act, and help them take initial steps down the path.

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

 

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: March 5, 2014