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Forum Foundation The Mission in the Marketplace

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  • 1. Social Investment How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions 2007
  • 2. A Brief Introduction
    • This PowerPoint is based on a booklet produced by the Social Investment Forum Foundation entitled, “The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments & Enhance Philanthropic Missions.”
    • This booklet can be found online at http:// www.socialinvest.org/pdf/research/Missioninthe
    • Marketplace.pdf .
    • Acknowledgements:
    • J.A. & H.G. Woodruff, Jr. Charitable Trust
    • Foundation Partnership on Corporate Responsibility ( www.foundationpartnership.org )
  • 3. An Invitation to Foundations & Endowments
    • Responsible Investing Strategies
    • Social and Environmental Screening
    • Shareowner Advocacy
    • Community Investing
    • Social Venture Capital
  • 4. Creating Value
    • “ [F]oundations are not simply vehicles for distribution of charitable gifts, but rather investors in value creation.”
    • — Jed Emerson
    • Generation Foundation
  • 5. What is Responsible Investing?
    • Responsible investing is an investment process that considers the social and environmental consequences of investments , both positive and negative, within the context of rigorous financial analysis.
  • 6. Terminology
    • The incorporation of environmental, social, & governance (ESG) factors into investment management has been described in a variety of ways: social investing, mission-related investing, values-based investing, socially responsible investing (SRI), ethical investing, double- or triple-bottom-line investing, and responsible investing. This report will use a number of these terms.
  • 7. Socially Responsible Investing (SRI)
    • SRI incorporates issues of
    • Corporate Social Responsibility (CSR) , ranging from environmental concerns to human rights and supply-chain management, from workplace health and safety to equal employment opportunity and human resources policies.
  • 8. Responsible Investing’s Scope and Scale
    • Over $3.6 trillion : Global SRI Assets by Institutional Investors
    • Over $2.29 trillion : U.S. SRI Assets under professional management
    • Over $4 trillion : Assets of institutional investors backing UN Principles for Responsible Investment
    • Over $6 trillion : Assets of UN Global Compact endorsers
    • Over 26% Annual Growth in US SRI Assets 1995-2005
  • 9. Fiduciary Prudence, Performance & Mission-Based Investing
    • Consideration of sustainability as an element of prudent trusteeship
    • Recognition of “extra-financial” benefits
    • Added economic value of environmental performance
    • Competitive long-term performance
    • Variety of options across investment styles, instruments, and asset classes
  • 10. Social and Environmental Screening
    • The Incorporation of Environmental,
    • Social and Governance (ESG) Criteria
    • into Investment Analysis
    • Negative Screening Avoids Poor CSR Performers
    • Positive Screening Identifies Strong CSR Performers
    • “ Best-of-Class” Screening Identifies Sector Leaders
  • 11. Largest Foundations Employing Social or Environmental Screening*
    • Bill & Melinda Gates Foundation
    • Ford Foundation
    • David and Lucile Packard Foundation
    • California Endowment
    • Annie E. Casey Foundation
    • Rockefeller Foundation
    • Carnegie Corporation of New York
    • California Wellness Foundation
    • Robert Wood Johnson Foundation
    • Charles Stewart Mott Foundation
    • Carnegie Corporation of New York
    • Heinz Endowments
    • William Penn Foundation
    • Among 50 Largest Private Foundations
    • Source: Chronicle of Philanthropy, 2006
    *May include a single screen, such as tobacco
  • 12. Shareowner Advocacy
    • Active Proxy Voting
    • Filing and Co-filing Resolutions
    • Direct Dialogue with Management
    • Participation in Shareowner Coalitions and Networks
  • 13. Recent Shareowner Successes
    • Climate Change and Carbon Disclosure
    • HIV/AIDS Policies at Coca-Cola and PepsiCo in Africa
    • Labor Conditions at Taco Bell and Yum! Brands
    • Fair Trade at Procter & Gamble
  • 14. Shareowner Engagement Networks
    • Council of Institutional Investors
    • Foundation Partnership for Corporate Responsibility
    • Interfaith Center on Corporate Responsibility (ICCR)
    • International Corporate Governance Network
    • Investor Network on Climate Risk (INCR)
    • Jewish Shareholder Engagement Network
    • Social Investment Forum
  • 15. Recent Social Shareholder Resolution Proponents Among Foundations
    • As You Sow Foundation
    • Camilla Madden Charitable Trust
    • Conservation Land Trust
    • Edward W. Hazen Foundation
    • Funding Exchange
    • Haymarket People’s Fund
    • Jessie Smith Noyes Foundation
    • Lemmon Foundation
    • Max and Anna Levinson Foundation
    • Nathan Cummings Foundation
    • Needmor Fund
    • Pride Foundation
    • Tides Foundation
    • United Church Foundation
    • Wisdom Charitable Trust
  • 16. Community Investing (CI)
    • Provides capital to traditionally underserved communities
    • Generates high-impact social returns
    • Supports affordable housing, child care, and sustainable economic development
    • Provides diverse investment opportunities, from below-market deposits to risk-adjusted, market-rate returns through debt, equity and venture capital
  • 17. Community Investing Institutions
    • Community Development Banks
    • Credit Unions
    • Loan Funds
    • Venture Capital
    • International Microfinance Funds
    • Grown from $4 billion in 1995 to nearly $20 billion in 2005
  • 18. Sample Foundation Leaders in CI
    • F. B. Heron Foundation
    • Jewish FundS for Justice (JFSJ)
    • A. J. Muste Memorial Institute
    • Rose Foundation for Communities and the Environment
  • 19. Social Venture Capital
    • “ Double-bottom-line:” both financial and social returns
    • Alternative Investment opportunities in early-stage private equity
    • Debt financing to support non-profit social enterprises
    • Over $600 million in capital from “Angel Investors” and Institutions alike
  • 20. Getting Started
    • Conduct Research and Gather Resources
    • Ask Whether Your Existing Managers and Consultants Have the Necessary Expertise
    • Consult a Financial Advisor with Expertise in Mission-Related Investing
    • Have a Strategic Conversation within Your Organization on Your Investment Policies
    • Present Findings to Your Foundation Board or Investment Committee
    continued
  • 21. Getting Started
    • Develop Active Proxy Voting Guidelines
    • Draft a New Responsible Investing Policy
    • Explore Community Investing Opportunities
    • Lead by Example: Share Knowledge & Best Practices
    • Join Responsible Investor Networks
  • 22. The Social Investment Forum
    • Dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing
    • www.socialinvest.org
    • The Social Investment Forum 1612 K Street NW, Suite 650 Washington, DC 20006 phone (202) 872-5361 fax (202) 463-5125
    • Join online today!