Thursday, February 21, 2008

Finance... Mission-related investing

Some foundations are exploring the concept of mission-related investing, sometimes known as socially responsible investing.The Minnesota Council on Foundations, through its Partnership on Corporate Responsibility, suggests that mission-related investing could include:

  • Portfolio screening: A foundation could screen portfolios to include best-in-class corporations or to avoid corporations with poor records on social issues, environmental issues or other issues of interest to the foundation.
  • Proxy voting: Shareholder activity could include voting proxies on a company’s proxy statement or developing a set of proxy voting guidelines covering issues of concern to the foundation. These activities night also include engaging corporations in dialogues on issues of concern as well as filing and co-filing shareholder resolutions.
  • Early investment: Mission-related venture capital uses the foundation’s assets for early-stage investment in companies that are seeking solutions to the problems that the foundation is seeking to solve through its grantmaking.
  • Community investing: Community investing assists underserved communities in meeting their development needs. The Council acknowledges that there is disagreement in the foundation field about the use of mission-related investing. Some argue that the board’s primary fiduciary responsibility is to ensure the maximum return on investment assets. Others believe there is a responsibility to consider whether investment decisions will further charitable purposes, or at least not run counter to them.