US foundations begin to align investment with impact

Breaking from traditional practice, major charitable foundations in the US are beginning to connect the social and environmental effect of their endowment investments with their philanthropic goals, as has been reported in the LA Times.

Douglas Bauer, senior vice president of Rockefeller Philanthropy Advisors, was quoted as saying, “A head of steam has been created around the issue of ‘mission-related investing.’” 

Many trustees finally realised that "if they are serious about social change and social impact . . . they have to look beyond grant making," said Bauer of Rockefeller Philanthropy Advisors. "Everybody now gets it. The light bulb went on."

Amongst others, the $7.8bn W.K. Kellogg Foundation has established a $100m fund for social and mission-related investing in the United States and Africa.

Some of this impetus for change may be derived from an LA Times report in January “that much of the Gates Foundation's $35bn portfolio was invested in companies whose poor records on environmental stewardship, governance or human rights -- in some cases involving the exploitation of child slaves -- worked counter to the foundation's charitable goals.”

As one of the reports cited, the foundation had invested $22.4m in companies accused of supporting the Sudanese government, which has been implicated in the genocide against citizens in its Darfur region; the Gates Foundation has since divested itself of Sudan-related investments.

• Related resource: Handbook on Responsible Investment across Asset Classes, produced by Boston College and funded by the F.B. Heron Foundation