equity 3

Equity by Another Name

April 13, 2015 //

Asset management lingo feels so different from a philanthropic organization’s programmatic lingo – from “Equity” Valuations to Social, Political and Economic “Equity” – it’s no wonder that attempting to reconfigure investments towards social impact can feel bewildering and mysterious, especially when the world of finances and investments feel so distant from a foundation’s programmatic work.  Yet, as distant and unfamiliar financial management can be, it is the endowment’s profitability that makes programmatic efforts even possible.  In other words, for many foundations, the endowment pays the bills – convenings, grants, salaries, and all the work so integral to meeting a philanthropic organization’s mission. Thus, it is vital not to overlook the stewarding of assets as an opportunity to more closely align to mission.

The philanthropic sector has seen this trend where philanthropic leaders and organizations are converging foundations’ asset investment and programmatic strategy – case in point: Gates Foundations’ divestments from Coca-Cola and Exxon.  And, philanthropic leaders, like our friend and colleague Ellen Friedman at the Compton Foundation, continue to sustain conversations about how to use asset resources, some representing multitudes more than grant making dollars, as another lever for community impact.

Recently, TWI reallocated our own investments. I was pleasantly surprised that 3 meetings and a few discussions later, we’ve moved 40% of TWI’s assets in more socially responsible investments! What made it so fast and easy? Here are a few learnings and observations, especially for our other small & mighty foundation colleagues:

Trust & Partnership:  These TWI values don’t just apply in our relationship building work with nonprofit leaders, it applies to our social impact investing process.  Our long-standing relationship of trust with Wetherby Asset Management ensured an open dialogue where our concerns could be addressed.  Plus, their expertise and framework in social investing was exactly what we needed to identify our investment objectives given the size of our endowment and our intentional decision to spend-down.

Small & Efficient: TWI’s smaller sized board and staff meant that our asset management efforts didn’t live in a separate department from programmatic work.  With smaller size comes more integration and faster decision making, something we hope other like-sized foundations take advantage of.

Expertise Building: The Asset Management industry is quickly developing expertise and offerrings for social impact investment, due to clients’ prioritizing divestment and values frames for investment.  I doubt we would have seen this type of approach, framework, and nuanced thinking even just 5 years ago.  We wanted to be careful not to buy into social impact “washing,” similar to the “green washing” of products, and will continue to make thoughtful decisions that align our investment practices with our organizational values.

The distance is closing between asset portfolio management and programs, for us and many kindred foundations. It will only get more integrated as asset management companies serve up the type of offerings their social investment clients are seeking, and philanthropic organizations take stronger interest in how their assets align to mission.

TWI is proud that we’re aligning our asset management decisions with our mission and core values, and we want to learn with you. What are your questions, and insights in this arena?