- Increasing size of foundations and recent regulatory changes makes mission-aligned investing more important and achievable than ever. The most recent assessment of US-based foundation assets placed the total at $715 billion in 2012,up from $662 billion in 2011. Increased focus on transparency, improved data, and an evolving understanding of fiduciary responsibility by foundation boards and the Internal Revenue Service (IRS) means that foundations have more support to align their investments with their missions. The IRS recently released a notice which supports mission-aligned investing, stating that “foundation managers may consider all relevant facts and circumstances, including the relationship between a particular investment and the foundation’s charitable purposes.”
- A look at the current landscape. Cornerstone Capital Group, in conjunction with the Sustainability Business Lab (S-Lab) of MIT Sloan School of Management, undertook an assessment of foundations’ public disclosures on mission-aligned investing. The assessment focused on 25 large foundations and examined their publicly available data, including foundation information databases. In addition, we interviewed key experts in foundation investing, including Bruce DeBoskey of The DeBoskey Group.
- Broad interpretation of transparency, limited information publicly available. Foundations are moving deliberately but slowly toward mission alignment. Only 20% of the group explicitly mention mission alignment and 12% state they integrate Environmental, Social and Governance (ESG) factors into their investment decisions. It is possible that institutional barriers exist for foundations seeking to increase the transparency and extent of mission-aligned investing.
Access the complete report here.
Sebastian Vanderzeil is a research analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.
Andy Zheng is a Research Associate at Cornerstone Capital Group. Andy graduated from Bowdoin College with an interdisciplinary major in Mathematics and Economics and a minor in Visual Arts. He spent his junior year studying abroad at the University of Oxford and the summer prior to that at the Sorbonne in Paris. Andy passed Level I of the CFA Program in January 2014.
We would like to thank the following individuals for contributing valuable insights to this report:
Neerja Bharti, Allegra Fonda-Bonardi and Roseliny Genao, MIT Sloan School of Management
Jason Jay, Senior Lecturer, Sustainability and Director, Sustainability Initiative, MIT Sloan School of Management
Professor Robert G. Eccles, Professor of Management Practice, Harvard Business School and Visiting Lecturer, MIT Sloan School of Management
Antoinette LaBelle, Managing Director, Network Partnerships, Growth Philanthropy Network
Anne Sherman, Vice President, Nonprofit Strategy, Growth Philanthropy Network
Laura Berry, Executive Director, Interfaith Center on Corporate Responsibility