Introduction to Social Investing

"What is Mission-Related Investing?"

Increasingly foundations are reviewing their investment polices and portfolios to assess whether they advance their mission. Stimulated by the recent corporate scandals and bad financial markets, foundations face new questions and opportunities in understanding of corporate globalization’s role.

A foundation's or nonprofit organizations fiduciary responsibility requires obedience to mission. This led William McKeown, counsel to Patterson, Belknap, Webb & Tyler, to state, "board members may have a duty to consider the effect on program of their investment decisions."

He continues:

          In order to fulfill their responsibility to see that the [nonprofit] corporation meets its charitable purposes, they may have a duty to consider whether their investment decisions will further those charitable purposes, or at least not run counter to them.¹

Mission-related investing (MRI) integrates the relationships among asset management and charitable purpose. It is the process by which boards seek to reduce what Gandhi called the dissonance between creed and deed.

There is no single formula for getting involved in MRI.  MRI involves four possible activities that can be approached individually or in concert.

1. Screening of equity and fixed income portfolios to focus the portfolio to best-in-class corporations, or to avoid corporations that have poor records on social and environmental issues, and on corporate governance.

2. Shareholder activity that may include voting proxies on individual company’s proxy statement, or developing a set of proxy voting guidelines covering all issues of concern to the foundation. Shareholder activity also includes engaging corporations in dialogues on issues of concern, and filing and co-filing shareholder resolutions.

3. Mission-related venture capital that 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.

4. Community investing to assist underserved communities to meet their development needs.

This web site focuses on issues of shareholder activity, although resources on other aspects of mission-related investing are included. It is perfectly reasonable to start small and develop comfort levels with any or all of the MRI activities that meet your needs.

The Foundation Partnership on Corporate Responsibility will be happy to try to answer your questions and direct you to additional resources. Questions can be addressed to Stephen Viederman at stevev@igc.org. He will direct your inquiry to the people who can be of greatest assistance.