This past July, the Council on Foundations and the Commonfund Institute released their collaborative study examining foundation perspectives and practices of responsible investing. Foundations are looking for new ways to invest in their communities and considering alternative approaches to managing their endowments. Elizabeth Krempley, Director of Communications at the Council on Foundations, points to the findings of this study to see how and why foundations are looking to responsible investing practices as strategic openings. Wisconsin Philanthropy Network found it interesting, and hopes you will too.
NEW STUDY OF FOUNDATION RESPONSIBLE INVESTING PRACTICES
by Elizabeth Krempley
The Council on Foundations-Commonfund Study of Responsible Investing was released jointly today by the two representative organizations. The study, believed to be the largest of its kind, provides foundations with invaluable insights into how the sector and individual portfolios are being shaped by responsible investing practices, potential hurdles to their adoption, and what the entry points are for those interested in fully engaging these practices in their endowment strategies.
Data analyzed from 186 U.S. private and public/community foundations representing a total of $39.7 billion in endowment assets revealed that a third of respondents have implemented or are actively considering mission-related investing practices in managing their endowed assets.
However, impediments to adoption—some identified as substantial—remain, with concern over returns being the single most commonly reported barrier.
“The Council on Foundations-Commonfund Study of Responsible Investing is a powerful tool for investment committees, board members, and investment staff who are eager to explore new strategy options. This is particularly relevant today as many foundations are asking if their investments can be invested in other ways beyond traditional grant making to deliver benefits to the communities they serve and complement the efforts central to the foundation’s mission. Our hope is that this study will help inform and educate philanthropy on practices increasing in popularity,” said Council on Foundations President and CEO Vikki Spruill.
Additional findings from the study include:
- 48 percent of respondents did not know or were unsure as to whether responsible investing is consistent with their fiduciary duty. Survey respondents answered these questions before or immediately following the release of new Treasury Department guidance that clarifies this point. It remains to be seen what effect this clarification and other regulatory efforts will have.
- Impact investments are the most popular strategy among surveyed foundations.
- Donor interests and desires remain important drivers for community foundations.
- Among all respondents, community economic development was cited most frequently as the impact area in which foundations are most likely to increase their mission-driven investments.
“The power of the study lies in what the findings offer our field: an unparalleled examination of what motivates foundations to embrace responsible investing practices and what barriers, both perceived and real, keep foundations from employing them,” adds Spruill.
The full Council on Foundations-Commonfund Study of Responsible Investing is available at no cost to all at https://www.cof.org/content/council-foundations-commonfund-study-responsible-investing-foundations-survey-2016.
About the Council on Foundations
An active philanthropic network, the Council on Foundations (www.cof.org), founded in 1949, is a nonprofit leadership association of grantmaking foundations and corporations. It provides the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance and sustain their ability to advance the common good. With members from all foundation types and sizes, the Council empowers professionals in philanthropy to meet today’s toughest challenges and advances a culture of charitable giving in the U.S. and globally.
About Commonfund Institute
Commonfund Institute houses the education and research activities of Commonfund and provides the entire community of long-term investors with investment information and professional development programs. Commonfund Institute is dedicated to the advancement of investment knowledge and the promotion of best practices in financial management. It provides a wide variety of resources, including conferences, seminars and roundtables on topics such as endowments and treasury management; proprietary and third-party research such as the NACUBO– Commonfund Study of Endowments; publications including the Higher Education Price Index (HEPI); and events such as the annual Commonfund Forum and Commonfund Endowment Institute.