This week, the Indiana State Legislature’s decision to pass a “religious freedom” law that would ultimately allow business owners to discriminate against LGBTQ patrons has rightly been met with strong condemnation and calls to boycott the state.
At least one major grantmaker is not only condemning the action, but also using its investment muscle to exhort Indiana leaders to reverse course. In a letter to Anthem, Inc., an Indianapolis-based health insurer, Dr. Robert Ross, president and CEO of The California Endowment, wrote, in part:
“As a health foundation, we are also profoundly troubled by the negative implications for the health and safety of employees, customers and residents of any state enacting policies allowing discrimination against LGBT people. The very heart of The California Endowment’s mission requires that we respect the dignity of all people living in the communities where we work. Yet, we now find we have investments in a state that has passed a law that runs counter our core mission and values. Our concerns are compounded by the public refusal of Indiana’s governor to disavow discrimination against LGBT Indianans under SB 101. If this refusal to address the discriminatory legal environment persists, we will be compelled by both our fiduciary responsibility – as well as our conscience – to reconsider our investments in Indiana within that negative context.” (emphasis added)
The letter (which was reprinted in Nonprofit Quarterly) was also sent to Indiana Governor Mike Pence.
I am not aware of other foundations that have spoken out so forcefully with both words and threatened deeds against this law, or against similar legislation passed in other states. Yet I’m not surprised to see Dr. Ross be out in front on this, given what I’ve learned through Philamplify.
TCE was one of the first foundations assessed by Philamplify, an initiative from NCRP that’s working to evaluate the largest grantmakers in the U.S. to understand the extent to which they practice strategic, social justice philanthropy. One question we explore is whether “the foundation’s investment policies and practices, including program-related investing (PRI), mission-related investing (MRI) and shareholder activism, advance its mission and systemic change goals.”
Unfortunately, most of the foundations we have assessed to date have not been very proactive in leveraging their assets to further their goals. TCE was an exception in this regard. Our 2014 Philamplify assessment of The California Endowment by Gita Gulati-Partee found that TCE “leverages a robust menu of resources and entry points to make change,” and further, “leads by example, makes powerful use of the bully pulpit and models the power of diversity to drive social change.”
Some of TCE’s mission investing activities noted in our report include:
- Screening out tobacco companies from investments.
- $50 million in program-related investments (PRIs) for affordable housing developments, health clinics and Fresh Works, a fund that incentivizes independent grocery stores to carry fresh produce in underserved communities (so-called “food deserts”).
- Expansion of number of women- and minority-owned investment managers used by TCE.
- Initial foray into shareholder activism, such as writing to Arizona-based companies to protest that state’s restrictive immigration policies.
In comparison, here’s how some of the other foundations that we’ve “philamplified” use mission investing (as of the time of our research):
- Daniels Fund had no MI activities, nor did it screen for alcohol investments, despite its founder’s own acknowledged struggles with alcoholism and the foundation’s work on addiction recovery.
- Lumina Foundation for Education had dedicated up to 2 percent of its asset base for mission-related investing. In 2010, Lumina helped establish and invest in a New Markets Education Fund.
- William Penn Foundation leaders reported that it had no current investment screens or MI goals. In 2011, the foundation made two PRIs totaling $3.5 million.
- More than 80 percent of the Woodruff Foundation’s investments were in the CocaCola Company, and to our knowledge, the foundation did not use any MI tools.
The Winthrop Rockefeller Foundation, a smaller grantmaker with which NCRP piloted the Philamplify methodology, did more than most of these much larger institutions. WRF committed 10 percent of its assets, or $12 million, in a fixed-income fund that invests in affordable housing in its home state of Arkansas. WRF has also made PRIs to several key lending partners that support local business and community development.
If each of the above four foundations also allocated 10 percent of their assets for mission investing, we would see $739 million more being invested in ways that benefit the communities and individuals these foundations care about – while also generating a return.
And if each of these four foundations decided to become activist shareholders, they would bring the power of billions of dollars to bear for equity and justice, adding to the power exhibited by TCE.
Are there other foundations who are using shareholder activism to challenge the Indiana law or other discriminatory policies? Let us know in the comments below!
Interested in learning more about the cutting edge of MI? Check out NCRP’s 2014 special issue of Responsive Philanthropy focused on mission investing.
Lisa Ranghelli is director of foundation assessment at NCRP. She also served as the primary researcher for the Philamplify assessment of the William Penn Foundation. Follow @NCRP and join the #Philamplify conversation on Twitter.
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