Getting Past Inertia: Ten Simple, Valiant Steps To Align Your Foundation’s Endowment With Your Mission – Or Not  
by Elizabeth Killough, Director, Untours Foundation

There’s a lot of judgment these days about your endowment. You use it only to grow more money when it could be doing that and much more. I admit to my own judgment and perhaps you can face up to yours.

You inherited a 100-year old practice of handing your endowment over to someone else while your board and staff focus mainly on grant making. You could help your grantees and your foundation’s very purpose more, if you demanded more of your endowment. While you wish for more resources to grow your foundation’s effectiveness, you are sitting on a gold mine.

The Surdna Foundation recognized its opportunity and began down a path that is worth studying. Celebrating its hundredth year as a family foundation, the Surdna Foundation committed $100 million of its endowment to impact investing. “Impact investing offers us the opportunity to align our financial resources with the social justice values that guide the Foundation’s grantmaking,” says Carra Cote-Ackah, Surdna’s Vice Chair. “By sharing our experience and some of the lessons we learned, we hope to contribute to collective learning in the fields of mission-related investing and family philanthropy and celebrate these core values.”

cote-ackah-carra-600x600Carra Cote-Ackah, a fifth generation member of the Andrus family, and Vice Chair of the Surdna Foundation.

Released earlier this year, Mapping the Journey to Impact Investing charts Surdna’s nine-month collaborative learning and decision- making process. Learning from the Surdna Foundation’s journey and several others’, here you go…

Step One: Remember why. Invite your board to learn, tweak, or re-write your mission statement. Rediscover why you do what you do: why your foundation exists and should exist. Your mission must inspire and fuel you all and at least stand up to the noise in our lives and the other temptations on our time. Give this at least an entire board meeting.

Step Two: Appoint and anoint. Create an endowment committee of board and staff to learn. Take up to a year to lift the hood of your endowment to see and understand what’s in it. This committee won’t make the big decisions, and will instead recommend options to the full board. By focusing on learning and not decision making, tempers and opinions will stay in check – hopefully! Keep your board informed on your committee’s progress. Give them things to read that you discover along the way.

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Step Three: Hire a hand. If you can afford it, hire a consultant to guide this committee. If you can’t afford it, you’ll be just fine.

Step Four: Know what you own. Bring in your asset manager – for no additional fee – to teach your committee the financial jargon that we all won’t admit we don’t understand. S/he should be able to run your portfolio through all sorts of programs that rate your holdings based on environmental stewardship, social impact, and business governance. If your asset manager can’t help you, bring in understudies. There are other smart and useful asset managers nearby, who want your business and will work for it.

Step Five: Make friends. Visit other foundations that are further down this road. They are happy to share their learnings, missteps, and surprises.

Step Six: Face the music. Lift each of your endowment holdings up to the light of your mission and the values you are identifying along the way. Do they further your mission? Are they undermining it – working at cross-purposes? Your endowment is 95% of your assets. Does yours represent who you want to be, how you want to be known, what you are working for? Would you be proud presenting your endowment to your donors?

Step Seven: Organize the whole nine yards. Line up options for your board to consider based on what you’ve learned about your endowment, your mission, your values. Create a menu from “do nothing” all the way to “re-align/reinvest everything.” The menu might include:

• Utilizing negative and positive screening for all holdings

• Actively seeking out B Corporations and other progressive companies for specific investments

• Investing in readymade socially responsible mutual funds

• Committing to shareholder resolutions, if you stay in “unsocial” holdings, on issues that match or complement your mission

• Moving your money market funds to local banks and credit unions

• Investing directly in your grantees themselves, such as carrying mortgages for them, so they can own and control their own spaces.

Several courageous foundations have forged this stream of identifying investments that more closely align with their missions. They can guide you – again, probably for free!

Step Eight: Let ‘er rip. Take your menu of investment options to your board and help them decide what to do now and perhaps later. It might be a first step – such as moving 10% of your portfolio to mission aligned investment. Take courage and heart. Decide.

Step Nine: Make a scene. Tell your constituents what you are doing. Sooner than later, charity navigation sites will – finally – rate non-profits on mission aligned investing. Let your constituents know you are out in front of this curve, that you are a leader. They will be impressed! This is better than getting caught with an Enron in your portfolio or with a public expose of your full endowment, which happened to the Gates Foundation.

Step Ten: Rinse and repeat. Your endowment is dynamic. Continue to consider new investments that ever more closely address your mission. Showcase them. You’re on a roll!

Want more help? Rockefeller Philanthropy Advisors has an excellent guide. And Mission Investors Exchange has valuable resources as well. Or contact me at the Untours Foundation. Our entire, small endowment is invested in handpicked investments that fulfill our mission.

Mission aligned, mission driven, mission determined, mission loyal, mission resolute: choose your term. You can do it!

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