The L.A. Times has posted the second part of its series on the Gates Foundation's investments. The paper includes information on several other large foundations with similar approaches to their assets - grant a little bit for good, invest a lot for bad. I posted part one of the series yesterday.
I find the most laughable response in this section to be that given by the spokesperson for the Hewlett Foundation. She cries 'victim' to the investigative reporter (a rare breed these days), claiming that the newspapers would come after the Foundation for its overhead costs if it spent "a lot of money screening its investments."
First of all, the Hewlett Foundation already spends huge money managing its investments - its Chief Investment Officer was paid $889,000 in 2005 (more than the CEO). Secondly, the screening gets done by the investment managers the foundations chooses to hire (or not). Foundations don't need more staff to invest their endowments in line with their missions - they just need a little will.
*Chronicle of Philanthropy, September 28, 2006.
Those are good points in response to that Hewlett rejoinder but I took the comment to be aimed in a somewhat different direction: at the caliber and depth of newspaper journalism about the sector. The LA Times reporting on Gates and MRI was certainly not a shining example of fairness or logic.
That said, overall it's good to see this issue on the front pages and I hope Gates decides to deal with it positively.
Looks like the article has had a major impact. The Gates Foundation has reversed course and will re-assess.
See LA Times today (or link via our blog)
Without a doubt foundations should strive to align their asset management with the values and operations of their philanthropic activities; and where possible, invest in socially responsible companies that have proven to generate good R.O.I.
HOWEVER, I can see (from a pure investment strategy perspective), why the Gates Foundation might find this difficult to do.
With the amount of assets that they must invest, whilst keeping with their investment policies (in terms of % ownership, liquidity, risk exposure etc), I think it may prove difficult if not impossible for the Gates Foundation in particular to align their investments with activities.
In short, until the progressive, socially responsible companies become as big and relatively stable - on a market cap basis - as the leaders of the industrials, I can't see how the largest foundations to do this.
This should not discourage "the rest of us" in advocating for this kind of alignment but my above point is one I feel being left out of the conversation on this topic.
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