Responsible Investing Slowly Shaping Foundation Policies, Survey Finds

Responsible Investing Slowly Shaping Foundation Policies, Survey Finds

Relatively few foundations have adopted so-called responsible investing practices, but even many non-adopters have policies and procedures in place that relate to responsible investing, a study conducted by the Council on Foundations and Commonfund Institute finds.

Believed to be the largest study of its kind, the Council on Foundations-Commonfund Study of Responsible Investing provides insights into how the sector and individual portfolios are being shaped by responsible investing practices, potential hurdles to the adoption of such practices, and the entry points for foundations interested in fully incorporating these practices in their endowment strategies. Based on data from a hundred and eighty-six U.S. private, public, and community foundations representing a total of $39.7 billion in endowment assets, the report found that while a third of respondents have implemented or are actively considering mission-related investing practices in managing their endowed assets, impediments to adoption remain, with concern over returns being the single most commonly reported.

According to the survey, nearly half of respondents did not know or were unsure whether responsible investing is consistent with their fiduciary duty, despite the release of new Treasury Department guidance that clarifies the point. The survey also found that impact investing was the most popular strategy among the foundations surveyed, and that donor intent remained an important factor in community foundation grantmaking. Among all respondents, community economic development was most frequently cited as the impact area in which foundations were most likely to increase their mission-related investments.

The report "is a powerful tool for investment committees, board members, and investment staff who are eager to explore new strategy options," said Council on Foundations president and CEO Vikki Spruill. "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."

"New Study of Foundation Responsible Investing Practices." Council on Foundations Press Release 07/14/2016.