Philanthropy's Toolkit: Mission-Related Investing

Mission-related investing? That's the somewhat esoteric term applied to a new strategy adopted by a growing number of foundations interested in generating positive social change. As Steven Goedke and Doug Bauer explain in Philanthropy's New Passing Gear: Mission-Related Investing -- A Policy and Implementation Guide for Foundation Trustees (68 pages, PDF), published earlier this year by Rockefeller Philanthropy Advisors:

Mission-related investing (MRI), broadly defined, encompasses any investment activity which seeks to generate a positive social or environmental impact in addition to providing a financial return.

An even better (if longer) explanation comes from the New York City-based Jesse Smith Noyes Foundation ("Statement of Fiduciary Responsibility," included as an appendix to Goedke and Bauer's guide):

We recognize that our fiduciary responsibility does not end with maximixing return and minimizing risk. We also recognize that economic growth can come at considerable cost to communities and the environment. We believe that efforts to mitigate environmental degradation, address issues of social justice and promote healthy communities should be incorporated as part of business and investment decision making. We believe that management, directors, employees and investors should consider these social issues in the pursuit of financial objectives.

We believe that in light of the social, environmental and economic challenges of our time, fiduciary responsibility in the coming decades will dictate the integration of prudent financial management practices with principles of environmental stewardship, concern for community, and corporate accountablity to shareholders and stakeholders alike.

We believe that foundations have a particular role to play in this process, seeing their mission not only in terms of the uses of income to fund programs, but also in terms of the ends toward which endowment assets are managed. We believe that it is essential to reduce the dissonance between philanthropic mission and endowment management.

That's as good a reminder of the adage "actions have consequences" as I've heard in a while. So it was heartening to learn via press release about a new initiative of the Kellogg Foundation to put a portion of its $8 billion endowment to work in just this way.

According to the release, the foundation has deposited $22.4 million, in amounts up to $4 million, in seven banks and four credit unions across the country. The institutions, all of which qualify for the federally insured Certificate of Deposit Account Registry Service (CDARS), are: ShoreBank, in Chicago; Southern Bancorp of Mississippi and First Bank of the Delta, in Little Rock; Liberty Bank and Trust, in New Orleans; Carver Federal Savings Bank, in Brooklyn; New Mexico Bank & Trust, in Albuquerque; South Carolina Community Bank, in Columbia; Dakotaland Federal Credit Union, in Huron, South Dakota; Hope Community Credit Union, in New Orleans; and Latino Community Credit Union and Self Help Credit Union, both in Durham, North Carolina.

The effort is part of a larger Kellogg strategy to invest, over the next three to five years, $100 million of its endowment assets in for-profit and nonprofit enterprises that can generate social as well as financial returns. Said Kellogg Foundation president and CEO Sterling Speirn: "The objective is to provide a market rate of our return on our investments, while enabling community development banks and credit unions to increase their lending activity in areas that align with out programming interests. Supporting community development institutions is a simple, yet effective, way to create greater impact that benefits people and the communities in which they live."

We couldn't agree more.

-- Mitch Nauffts