8.13.2003 ET

(CSRwire) STANFORD, CA - In the Summer 2003 issue of the Stanford Social Innovation Review, now arriving in subscribers' mailboxes, foundation leaders need to look beyond their grant-giving activities to more holistically pursue their organization's mission, argues Stanford Graduate School of Business lecturer Jed Emerson. Spotlighting cases where foundations have breached the "firewall" between their grant making and fund management programs, Emerson illustrates the effectiveness of bridging the "investment gap," which he describes as "the chasm between the financial capital that foundations invest in economic worth and the social capital through which foundations pursue investments in social value."

Consider that in 2002, foundations gave away an estimated $30.3 billion, yet held $476.8 billion in assets, Emerson reports. It is no mystery why this happens, since by law, foundations are required to pay out a minimum of 5 percent of their assets annually in grants. This summer, as debate rages in Congress about raising that minimum by a few percentage points, Emerson quizzically asks, what about that whopping 95 percent?

"For the vast majority of foundations," Emerson writes, "grants become the sole vehicle by which they pursue their mission. What that means is that for most foundations, 5 percent of capital returns is assigned in pursuit of 100 percent of the institution's larger social mission, while 95 percent of capital assets are managed in pursuit of increasing financial value, with zero percent consideration for the institution's social mission."

In his call for foundation leaders to maximize the impact of their organization's capital resources, Emerson expands upon five primary methods to leverage a foundation's assets:

1) engaged investing of mainstream assets -- voting proxies;

2) socially responsible investing of core assets -- using "screens" that can assist asset managers to ensure they do not invest in stocks that run counter to the foundation mission;

3) investing in alternative asset classes and small and medium enterprises, or startups;

4) low-interest loans and below market-rate investments in nonprofits; and

5) investing in a way that enables significant corporate transformation -- for example, providing venture capital to help achieve what a direct grant cannot.

Grants, Emerson demonstrates, are only one tool among many for advancing mission.

Building on the extraordinary success of its sold-out inaugural issue, the Stanford Social Innovation Review, published by the Stanford Graduate School of Business, continues to provide provocative insights and research from world-class faculty on nonprofit management, philanthropy, and corporate citizenship.

Other subjects addressed in the Summer 2003 issue of the Review include corporate and nonprofit partnerships, nonprofit management, social entrepreneurship, and organizational effectiveness. These subjects are addressed in feature stories and the following departments:

"From the Frontlines" are first-person essays penned by individuals on the frontlines of social service.

More information on these and other articles are available online: www.ssireview.com. A one-year subscription costs $69.

The Stanford Social Innovation Review (SSIR) is published by the Center for Social Innovation (CSI) of the Stanford Graduate School of Business. The Review crowns an initiative launched three years ago with the founding of the Center. Significantly expanded last summer, CSI was created to promote innovative, effective, and efficient solutions to important social problems by adapting business knowledge and experience to challenges faced by the nonprofit sector.

The Stanford Social Innovation Review is made possible by the financial support of CSI's investors, including philanthropists Louise and Claude Rosenberg (MBA '52), Susan B. Ford, The William and Flora Hewlett Foundation, and The David and Lucile Packard Foundation.

For more information please contact:

Helen K. Chang , Stanford Graduate School of Business
+1-650-723-3358

For more CSR news and information from this organization:

Corporate Social Responsibility Profile for Stanford Graduate School of Business

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