Submitted by: CSRwire Weekly News Alert
Posted: Dec 23, 2008 – 10:59 PM EST
Dec. 23 /CSRwire/ - December 24, 2008 - What's the most ironic aspect of the Bernie Madoff Ponzi scheme fraud? The fact that fellow fraudster Henry Blodget (busted for pumping tech stocks and mocking his clients’ gullibility) maintains the most accurate list of its victims? That billionaire celebrities such as Stephen Spielberg lost millions? No, it's the fact that foundations, such as Spielberg’s Wunderkinder Foundation as well as the Elie Wiesel Foundation for Humanity, invested with Madoff and thus compromised their mission work. The silver lining may be that it shines the spotlight on foundation investing, which typically accounts for 95 percent of endowment assets but receives scant attention compared to foundation grant-making, which typically accounts for a mere 5 percent of assets.
Steve Viederman has been highlighting the need for foundations to align their investments with their missions for years. As early as 1995, when he was President of the Jessie Smith Noyes Foundation, he advocated for reducing (and eliminating) the dissonance between foundations’ grant work and their investment portfolios. Now, more than a dozen years later, he continues to crusade, characterizing foundations as "old-fashioned slot machines: They have one arm and are known for their occasional payout."
"Think of how much more bang for the buck foundations would achieve if they used both of their arms - the 5 percent making up the grants, and the investable capital that makes possible the grants - the 'other' 95 percent," Viederman writes. "By not using both arms, by failing to use all of their resources in support of their missions, foundations are failing to meet their fiduciary duty."
The More for Mission Campaign, launched at the April 2007 Council of Foundations Annual Conference, challenges foundations to get both their arms working in concert. The Campaign encourages foundations to increase their mission investments by at least 2 percent of total foundation assets over the next 5 years – a potential shift of $12 billion. The Campaign (formerly known as the "2% Campaign" for obvious reasons) has enlisted the Boston College Institute for Responsible Investment to house a Resource Center to help foundations make the alignment. And the Campaign's Leadership Committee of 24 foundation CEOs representing almost $19 billion in assets is actively urging fellow foundations to jump on the wagon.
Perhaps the greatest irony of all is that, after a half-decade of ambitious work, the participating foundations will only have 7 percent of their assets (5 percent grant-making and 2 percent mission investing) assuredly working toward their missions, leaving the remaining 93 percent potentially undermining their missions. At this rate, it would take participating foundations a loooooong time to fully align their money with their missions.
This article was written by CSRwire contributor Bill Baue.