PND (7/25/2000) -- Bay Area Nonprofits Debate the Importance of Socially Responsible Investing

A recent San Jose Mercury News article examines the ways in which San Francisco Bay Area nonprofits are handling donations from grantmakers whose investments create potential conflicts with the organizations' missions.

While some nonprofits specifically design their investment strategies to match their missions, donations that come from community foundations or other grantmaking entities can confuse the boundaries of such socially responsible investing. For example, the American Lung Association refuses to accept donations from tobacco companies, yet earlier this year the group received a small grant from the Community Foundation Silicon Valley, which has a portion of its assets invested in Philip Morris stock.

To prevent such conflicts of interest, advocates of socially responsible investing urge nonprofits to carefully screen not only their own portfolios but the investments of their donors as well — even though such screening can be time-consuming and costly.

For their part, the leaders of many grantmaking foundations say they see their investments first and foremost as a means of delivering the highest possible level of funding to the community. "I think most foundations operate like the newspaper business," said George Vera, chief financial officer of the David and Lucile Packard Foundation in Los Altos. "There's a wall between business and editorial. Similarly, foundations have a wall, or at least a fence, between the investment side and the program side."

Woman, David and John Boudreau. "Foundation Feeding Frenzy: Nonprofits Struggle to Manage Assets in Ways that Won't Undermine Their Social Missions." San Jose Mercury News 7/23/2000.

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