Nonprofits Need To Put Their Money Where Their Mission Is
Nonprofits Need To Put Their Money Where Their Mission Isback

So you’re recycling, reusing, paying a fair wage, and donating to nonprofits. Or you are a nonprofit, giving your all to make the world a better place.

Is that all there is to social responsibility?

Nope. You need to look at how you invest your money. How can you claim dedication to the well-being of people and the planet if your profit or endowment is invested in companies that contribute to the very ills you are fighting?

The idiocy of this was highlighted in a 2007 Los Angeles Times series about the Gates foundation, in which the reporter noted “the [Bill and Melina Gates] foundation reaps vast financial gains every year from investments that contravene its good works.”

At first, the foundation responded that it would rethink its investment policies; then it reneged. Patty Stonesifer, executive director of the foundation, told The Times that “it would be naive to think that changing the foundation’s investment policy could stop the human suffering blamed on the practices of companies in which it invests billions of dollars.”

Ludicrous on two counts: the Gates Foundation is so big that its actions matter (and inspire imitators) and even if it were a teeny, tiny foundation, hypocrisy is not a virtue.

Well, three counts: If small contributions to the betterment of the world don’t matter, why do we even have social entrepreneurs and nonprofits, and why do we, as individuals, recycle our little bit of trash?

Since 2007, not much has been written about mission/investment conflict.

Well, let’s change that. Little things do mean a lot; our efforts as social entrepreneurs, nonprofits, and socially conscious individuals do count; and we need to put our money where our missions are.

First, some facts. Socially responsible investing has been around for awhile. It comes in many forms:

  • Mutual funds – or individuals and foundations – that screen companies for environmental and labor practices
  • Funds that actively try to change the social policies of companies through advocacy and shareholder resolutions;
  • Community investing, which makes capital and credit available in to low-income individuals, small businesses and affordable housing projects in areas under- or unserved by traditional banks.

Most important fact of all: You don’t have to take a rotten return on an investment to be a socially responsible investor.

In April of this year, Domini Social Investments announced that the Domini Social Equity Fund outpaced the S&P 500’s return by more than 7 percent for the year ended March 31, 2010.

Of course, there are good performers and bad performers, just as there are in funds that are not screened. You have to do your homework but, then, you have to do that anyway.

And the dollar bottom line is not the only one we are concerned about, is it? Aren’t we, as social entrepreneurs and nonprofit leaders, balancing the triple bottom line: profit and people and planet?

Does your organization (or you) consider social responsibility when investing funds? If not, why not? How do you align investment decisions with your mission/vision?