In this moment of great social, economic, and ecological upheaval, it is abundantly clear that we need fundamental and systemic changes to our economy. Fifty years of Milton Friedman’s doctrine of shareholder primacy and maximisation of profit has produced grotesque inequality and catastrophic environmental impacts. In this economic model, financial institutions and corporations are accountable only to their investors. Because this has become standard practice, investments are one of the most significant levers available to enact social change, influence corporate behaviour, and transform businesses practices to place the common good alongside financial returns.
As movements all around the world rise to demand economic, racial, gender, and climate justice, they are increasingly turning to finance as a way to shift corporate practices and build new economic models in service of a just and sustainable planet. Furthermore, as legislative windows for bold systemic change on climate and the economy seem set to remain narrow in the U.S., foundations have a unique opportunity to drive change globally by deploying our investments alongside our grants to support movements, advance sustainability and human rights, and leverage our assets to build new standards and changes in economic systems. Many foundations have realised that they do not need to sacrifice returns to multiply impact and as a result are deploying their investments as another tool in service of their mission.
Your investments signal your values
Over the past decade – and with increasing urgency – many foundations (including ours) have come to view the way we invest our endowments as one of the most direct ways to advance our values and priorities, a strategic tool that is equal to our grantmaking. We believe we have both mission-level obligation and opportunity to seek impact across all of our tools – grants, operations, and investments. We also recognise that as mission-driven institutions, we are not any investor and should not approach our investments like a mainstream financial institution. Foundations receive charitable tax status to serve the public good. Our investments should neither undercut the public good nor be ignorant of their societal impact. Return maximisation, therefore, cannot be our only objective. If it is, we are mirroring the failed economic system that has driven the very societal ills we exist to address.