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The Archimedes Project
Contact us to learn more about the Archimedes Project or how the Center for Social Philanthropy can help your organization.
Archimedes once famously said, “Give me somewhere to stand and I will move the earth.” The classical Greek mathematician was alluding to the power of the lever, whose simple mechanics of multiplying force he helped to theorize.
In an era when the word “leverage” has been tainted with negative associations of reckless financial risk-taking and abusive over-indebtedness, we at the Center for Social Philanthropy think it’s high time to reclaim the original, classical meaning of the term: as an instrument for uplifting the world.
The Center’s Archimedes Project is assembling tools foundations need to multiply the force of their philanthropy. We’re creating innovative, data-driven resources to help foundations and philanthropists – as well as their advisers – leverage their assets more fully in order to lift up our world to a more sustainable future.
Strategies
The Center’s Archimedes Project provides research, resources, data and tools on six key strategies of Fully Leveraged Philanthropy:
Mission-Related Investing (MRI)
Aligning foundation endowment management with philanthropic mission, across asset classes, by incorporating environmental, social and governance issues explicitly into investment policy and practice.
Program-Related Investment (PRI)
Making investments whose primary purpose is to further a foundation’s program, not to produce income.
Active Ownership
Becoming more engaged stewards of philanthropic capital by fully exercising foundations' rights and responsibilities as the owners of the assets in which they invest – through proxy voting, filing shareholder resolutions, engaging with corporations directly and through investor networks, and supporting shareholder rights.
Historical Asset Management
Managing a foundation’s heritage and legacy as responsibly as financial assets. “Historical assets” may include real property, furnishings, memorabilia, art, archives and records, as well as the stories that circulate about a foundation – that shape a philanthropic legacy and a foundation’s reputation.
Sustainability
Integrating sustainability throughout a foundation requires taking a more holistic approach to managing internal operations and human resources across a philanthropic organization. “Greening” workspaces, reducing an organization’s carbon footprint, providing a supportive work environment, using sustainable suppliers, or offering social and environmental investing options in employee retirement plans are among the ways to transform foundations into sustainable enterprises.
Responsive Grantmaking
Grantmaking should strive to be responsive to the need for long-term, systemic social and environmental transformation, and the Center for Social Philanthropy helps funders identify impact opportunities that respond to their specific philanthropic mission and programs.
Use the tabbed arrows and drop-down menus to explore each of the Archimedes Project’s strategies of Fully Leveraged Philanthropy in fuller detail.
Mission-Related Investing (MRI)
Photo by Neil Mackinder.
Mission-Related Investing (MRI) means aligning foundation investments with philanthropic mission in order to mobilize more resources for pursuing social and environmental impact.
The Center for Social Philanthropy has tracked growing interest in Mission-Related Investing among foundations of all types, small and large, public and private, corporate and community foundations, independent and family foundations. Foundations are widening their range of concerns about corporate social responsibility beyond "sin-stock" screening to seek more focused social and environmental impact opportunities. Increasing numbers are becoming active owners of their investments: voting shares, filing shareholder resolutions, engaging through investor networks, keeping their managers' feet to the fire, and taking other actions to hold corporations accountable for their activities.
The foundation community has also seen how misaligned investments can tarnish reputations. During the financial crisis many foundations that failed to incorporate mission-related criteria into investment management also found themselves victims of the worst financial fraud to strike since the Great Depression.
More for Mission Investing
At the Council on Foundations annual conference in April 2007, three foundations — the Annie E. Casey Foundation, the F. B. Heron Foundation and the Meyer Memorial Trust — challenged the wider philanthropic community to commit more of their assets to investments aligned with mission. Since then, over 60 charitable groups with more than $30 billion in total assets have joined the “More for Mission” campaign. For more information, visit www.moreformission.org.
Today Mission-Related Investments can be tailored to a wide range of philanthropic concerns, including environmental issues, public health and education, human rights, diversity, labor and employment issues, community development, globalization, and fighting hunger and poverty, both domestically and abroad.
Investment managers and consultants are also rising to the growing demand for Mission-Related Investments. Foundations can therefore readily find MRI opportunities available across asset classes — from public and private equity to fixed income and real estate, managed directly or through investment intermediaries. Whether mutual funds or ETFs, social venture capital or hedge funds, community development banks, credit unions, and loan funds or microfinance institutions, a vast array of investment vehicles now incorporate diverse mission-related environmental, social and governance issues into their investment strategy, such as climate change, green energy and clean technology, community impact, women’s empowerment, sustainability, and transparency.
Contact the Center for Social Philanthropy to learn more about how to incorporate Mission-Related Investing into your strategic toolkit.
Program-Related Investment (PRI)
Photo by Brian Holsclaw.
Program-Related Investments (PRIs) are philanthropic tools that can expand the programmatic impact of a foundation.
PRIs are defined by the Internal Revenue Service as investments with three characteristics: (1) their primary purpose is to further the foundation's tax-exempt purposes, (2) producing income or appreciating property is not a significant purpose, and (3) influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.
Unlike Mission-Related Investing, which is typically allocated from endowment assets to generate market-rate returns, PRIs are often made on favorable terms, with below-market rates of return, and generally counted toward a foundation's annual payout requirements. Unlike with a grant, however, the returns generated by PRIs allow foundations to recycle those funds to extend the reach of their programmatic activities.
Funding Sustainable Seafood
Thanks to a $10 million Program-Related Investment from the David and Lucile Packard Foundation, the Sea Change Investment Fund was launched in March 2005 as the first “double- bottom-line” private equity fund that invests solely in progressive companies that promote sustainably sourced seafood. The PRI provided half of Sea Change’s seed funding in the form of a low-interest loan. The Foundation has long supported marine stewardship and ocean conservation efforts, but the PRI in Sea Change seeks to transform the seafood marketplace. Unlike traditional venture capital, the Sea Change fund invests in portfolio companies that generate visible environmental impact, as well as profitable financial returns.
Traditionally, PRIs have taken the form of low-interest loans to nonprofit organizations, but increasing numbers of foundations have used PRIs in a variety of creative ways and across asset classes, from deposits in community development banks to bridge financing for land conservation projects to high risk private equity investments with substantial social and environmental returns.
Program-Related Investment has become a widely used tool during the financial crisis, as foundations have helped meet the financing needs of distressed communities, organizations, small businesses and homeowners squeezed by the effects of the credit crunch.
Contact the Center to find out how PRIs could add value to your programmatic work.
Active Ownership
Photo by iceman9294.
Active ownership means becoming more engaged stewards of philanthropic capital by fully exercising foundations' rights and responsibilities as shareholders. Important environmental, social and governance issues are addressed through the shareholder process at companies every year, and given the shares under their control, foundations have a critical role to play in that process.
Through its Active Ownership Agenda, the Center for Social Philanthropy provides foundations with the data, research, resources, and tools to become more active owners of their assets. We measure and track foundation involvement in active ownership initiatives, and we advise foundations on how to make their activities as shareowners more effective.
Proxy Stewardship Project
A growing group of philanthropic and educational endowments are beginning to engage with investment managers about passive proxy voting on important environmental, social and governance issues. When investment managers pool client assets in commingled funds, they vote proxies on the underlying investments; however, our research has found that managers tend to vote much more deferentially to corporate management than their clients would. C- SocPhil has therefore been working closely with concerned endowments to research the problem and to convene foundations, colleges and universities in order to discuss the issues and to engage with leading asset managers. Following an initial series of meetings in New York and San Francisco in fall 2009, the initiative is being formalized into a Proxy Stewardship Project that will lead these engagements and develop Proxy Stewardship Principles to provide a framework for creating more robust proxy voting guidelines on environmental, social and governance issues for endowments and managers alike. For more information, contact the Center.
Leading active ownership strategies include active proxy voting, filing shareholder resolutions, dialoguing directly with corporations, engaging through investor coalitions, and defending shareholder rights. Collectively, these strategies encourage companies to become better corporate citizens. They can help hold management accountable, improve corporate governance, mitigate social and environmental risk, protect long-term shareholder value, and give voice to stakeholders that lack votes in corporate governance processes.
Proxy Voting
When investors vote their shares at corporate annual meetings, they generally do so “by proxy,” filling out a proxy ballot rather than attending the meeting in person. These proxy votes are valuable assets, so casting them is an important part of prudent trusteeship. Higher votes on proposals translate into a higher probability that companies will take the issues seriously.
And even when shareholder proposals fail to win a majority of votes, pluralities of shareholder support can create leverage for tangible improvements in corporate policies and practices on a whole host of issues – from climate change and sustainability to excessive executive compensation and equal employment opportunity, to toxics, human rights, and labor abuses.
How can foundations leverage their proxy votes for greater corporate accountability?
- Create proxy voting guidelines on environmental, social, and governance issues. These can be mission-related or simply responsible investing issues that could potentially impact shareholder value. Numerous foundations have developed written guidelines and made them publicly available.
- Actively vote your proxies according to your guidelines or direct your investment manager or a proxy voting service to do so in your foundation’s behalf. Be sure to monitor your managers to make sure they are voting according to your guidelines.
- Give advanced notice to companies of how you intend to vote – whether publicly or privately. Advanced notice makes companies aware of investor concerns before they even go to a vote. This can help advance positive reforms.
- Keep track of how you voted and publicize your votes.
- If you use commingled funds, find out how the fund manager votes your shares. If you don’t approve of their voting, convey your concerns as the asset owner. If the manager proves indifferent, shift your assets to a more responsive manager. Increasing numbers of investors are beginning to pool together to dialogue directly with managers. Contact the Center, and we can help you get involved in those efforts.
Shareholder Resolutions
- File a shareholder resolution on an environmental, social or governance issue of concern.
- Co-file a shareholder resolution that another investor has taken the lead in filing. By co-filing, you do less of the heavy-lifting, but you provide valuable public support to the social or environmental issue at hand, just like a co-sponsor to a piece of legislation in the political process.
- Support social, environmental and governance resolutions proposed by other investors at companies in which your foundation also invests.
For examples of the dozens of shareholder resolutions filed or co-filed by foundations in recent years, please visit C-SocPhil's Foundation Resolutions Focus List, which the Center developed on ProxyDemocracy.org.
Engagement
Individually or with other investors, foundations can dialogue directly with companies about the social and environmental impacts of their corporate policies and practices. Direct dialogue can take many forms, from writing a letter to joining in an investor meeting or conference call with company executives.
Join the growing number of shareowner coalitions that provide platforms for engagement among investors with similar concerns. Leading investor coalitions include the Carbon Disclosure Project, Ceres, the Council of Institutional Investors, the Interfaith Center for Corporate Responsibility (ICCR), the International Corporate Governance Network, the Investor Environmental Health Network, the Investor Network on Climate Risk (INCR), the Social Investment Forum, and the United Nations Principles for Responsible Investment.
Defending Shareholder Rights
As investors, foundations have important rights as shareholders to corporate transparency and responsiveness. From time to time, challenges to shareholder rights arise, so monitoring shareholder issues has become an important aspect of active ownership. Investors can easily make their concerns known to agencies such as the Securities and Exchange Commission involved in shareholder issues.
As a last resort, shareholders can also use litigation to defend their rights and demand corporate changes.
For more resources on active ownership issues, contact the Center for Social Philanthropy or visit our Knowledge bank for additional resources on leveraging your assets through shareholder advocacy.
Historical Asset Management
Photo by Erika Matthias.
Many foundations possess historical assets that need to be managed as responsibly as their financial assets.
Any property related to a foundation's heritage that has enduring value can be considered an historical asset. In addition to “hard” assets such as real estate, furnishings, memorabilia or works of art, the stories that circulate about a foundation also constitute valuable historical assets that shape an organization’s legacy, ethos and culture.
Managing a foundation’s stories in a controlled, compelling, and transparent way is not always easy, however. Sources may be buried in scattered, fragmentary or disorganized archival records or in the memories of foundation staff or family members. Third parties, such as the press or watchdog groups, can shape public perceptions about a foundation in ways that may run counter to the stories that a foundation wants to tell about itself. Managing historical assets therefore provides a crucial element in managing a foundation’s reputation.
Pocantico Principles on Sustainability and Historic Preservation
In November 2008, at the Rockefeller Brothers Fund’s Pocantico Conference Center, the National Trust for Historic Preservation and the National Center for Preservation Technology and Training convened a group of experts to discuss the intersection of historic preservation with social and environmental sustainability. The group issued a proclamation declaring that "[h]istoric preservation must play a central role in efforts to make the built environment more sustainable” and developed a series of principles on sustainability and historic preservation that respond to the challenges of climate change, growing social inequity, and the need for green economic development. The Pocantico Principles on Sustainability and Historic Preservation provide a roadmap for foundations seeking to leverage their own historical assets more fully for long-term sustainable social and environmental impact. For more information on the Pocantico Proclamation, visit the National Trust for Historic Preservation.
Among the leading kinds of historical assets that foundations typically possess are the following:
- Real Estate can include land and buildings. For example, a foundation may be located in an historic mansion or within an historic precinct, or it may own environmentally important land that needs to be conserved.
- Furnishings, whether antiques, heirlooms from the founder’s family, or other furnishings, may be in the foundation’s possession, but not all foundations have the capacity to preserve, display or use them as effectively as they could.
- Memorabilia range from items relating to the founders and donors to items given in honor of the foundation or its staff, including plaques, medals, certificates, portraits, photographs, films and videos, inscribed books, and other "realia."
- Works of Art, from drawings to paintings to sculpture, may include isolated pieces or more deliberate collections. Lacking museum-quality storage and presentation facilities, many foundations find themselves ill equipped to preserve artwork.
- Archives and Records include the accumulated documentary records of the organization, but they may also include records of predecessor organizations, personal or family papers, records acquired through real estate or financial transactions, or libraries that may include rare book collections. Organizational records of historical value may be held in off-site storage facilities, in the possession of retired administrators or trustees, or in the possession of legal or financial custodians.
In addition to providing sources for the history of a family or a foundation, foundation records often contain extremely valuable historical information about the organizations that seek funding from the grantmaker. Philanthropic archives are also essential primary sources for historical research, so foundations need to manage their records responsibly and transparently so that historians can use them to interpret the history of social, cultural and environmental issues.
Historical assets can all be assigned value. Maintaining and controlling them requires real commitment, and disposing of them properly requires careful inventories and assessment. Appraisal and management may require outside expertise.
Regardless of the kind of historical assets a foundation may possess, the Center for Social Philanthropy can help guide foundations through the process of managing them more responsibly and effectively. Contact us to find out how.
Fostering Sustainability in Foundation Operations
Sustainability is not simply an approach to investing for long-term social and environmental impact; it's also a watchword for how foundations should try to organize their internal operations and manage their human resources.
Environmental Grantmakers Association Green Co-op
One of the nation’s largest foundation affinity groups launched a “Green Co-op” to help its members and other funders use their spending power in support of a “greener,” more sustainable economy. By pooling the resources of more than 50 foundations, the Green Co-op leverages its members’ buying power to negotiate more affordable rates for a host of sustainable products and services, from office supplies to rental cars, from organic flowers to fair-trade coffee. The Co-op is also assisting members with reducing their carbon footprints and greening 403(b) retirement plan investment options. For more information, visit http://www.ega.org/co-op/index.php.
"Greening" office buildings, supplies and workplaces, reducing an organization’s carbon footprint, providing a terrific workplace for employees, creating more participatory decisionmaking structures to engage staff and trustees, offering employees social and environmental investing options in their retirement plans are among the leading ways to integrate sustainability throughout foundation operations.
Long-term philanthropic stewardship doesn't end with "pay-out" rates and endowment management. It should strengthen the entire ecosystem of any philanthropic enterprise.
The Center for Social Philanthropy can provide foundations with the resources and tools needed to integrate sustainability throughout their operations. Contact the Center to find out how.
Responsive Grantmaking
Photo by cybertoad.
Although many strategies of Fully Leveraged Philanthropy focus on non-grantmaking activities of philanthropic foundations, grant funding remains an undeniably central strategy to any foundation's work.
How to get the most long-term impact from a philanthropist's grantmaking dollars?
The foundation community is undergoing a wide-ranging debate about the effectiveness of various grantmaking strategies. More than a decade ago "venture philanthropists" began stressing new techniques for seeking measurable social returns on grantmaking "investments," and prominent institutional funders and philanthropic advisers have started developing "metrics" for quantifying social outcomes and impacts. Along the way, the language of "social innovation" and "social entrepreneurship" has displaced an older philanthropic discourse of "social technology."
Some have criticized the obsessive focus on quantifiable social performance of grants for missing the big picture of strategic social change, while others have called for foundations to allocate more grant funding to community-based advocacy efforts that empower grassroots agents of change. Some have derided the tight-fisted focus on meeting five-percent minimum payout requirements. Still others have cursed philanthropy for its failure to address basic social inequities, despite decades of insistence on tackling "root causes" of such social problems.
The Center for Social Philanthropy believes grantmaking should strive to be responsive to the need for long-term, systemic social and environmental transformation. Steeped in historical research on the growth of philanthropic giving over the last two centuries, we recognize the vast obstacles facing the field and take the long view on contemporary debates about philanthropy's prospects. Grantmaking cannot shoulder the burden of social change alone, so seeing grants as investments too often allows the philanthropic community to ignore the untapped power of the many other assets readily at its disposal: endowment assets and historical assets, among others.
Responsive grantmaking, therefore, cannot be done in a vacuum. Instead, funding decisions need to be made in consonance with the broader strategic leverage being deployed by a funder. Truly dynamic donors are using leverage to support organizations and causes that are advancing the very same programmatic objectives of their mission-related endowment investments, their Program-Related Investments, their active ownership initiatives, their quest for sustainable operations, and their historical asset management.
There is no one single template for responsive grantmaking. Each foundation has its own mission, its own set of programs, and its own range of assets to be deployed. Grantmaking must consequently be more responsive to that basic philanthropic potential than to the latest wave of philanthropic fashion, whatever it may be.
Contact the Center for Social Philanthropy for the data, research, resources, tools and advice foundations need to multiply the force of their grantmaking, by leveraging a much fuller range of assets at every funder’s disposal.
