Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

February 2, 2007

Change requires taking a stand

Despite their lofty talk about social change, foundations rarely put their money where their mouth is.

Foundations fund causes they care about, but grants and overhead at few foundations exceed the 5 percent of assets the law requires they pay out each year.

And precious few foundations treat their endowment -- funds they invest in capital markets – as assets to advance their mission.

Jonathan Fanton, president of the John D. and Catherine T. MacArthur Foundation, told a Duke University seminar last month it would be a mistake to tie the foundation’s investments to its grants portfolio.

He also dismissed the idea that foundations should be active shareholders, saying he was skeptical of the impact foundations could expect to have on corporate policies.

Yet Fanton also said that MacArthur, known for “genius” grants it makes to individuals, takes very seriously its commitment to human rights and biodiversity.

It does not take a genius to view as near-sighted, if not wrong-headed and even hypocritical, a foundation that touts its commitment to critical causes, yet knowingly will not try to enlist in those causes the corporations in which it owns stock, and that may be part of the problem and can help shape the solution.

In a series of articles, the Philanthropy Journal looked at the more active stockholder role some foundations are taking to better advance their mission. To read the series, click here.


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