Social Investment Policy
About The Kids Foundation’s broad purpose is to promote the well-being of humanity. In other words, our objective is to generate maximum social benefit from our financial and human resources. The Board believes that the Foundation creates substantial social benefit through its grants and related philanthropic activities.
The Foundation’s Approach to Social Investing
Organizations may also express their social priorities through their financial investments, through mechanisms including proxy voting, negative screening, positive screening, and mission-related (“double bottom line”) investments. When considering a social investment initiative, the Foundation will assess the expected social benefit relative to the possible investment return forgone and also consider the resources required to develop a policy, assess alternatives, make the investments, and monitor progress and results. The Foundation’s assets are invested by carefully selected outside managers. Most of these managers are given wide discretion relative to the underlying investments they choose. This discretion includes making decisions with respect to economic sectors, geographies, degree of maturity of individual companies, etc. The Foundation is cognizant of the fact that many of these managers selected by the Foundation see the greatest investment promise in companies with enlightened managements that recognize that sustainable practices and sound employment policies are in the best long-term interest of their companies and shareholders. The rising importance that investment managers and company managements each give to these policies is leading to a convergence between the portfolios of social investors and mainstream investors.
Current Social Investing Activity
Among the various avenues trying to generate social return through investing, the Foundation has investigated proxy voting the most fully. We were attracted to this strategy because it appears to be having an increasing influence on management decisions, is unlikely to degrade investment returns, and can be accomplished (we are hopeful), with minimal administrative burden.
In general, the Foundation is not attracted to either positive or negative screening. Typically, the reasons why a company might be positively or negatively screened are highly subjective and are subject to significant differences of opinion among reasonable observers. In addition, as mentioned above, mainstream and socially driven portfolios are gradually looking increasingly similar.
One exception, where the Foundation does choose to screen, is tobacco. This product, even if used as intended, has deleterious consequences for both individuals and society. Consequently, where the Foundation is able to do so, it excludes from its portfolio the stocks of any companies for which manufacture of tobacco products is a significant contributor to sales or earnings.