Pivoting Through COVID-19: Portfolio Alignment for Foundations - Exponent Philanthropy
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Pivoting Through COVID-19: Portfolio Alignment for Foundations

Photo by Brooke Cagle on Unsplash

In 2020, the pandemic upended our daily lives and the philanthropic landscape. But the Claire Friedlander Family Foundation‘s board saw this crisis as an opportunity to transform their giving, investment focus and protocol — proactively aligning the assets of the foundation with its mission.

The pandemic and ensuing hardships gave the board the impetus to focus their annual giving on nonprofits working in health care and medicine, and those helping solve food insecurity. Pivoting from funding a wide range of causes to a more defined and focused one had been on the board’s to-do list for some time. The COVID pandemic was the spark that lit the fuse.

The board also started developing a more defined investment strategy. Assessing the current health crisis naturally led to discussions about the portfolio, or as one board member said, “the largest asset we have as a foundation.”

How might it not fully represent the values and mission of the board and the foundation? In a world facing crisis and extreme hardship, we must stop and consider whether the companies we’re invested in are stepping up to meet this moment, or selfishly profiting from it.

How can a foundation achieve their philanthropic mission when they have a portfolio of investments that does not represent their values?

Socially responsible investing

As board president, I am as concerned about how the portfolio did as I am about what the companies within it are doing. We should be proud of our portfolio’s holdings and ensuring that their businesses reflect the mission and spirit of this philanthropic legacy.

Traditionally, the goal of investing was all about the bottom line, but the growth of socially responsible investing (SRI) is changing the landscape. Sustainable investing is a means of aligning one’s personal values with money. Thus, by incorporating SRI into your portfolio, you no longer have to compromise your ideals in favor of profit. Nowhere is this more important than in a foundation or endowment’s portfolio, as their mission is at the core of everything they do.

Portfolio alignment

ALINE Wealth’s Portfolio ALINEment starts with an assessment of the board’s core values and mission. This value mapping exercise involves surveying each board member with a quick and simple 10-minute exercise to get their take on several value pillars. These pillars reflect significant environmental, social and governance issues facing the world today, and are somewhat modeled from the United Nations 17 Sustainable Development Goals.

The output is a Value Map Report that outlines the sustainability pillars most relevant to the board’s mission and values. Abd the report is fleshed out through deep discussions with board members to ensure they accurately reflect their wants and needs. On occasion, these are done during intensive retreats where we facilitate the deep discussions.

We incorporate the findings in the foundation’s investment policy statement (IPS). This is reviewed periodically to ensure it’s up to date, and in line with the current needs and desires of the foundation and board.

Assessing your current portfolio to determine if you are ‘ALINED’ comes next. Once we’ve honed in on the most important value pillars, we can begin crafting a portfolio that’s reflective.

If your investments don’t match your values, you’ll need some realignment. This can be done through divesting from companies that go against these values, or investing in companies that proactively seek social impact. For example, if one of your value pillars is clean water, we could invest a portion of the assets in a water portfolio of stocks. Foundations receive quarterly and annual reporting on financials, as well as their impact as it relates to the value map.

See the tangible impact your foundation can have beyond giving, while also growing your portfolio.

Peter J. Klein, CFA®, CRPS®, CAP® is the Chief Investment Officer and Founder of ALINE Wealth and serves as President of the Claire Friedlander Family Foundation.

ALINE Wealth is a group of investment professionals registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC. To learn more about the Portfolio ALINEment service and mission alignment, contact us at aline@alinewealth.com or visit our website alinewealth.com.

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