May 10, 2021 | Read Time: 3 minutes
Leaders of big foundations like Marguerite Casey, Wallace Global, and Nathan Cummings are joining dozens of social-change activists and others to call on all grant makers to use the power of their endowment investments to advance racial change.
Foundations with investments in big companies are entitled to proxy votes when those corporations hold elections for board members and consider shareholder proposals, which happens in the spring for most companies.
The foundation leaders are urging the asset managers who cast those votes to support board members dedicated to advancing racial justice. They are also urging them to back shareholder proposals on racial-equity audits as well as political spending and lobbying that could become important tools to aid people of color.
In some cases, shareholder voting decisions are made through chief investment officers who work at foundations and in others through the financial managers that handle foundation investments.
The effort by foundation leaders is being coordinated by Majority Action, a nonprofit that says its mission is to empower shareholders “to hold corporations and their leadership accountable to high standards of long-term value creation, corporate governance, and social responsibility.”
In addition to the Marguerite Casey Foundation, Wallace Global Fund, Nathan Cummings Foundation, the Woodcock Foundation is also backing the effort, according to a Majority Action new release.
“All the foundations can do this, and if they’re asking their investment advisers and their managers to do it, it can have a big ripple effect quickly,” said Ellen Dorsey, executive director of the Wallace Global Fund, which has an endowment of about $125 million and counts Majority Action among its grantees.
Dorsey noted that money in foundation endowments enjoys enormous tax advantages, which sharpens the need to do public good with the money not just in terms of how it’s spent on grantees but also in how it’s invested.
“We own corporations with our investments,” Dorsey said. “We are ethically accountable for what we invest in.”
The foundations, along with about 140 other philanthropic leaders, consultants, union leaders, and others, recently made their case to investment managers in a full-page advertisement in the Financial Times.
Voting Guides
Laura Campos, director of corporate and political accountability at the Nathan Cummings Foundation, compared the potential for increased shareholder activism to the successful pressure tactics that persuaded South Africa to dismantle apartheid.
Like other grant makers involved in the effort, the Nathan Cummings Foundation, which has an endowment of about $425 million, has asked its investment managers to consult with Majority Action’s proxy guides when casting shareholder ballots. Majority Action has voting guides that focus on how companies can advance the environment and racial justice.
The guides state specifically which candidates for corporate boards that shareholders should vote for and which shareholder proposals they should support or oppose.
Campos said there is no conflict between advancing racial justice and maximizing shareholder value.
“There’s some pretty clear evidence that racial injustice is a real drag on the economy,” she said.
