Sponsorship Guidelines Are a Moral Necessity

To the Editor:

The August 27 issue included two fascinating and helpful opinion pieces, one by Mark Dowie on merging foundation values and investment portfolios (“Grant Makers: Put Your Assets Where Your Values Are,” My View), and another by Bill Schulz of Amnesty International on the ethics of receiving grant dollars from corporations with questionable practices (“Tips on Ties to Corporate Sponsors”).

Mr. Schulz focused in particular on the ethics of human-rights groups that receive grants from tobacco companies. As the director of the organization that publicly challenged the International League for Human Rights for inviting the C.E.O. of Philip Morris, Geoffrey Bible, to be co-chair of their fund-raising dinner and receiving $50,000 from that tobacco giant — a situation that was mentioned prominently in Mr. Schulz’s column — I write to comment.

Of course Mr. Schulz is right that it is difficult for a charitable organization to refuse to take funds from an eager donor. There are no crystal-clear guidelines that work for every organization. However, as he noted, it is increasingly important for non-profit organizations to work on such a set of guidelines. To ignore this need results in charitable organizations’ occasionally taking funds from companies whose actions blatantly contradict their mission.

For example, a health-care organization that serves people who are ravaged by cancer caused by smoking is in a living contradiction if it seeks grants from tobacco companies that are responsible for the sickness and death of literally millions of people around the world. What hypocrisy for a cancer hospital to ally itself with the tobacco industry while treating the industry’s victims every day.

Establishing ethical guidelines for grants for an organization doesn’t promise purity. Rather, it insures a consistency between one’s mission and the funds that pay for the work.

For example, an organization whose priority includes the environment and global climate change would be in an embarrassing situation if its development office solicited a grant from the Exxon Foundation, since Exxon is leading the corporate charge against government actions on climate change. Such guidelines are an ethical and moral necessity.

Mr. Dowie’s article raises a different set of ethical questions: namely, how a foundation’s mission and values can be made consistent with its investment portfolio. Here again the goal is not absolute purity. Instead, foundations have the ability to harness the “power of the proxy” with companies they invest in. By voting proxies, filing shareholder resolutions, and writing letters to companies, investors can make sure that management hears their concerns.

Whether the issue is the environment or human rights abroad, owning shares in a company provides an avenue to influence change in major corporations. It also augments the grants given to groups working on those issues.

Timothy Smith
Executive Director
Interfaith Center on Corporate Responsibility
New York

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To the Editor:

Mark Dowie correctly states that “change is what foundations are all about.” As more foundations look at their investments as another vehicle to effect change, it is only natural that they turn to values-based investing.

The fiduciary responsibility of foundations does not preclude them from investing in “socially screened” portfolios, as the U.S. Department of Labor said in a May 1998 opinion. In fact, a growing body of evidence suggests that investing in “screened” portfolios may add value by helping investors identify better-managed companies.

Foundations and institutional investors are increasingly attracted to mission-based investing not only because they can align their investments with their values but also because they can earn a competitive and sometimes superior return on their investments. The conventional wisdom that once debunked social investing as synonymous with poor performance no longer holds true. . . .

Investors and shareholder activists can have an important impact on corporate policy in the areas of environmental protection, equal opportunity, workplace safety, and human rights. With more than $1.2-trillion invested in socially screened portfolios, social investors are playing a greater role in promoting enlightened business practices — building the type of world we want to live in tomor row by investing in the type of businesses that will shape that world.

We believe that in the next century, the greatest opportunity to impact social change will be in the private sector. Imagine the impact that American private, corporate, and community foundations could have if they invested their $227-billion endowments in a manner consistent with their grant-making guidelines. Would we not begin to see more transformational change on the part of the private sector that embodies the values and mission of the foundation community?

Joseph Keefe
Executive Vice-President
Citizens Funds
Portsmouth, N.H.