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Aligning Investment Strategy with Institutional Mission

Aligning Investment Strategy with Institutional Mission

Many foundation investment committees and boards are being asked to meet the financial needs of their respective institutions through investment strategies that also align with their environmental, social, and governance (ESG) goals. For many foundations and staff-volunteer leaders, this is new territory that involves and integrates sustainability concepts, social responsibility, consideration of ESG factors in the investment process, and impact investing. This is a result of major societal challenges such as climate change, resource scarcity, human rights, income inequality, water shortages, changing donor and alumni demographics, technological advancements, evolving social values, and potential pressure from students and faculty. The challenge for presidents and trustees is learning to understand and then cope with these challenges in ways that enhance long-term risk-adjusted investment success and help mobilize private sector capital to have positive health, social, and environmental impacts. 

Leaders in higher education are asking how to embrace these challenges in a manner that both supports and builds on the sector’s education and research mission and serves as a role model for society through operation and investments. There is no singular “right way” to approach aligning endowment investments with institutional mission, values, and the goal of contributing to a healthy, thriving society. Each institution must create its own strategy based on its culture, circumstances, and governance processes. But it can be done. 

There is growing evidence that many ESG factors are critical to sound long-term investing and higher education’s success in fulfilling its mission. Moreover, taking a proactive, positive approach may offer opportunities to appeal to new applicants, encourage gifting, and increase engagement by the institution’s community members while achieving sound financial returns on investments.

A recent Trusteeship article by trustees and the leaders of the Intentional Endowments Network explores these ideas.

Anthony Cortese is a principal of the Intentional Endowments Network.  

AGB’s 2018 Foundation Leadership Forum will tackle this issue and others. Join us in Los Angeles, California, Jan. 21-23. Concurrent sessions on Jan. 23 will examine mission-aligned investing, and a post-conference peer learning workshop that day will take a deeper dive into all aspects of aligning ESG goals to the foundation’s mission while meeting the financial and advancement requirements of each institution. 
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