BOOK REVIEWS

Unleashing the Power of the Proxy: How Active Foundation Proxy Voting Can Protect Endowments and Boost Philanthropic Missions
A joint publication of Rockefeller Philanthropy Advisors and As You Sow Foundation

Reviewed by Neva Goodwin, Rockefeller Brothers Fund, Global Development and Environment Institute, Tufts University

This is a practical how-to (and why-to) manual on the use of that 95% of most foundations’ assets that too often get forgotten, as we think about our impact on the world. While we give away (something like) 5% of the value of our assets each year, too many foundations avoid thinking about the impact of how their endowments are invested. Unleashing the Power of the Proxy is NOT a call for reducing the value of your portfolio––quite the opposite. It is about exercising your civic responsibility as owners – that is, shareholders––in the world’s corporations.

Every year all owners are given the opportunity to vote on resolutions that some shareholders have put forward. Corporate management would like us to believe that these resolutions are put forth by cranks. A few are––but most of those (along with some quite legitimate ones) are screened out by the Securities and Exchange Commission. Most of the resolutions that are sent to shareholders for their proxy votes (therefore often referred to as proxy resolutions) are written by thoughtful individuals or groups, such as CERES (the Coalition for Environmentally Responsible Economies) or the interfaith Center for Corporate Responsibility (ICCR). They deal with a wide variety of issues: a good example is a spate of resolutions now going forward to ask businesses to assess how their future profitability––and viability––may be affected by global warming, and by the regulations and behavior changes we may expect in a carbon-constrained world. It is only good business sense to look at these risks: in fact, the world’s second largest reinsurance company is now refusing Officers and Directors Liability coverage to organizations that cannot show that they are taking this risk into account in their planning!

Many foundations have felt it was simplest to keep their philanthropic and their business activities strictly separate. Especially when proponents of corporate responsibility have pushed for disinvestment or portfolio screening, the issues raised have often been difficult ones, and it is understandable (if sometimes regrettable) that boards have been reluctant to divert from their philanthropic decision-making the amount of time necessary to make intelligent decisions on this aspect of portfolio composition. Now, however, there is a growing consensus that very often the most important place to exercise shareholder responsibility is not in what we choose to own, but in our treatment of the proxy resolutions we receive. If we ignore them, or leave them to the discretion of money managers, we are in effect voting with the corporate management. Our fiduciary as well as our moral responsibility requires that we do more: that we create policies, in line with each foundation’s philanthropic purposes as well as its budgetary requirements, to determine how our proxies will be voted. Unleashing the Power of the Proxy is a great guide to how to start thinking about this, and how to implement our decisions. It is not a call for impossible actions, but suggests practical, doable steps.

This 60-page booklet can be downloaded from the Rockefeller Philanthropy Associates website: www.rockpa.org. Or you can request a free hard copy by e-mailing your request with mailing address to info@rockpa.org.