New CEP Research on Impact Investing and Negative Screening

For large private foundations, the rhetoric about aligning investments with mission seems to be outpacing the reality. That’s one of the takeaways from CEP’s new publication, Investing and Social Impact: Practices of Private Foundations, which digs beneath the talk and into the data to examine the state of practice of impact investing and negative screening at large, private U.S.-based foundations.

The report reveals that a sizeable number of these foundations report engaging in impact investing, but tend to commit only very small proportions of their respective endowments or program/grant budgets toward those efforts. In addition, few foundations reported engaging in negative screening of endowment investments to avoid investments in areas such as fossil fuels or tobacco.

“Although many of the large foundations we gathered data about are engaging in impact investing — in investments that are explicitly seeking a social return — the story at this point in time remains one more of small-scale experimentation than significant investment,” said CEP President and report co-author Phil Buchanan.

The report analyzes survey responses from CEOs of 64 U.S.-based private foundations providing $10 million or more in annual giving. Of those, 41 percent said their foundation engages in impact investing, most commonly in community development, employment or economic development, and education. Yet, the median percentage of endowments going toward impact investing was only two percent; the median percentage of program/grant budgets going toward it was even lower, just 0.5 percent.

Additionally, the study found that most foundations (83 percent of respondents) are not using negative screening to exclude particular companies and/or organizations from their investment portfolios. Of the 10 foundations that reported screening out investments, seven exclude tobacco and three screen out fossil fuels. No respondents reported screening to exclude nuclear power, private prisons, adult entertainment, or animal testing from their investment portfolios.

“Aligning investing practices and mission has been a hot topic at foundations,” said CEP Vice President, Research, and report co-author Ellie Buteau. “We hope that (the report) helps ground the discussions of impact investing and negative screening in the reality of current practice.”

The report’s release on May 20 corresponded with the opening plenary at the 2015 CEP Conference, in which Phil shared the data from the report for the first time. After its release, The Chronicle of Philanthropy, Philanthropy News Digest, and Think Advisor covered the report and its findings.

The report is the first stemming from a larger operational benchmarking initiative funded by the S.D. Bechtel, Jr. Foundation that also surveyed CEOs of private foundations giving at least $10 million annually on their foundation’s governance practices and their decision of whether to have limited life or exist in perpetuity.


2014-Annual-Report-1-border1-154x200CEP Release 2014 Annual Report

CEP’s 2014 Annual Report is out now! Read the full report here to learn more about all that CEP accomplished throughout 2014, and to see complete lists of last year’s tools subscribers and funders.



2015 Conference Videos Now Up!

If you were not able to join us in San Francisco last month for the 2015 CEP Conference -Leading Effective Foundations- or if you want to experience your favorite talks again or share them with friends and colleagues, videos of the plenaries are now up on our website and on our YouTube channel!

For cogent wrap-ups and reflections on the conference and the big questions and themes that ran throughout it, posts on the CEP blog from CEP Board Chair Grant Oliphant, CEP Board Member Crystal Hayling, and Philanthropic Foundations Canada President and CEO Hilary Pearson are must reads. Additionally, you can check out highlights of the conference through the eyes of attendees via our day-by-day summary posts of tweets using the hashtag #CEP2015, and you can see photos from the conference on CEP’s Facebook page.

On the CEP Blog

Phil Buchanan responded to Inside Philanthropy editor David Callahan‘s New York Times column “Who Will Watch the Charities?” in a post that generated lots of back-and-forth on social media.

In another popular post, Phil and Research Analyst Jen Cole shared what they found when they looked into the backgrounds of the CEOs at the 100 largest foundations in the U.S. For example, they found that only 10 of these leaders came into their roles with immediate previous experience on the grantee side of the funder-grantee relationship. The two also co-wrote a post detailing the gender breakdown of that same cohort of CEOs at the 100 largest foundations.

There were several responses on the blog to Assessing to Achieve High Performance, CEP’s recent research report on the state of nonprofit performance assessment and how nonprofits are looking to funders for support. Vu Le, executive director of Rainier Valley Corps and the author of the popular blog, Nonprofit with Balls, highlighted the importance of collecting formative data in the nonprofit sector. Bridget Laird, CEO of WINGS, shared three key factors that her organization follows in its pursuit of high performance. Adene Sacks, senior advisor to DataKind, discussed the need to accelerate the potential of data and actions funders can take toward this goal. And, most recently, Kelly Hunt, senior consultant at Hunt Strategy Group, shared a case study of how one funder encourages its grantees to come together to discuss and learn about evaluating their work.

Vince Stehle, executive director of Media Impact Funders and CEP Board member, contributed a post calling on foundations to invest more resources into communications strategies that inform and persuade.

William Keator, former vice president for programs at The Arthur Vining Davis Foundations, contributed another helpful post to the blog, this time on the importance of balancing process, relationships, and expertise in foundation work.

CEP staff also contributed several posts to the blog. Director, Assessment Tools, Austin Long shared findings from a recent third party assessment of the Staff Perception Report. And Ethan McCoy, writer – development and communications, discussed four steps that funders can take toward building stronger relationships with their grantees, as well as shared the next post in a series of conversations with community foundation leaders who have used the Donor Perception Report (DPR).

Remember, you can sign up for our subscription service to have CEP blog posts sent directly to your inbox as soon as they’re live. Sign up for this service using the box on the right-hand side of the blog, and never miss a post again!

CEP in the News

Marc Gunther pointed to CEP’s assessment tools as an example of progress in the movement for foundations to become more transparent and accountable in a recent post on his site, Nonprofit Chronicles.

On the Alliance Magazine blog, Melinda Tuan cited a finding from Assessing to Achieve High Performance in a post about “Listen for Good,” a new initiative of the Fund for Shared Insight that had been announced at the CEP Conference. Mary K. Winkler also pointed to findings from the report in her post, “Seven Disciplines for Social Sector Excellence,” on Urban Wire, the Urban Institute blog.

In Nonprofit Quarterly, William Schambra pointed to Phil Buchanan’s defense of the nonprofit sector against tech and business hubris in his article, “Software Eats the Nonprofit World.” Also in Nonprofit Quarterly, in a piece from NCRP entitled “Are Nonprofits Ready to Give Foundations Direct Feedback?,” the authors call on foundations to publicly share feedback they receive, including Grantee Perception Report findings and reflections on grantee feedback from CEOs and Board chairs.

A perfect example of that came when Great Lakes Higher Education Corporation & Affiliates shared results from their fall 2014 GPR and APR (denied Applicant Perception Report), which was covered by Inside Philanthropy.

CEP on the Road!Phil-Ellie-and-Kevin-AGM-Fenway

Phil Buchanan, Ellie Buteau, and Vice President, Assessment Tools, Kevin Bolduc, shared data from recent CEP research on foundation practice with attendees at the 46th Annual Meeting of Associated Grantmakers, the regional association of grantmakers in Massachusetts and the surrounding area. The event, held at Fenway Park, also featured an address from Massachusetts Governor Charlie Baker.

Though not on the road, Kevin will lead a Working Well With Grantees workshop in CEP’s Cambridge, MA office on Tuesday, August 4. The workshop will bring together foundation staff to focus on ways to build strong and supportive relationships with grantees. Participants will learn best practices to apply to their own interactions with grantees, speak about their own foundation’s challenges and hear from their peers, and leave with concrete tools for most effectively working with their grantees. Space is limited – if you would like to attend, you can register here.

Phil will also be traveling to Asheville, North Carolina, in November to speak at the Southeastern Council of Foundations 46th Annual Meeting, a convening of funders serving various constituencies across the southeastern region of the country.

You can keep up with all of CEP’s upcoming speaking engagements on our website.

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