The Nathan Cummings Foundation is a multigenerational family foundation based in the United States. It advances racial, economic and environmental justice. With an endowment of nearly 500 million USD, the foundation is one of the largest to commit to aligning 100 percent of its investments with its funding goals.
The climate crisis is both accelerated by and threatens the current structure of capital markets. To address problems like climate change, the Nathan Cummings Foundation decided that grant-making alone was not enough, and instead, it needed to activate the totality of its resources, including its endowment, for transformative change.
The foundation recognises mission-aligned investing of its Capital as a strategy that not only enables it to use the full potential of its endowment to achieve impact, but also to secure its financial goals in the long-term.
Application in Practice
The foundation began to use its Capital as a lever for change by engaging in shareholder activism, and it continues to do so to this day. Over the course of the last two decades, the foundation filed over 250 shareholder resolutions on issues ranging from climate change to executive compensation.
Moreover, in 2018, the foundation’s board committed to renew its portfolio of aligned investments across all asset classes. The foundation defined four categories:
- Investments that cause social or environmental harm, so-called “no-go investments”.
- Investments in companies that work to avoid harm to stakeholders.
- Investments in companies that seek to benefit stakeholders.
- Investments that actively contribute to solving systemic challenges.
As a first step, the foundation removed almost all its “no-go investments”. Then it broadened the approach to reallocate ever larger parts of its assets to investments that fit into the other categories.
Four and a half years into the implementation of its new investment strategy, the Nathan Cummings Foundation has invested more than 95 percent of its endowment assets in companies that prevent harm, companies that benefit stakeholders, and companies that contribute to solutions. According to the foundation’s most recent impact investing report, this investment approach has not led to financial setbacks.
The foundation has also achieved a lot by way of shareholder activism. For example, it managed to push Occidental Petroleum to assess its long-term impact on climate change when the foundation’s resolution was passed by the majority of shareholders.
What has worked well?
- Start simple: Ensuring values alignment is a work in progress. Look at every aspect of your investment and start by removing investments that are directly detrimental to your objectives.
- Don’t let concern about financial returns stop you: Aligning your financial investments to your values does not necessarily lead to sacrifices in financial returns.
- Collaborate with other shareholders: In terms of shareholder activism, having positive influence does not require all shareholders to approve your resolutions. Building up pressure among other shareholders can be sufficient to get corporations to negotiate and make concessions.
What are opportunities for new funders?
- Build on the experience of others: All economic sectors need to transition to net-zero swiftly. You can look to existing experiences and shared learnings, like that of the Nathan Cummings Foundation, to help leverage your own investment portfolio for impact.