Foundations Embrace Mission-Based Investing, Study Says
The investment potential of U.S. foundations far outweighs their grant-making potential and more foundations are beginning to make investments that coincide with the their goals, which is known as mission investing, according to a recent study.
U.S. foundations made grants totaling abut $46 billion in 2010 but held assets totaling more than $600 billion, vastly increasing their potential to support their missions, according to Key Facts on Mission Investing by The Foundation Center.
One in seven foundations that responded to the survey are investing in market-rate, mission-related investments and/or below-market-rate, program-related investments. Market-rate investments earn more but do not count toward the foundation's disbursement requirements, while program-related investing may earn below market rates but can be counted as part of the foundations' disbursement requirements.
Both types of investing have been around for decades, but half of those engaged in mission investing started doing so only in he last five years and 28% started in the last two years. Survey results were compiled from 168 foundations that have $119.2 billion in assets.
Half of the foundations engaging in mission investing have program-related investments and 28% have both program-related and market-rate investments, while 22% hold only market-rate investments.
Just over one quarter (26%) of those making mission-related investments commit half or more of their assets to this type of investing, according to the study. Most reported holding only 5% or less in mission-related investments.
Stephen Viederman, former president of the Smith Noyes Foundation and a proponent of mission investing, argues that foundations' investment strategies should be guided by their mission to benefit the public and that social investing does not underperform general investing.
Global Credit Crisis Avoidable, MFO Analyst Says
Global markets will continue to be affected by the situations in Greece, China and elsewhere, but the problems should not be as harmful as in 2008 and investors can take steps to protect themselves, says Greg Peterson, director of research at Ballentine Partners.
Greece's default will be managed in an organized manner and the European Union will survive intact, Peterson notes in a report for Ballentine. Ballentine is a multifamily office and investment advisory firm based in Waltham, Mass., serving families with assets of $20 million or more.
Peterson believes Portugal's fiscal problems will not reach the level of those in Greece and Ireland and that the country will be able to repair itself.
"We expect an extended period of global deleveraging and low growth, accompanied by heightened market volatility and higher correlations," Peterson says. However, the situation will not mimic 2008. "Investors may be well-advised to rebalance to the same equity targets held in early September but to wait for a better tactical entry point to make equity purchases."
In the U.S., a double-dip recession should be avoidable, but global markets could still be seriously disrupted by policy errors, such as not passing the recommendations submitted by the Joint Select Committee on Deficit Reduction, Peterson says.
"The situation in China is like that in the U.S. in that policy errors could create problems," Peterson says. "Slower global growth, a burgeoning real estate bubble, and a potential trade war with the U.S. could hinder China's progress."
A global credit crunch should be avoidable, Peterson says.
Bank Of The West Expands HNW Services
High-net-worth clients will have more services available for their specific needs at Bank of the West Wealth Management, based in San Francisco, according to the firm.
Bank of the West is adding more private client advisors, personal trust administrators and investment portfolio managers for its affluent and high-net-worth clients in the 19 states where it operates. The firm says its goal will be to establish individual relationships with high net worth clients, said John Bahnken, head of Bank of the West Wealth Management.
The private client advisors will act as lead relationship managers to coordinate banking and investment services. The bank will form a specialized team focused on residential real estate financing for affluent and high-net-worth individuals.
Bank of the West Wealth Management also says it is creating dedicated wealth management client centers, with five set to open by the end of the year.
-Karen DeMasters
On The Move
Cornerstone Advisors of Bellevue, Wash., has hired Scott Dowling as client manager. Dowling will focus on serving the needs of technology executives and families with multi-generational wealth. He brings over 22 years experience in investment management and financial analysis, most recently as president of his own firm, Dowling Investment Group.
BNY Mellon's wealth management business has named Lawrence Miles regional president for the firm's Los Angeles office, where he will oversee sales and servicing for southern California. Miles previously served as executive vice president for the boutique investment advisory firm, Convergent Wealth Advisors.
First Western Trust Bank announced the appointment of veteran Denver attorney Bill Schmidt as senior trust officer and family wealth advisor. A published author and lecturer, Schmidt has more than 40 years of experience advising clients in the areas of trust law, estate planning and administration, and charitable giving strategies. Prior to joining First Western, Schmidt practiced trust and estate law at the Denver office of Holland & Hart LLP.
-Kathy Lynch
