Center for Social Philanthropy

C-SocPhil hosts special briefing with Oakland Institute on African land-grab investments

Fri, 04 Nov 2011 16:00:00 -0400

Tellus Institute brings stakeholders together to discuss problems in agriland investments

BOSTON — Following the release of three country-specific reports by the Oakland Institute on agricultural land investments in Africa, the Center for Social Philanthropy at Tellus Institute hosted Oakland Institute Executive Director Anuradha Mittal and Board Member Jeff Furman for an in-depth briefing and discussion with stakeholders representing a variety of NGOs, academics, investors, students, and labor groups.

Mittal and Furman presented and led the discussion along with C-SocPhil director Josh Humphreys. Dr. Humphreys provided insight into recent trends that have driven increased investment by college endowments and other institutional investors into alternative asset classes such as agricultural land.

Mittal and Furman explained the Oakland Institute’s findings that these investments are particularly enticing because their managers claim to yield high returns and tout them as “sustainable” ways to “feed Africa” and the world. In fact, however, any food, fuels, or other goods produced on these purchased lands are often exported out of Africa, and the development of these sites can force hundreds of thousands of people from the land on which they have lived their entire lives. No social or environmental impact assessments are conducted before these developments occur, Mittal said, and the human rights violations, conflicts, and resulting risks for investments are underplayed by investment managers.

The discussion that followed involved participants from Tellus Institute, Grassroots International, the Initiative for Responsible Investment at Harvard University’s Kennedy School, Oxfam America, the Responsible Endowments Coalition, Reynders McVeigh, the Service Employees International Union, the Sustainable Endowments Institute, and Trillium Asset Management.

Questions and conversations focused on power dynamics and the need for greater transparency and accountability in the agricultural land investment process. Mittal described situations in which investors have evaded community consultation by convincing tribal leaders that their investments will help the people living there. She also provided examples of local resistance sparked by land grabs and labor conditions in Ethiopia and South Sudan. Furman suggested that if any standards were to be put in place to enforce the actual social, environmental, and economic sustainability of these investments, such requirements would have to be rigid and accountable in order to prevent these dangerous cases. Participants highlighted the particularly weak transparency in college investments even though endowments benefit from tax exemption.

The group also discussed prospects for the development of new more responsible forms of investment in smaller scale, sustainable agriculture.

For more information about the event or about C-SocPhil’s work on alternative investments and other research related to endowments, contact Josh Humphreys at jh@socialphilanthropy.org or (617) 575-9660.

ABOUT THE CENTER FOR SOCIAL PHILANTHROPY

The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.

ABOUT THE OAKLAND INSTITUTE

The Oakland Institute is a policy think tank dedicated to advancing public participation and fair debate on critical social, economic, and environmental issues. For more information, please visit http://www.oaklandinstitute.org/.

C-SocPhil issues new report on sustainability trends in US alternative investments

Wed, 26 Oct 2011 00:00:00 -0400

New C-SocPhil research documents 16% growth in sustainable alternative investments

WASHINGTON, DC – In late October, US SIF Foundation released Sustainability Trends in US Alternative Investments, an in-depth report on the market of US alternative investment funds that incorporate environmental, social or governance (ESG) criteria. The report measures the growth of the ESG alternative investment market from 2010 to 2011 and tracks emerging trends, including the most prevalent ESG themes and the role that investor networks and field-building organizations are playing in supporting the industry’s growth.

Based on data collected by a team of researchers at Tellus Institute’s Center for Social Philanthropy, led by principal investigator Joshua Humphreys and lead analyst Ann Solomon, $80.9 billion was identified in 375 ESG alternative funds at the outset of 2011. This represents a 15.9-percent growth in assets for the ESG alternative investment market since the beginning of 2010, when $69.8 billion was identified as invested through 346 funds.

The alternative investment funds tracked in Sustainability Trends span the asset classes of private equity and venture capital, property, and hedge funds. Private equity and venture capital funds led the field numerically with 233 distinct funds, while property funds dominated the field in asset-weighted terms, with a combined total of $44.3 billion under management. A list of individual fund names and fund managers are provided in appendices to the report.

“Sustainable and responsible investing – the incorporation of environmental, social and corporate governance (ESG) criteria into investment management activities – has become an increasingly important part of the capital markets,” said report lead author Joshua Humphreys, director of the Center for Social Philanthropy. “Within this growing investment field, now sized at more than $3 trillion in the United States alone, alternative investments are attracting unprecedented attention across asset classes, geographies and ESG themes.”

Investor demand was a major driver of the ESG alternative market’s recent growth. Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment (US SIF), commented: “Alternative investments in sustainable and responsible investing are attracting a wide range of investors – high-net-worth families and individual ‘angel’ investors, mission-driven institutional investors such as philanthropic foundations, hospitals and faith-based institutions, and some of the largest and most prominent pension funds and private equity firms.”

Funds’ approaches to ESG incorporation were highly varied, and included a wide diversity of ESG themes. US SIF Deputy Director and Research Director Meg Voorhes said: “The majority of the alternative fund managers we reviewed consider several ESG criteria simultaneously, but environmental factors predominate. In particular, we see interest in green building, climate change issues, clean technology, renewable energy and energy efficiency. These managers look to produce market rates of return for their clients while helping to foster businesses, generate jobs or introduce products that will yield social and environmental benefits.”

A free Executive Summary of the report is available here. Electronic and hard-copy versions of the full 35-page report is available here, free for US SIF members and fee-based to other accredited investors.

The report was made possible with the support of Lead Sponsor Azimuth Investment Management, LLC, and the following Supporting Sponsors: Arborview Capital, DBL Investors, Ecotrust Forest Management, Inc., The Lyme Timber Company, Mission Markets, SJF Ventures, TerraVerde Capital Partners, Trillium Asset Management, and Working Lands Investment Partners, LLC.

For more information, please contact lead author Joshua Humphreys, jh@socialphilanthropy.org or (617) 575-9660.

ABOUT THE CENTER FOR SOCIAL PHILANTHROPY
The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.

ABOUT US SIF AND US SIF FOUNDATION

US SIF Foundation, a nonprofit 501(c)(3) organization, supports the educational and research activities of US SIF: The Forum for Sustainable and Responsible Investment. US SIF (http://www.ussif.org) is the US membership association for professionals, firms, institutions and organizations engaged in sustainable and responsible investing. US SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners.

C-SocPhil releases issue brief on excessive compensation at Massachusetts private colleges and universities

Wed, 28 Sep 2011 00:00:00 -0400

New report documents exorbitant executive salaries and radical wage inequalities at Massachusetts’ wealthiest colleges.

View the full report here: http://www.tellus.org/publications/files/issue-brief-exec-comp-201109.pdf

BOSTON — In a newly released special issue brief, the Center for Social Philanthropy at Tellus Institute documents the excessive compensation of top staff at Massachusetts private colleges and universities, including often undisclosed compensation from outside corporations. The report also highlights the dramatic income disparity between these “key employees” and lower level faculty and staff at the same schools.
The issue brief, Academic Excess: Executive Compensation at Leading Private Colleges and Universities in Massachusetts, focuses on Massachusetts’ 20 wealthiest private schools, whose collective endowments represent more than $50 billion in combined assets. The issue brief builds on the Center for Social Philanthropy’s 2010 report Educational Endowments and the Financial Crisis, which examined compensation trends and high-risk endowment investment practices and at six leading New England colleges.

Academic Excess reveals that despite the 2008-2009 financial crisis and subsequent layoffs at universities across the state, six- and seven-figure compensation packages remain commonplace for high-ranking college staff. In fact, 20 university employees earned over $1 million in 2008-09. Most of those top 20 are current or former staff at Harvard University. The average disclosed pay for these “key employees” across all 20 schools amounted to more than $464,000.

The excessiveness of these compensation packages is drawn in stark relief to the average salaries of professors and the lowest paid staff at these same colleges. The top paid employees earn between 3 and 33 times what the average professor makes and from 11 up to an astonishing 180 times what a unionized custodian earns. Such extreme income inequality at Massachusetts universities not only affects faculty and staff on-campus, but also has far-reaching impacts on the communities in which these schools are located.

Despite the widespread patterns of excessive pay, many forms of high compensation go unreported and remain largely obscured from public view. Colleges are only required to report the compensation of the 20 highest compensated “key employees” making over $150,000 and the five highest-paid employees making more than $100,000—leaving many other recipients of high pay undisclosed. Additionally, at present, colleges are not required to disclose compensation their employees receive from outside parties for corporate board service, consulting, speaking, or other business activities. Despite the lack of reporting requirements, Academic Excess identified $18.8 million in outside compensation to 26 “key employees.” Even when these outside pay packages present potential conflicts of interest, schools are under no obligation at present to disclose them.

“The view from Massachusetts is only the tip of the iceberg in excessive college pay in our country,” said Joshua Humphreys, director of the Center for Social Philanthropy at Tellus Institute and a co-author of the report. “While college leaders and their lobbyists complain about the burdens of added transparency, the fact is that there remain numerous loopholes in reporting requirements that make it difficult for the public to understand just how deeply entrenched excessive compensation has become on college campuses. Taxpayers and stakeholders are right to be concerned about these pay schemes when their tax dollars are effectively subsidizing them, given the numerous tax exemptions that private, nonprofit colleges receive. We need a new social contract for higher education, in which transparency becomes a benefit, not a burden.”

Million-dollar university salaries are also a major concern for college students and their families, who are paying ever-increasing tuitions. In the past 40 years, private college tuition and fees have increased twice as fast as the median US household income. Given the importance of access to higher education to career outcomes, this issue brief raises serious questions about the effects of executive compensation on college affordability.

The issue brief was co-authored by Humphreys, Catie Ferrara, and Bryant Mason, summer fellows at the Center for Social Philanthropy at Tellus Institute. Funding for this research was provided by the Center and by Service Employees International Union, Loc 615, which represents thousands of property-service staff at campuses across New England.

View the full report here: http://www.tellus.org/publications/files/issue-brief-exec-comp-201109.pdf

For more information, please contact Joshua Humphreys, jh@socialphilanthropy.org or (617) 575-9660.

ABOUT THE CENTER FOR SOCIAL PHILANTHROPY
The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.

C-SocPhil co-sponsors Five Fund Forum VII at SoCap11

Mon, 05 Sep 2011 15:47:00 -0400

Connecting sustainable investors, increasing social impact

SAN FRANCISCO — The Center for Social Philanthropy at Tellus Institute is please to announce its support and co-sponsorship for the Seventh Five Fund Forum, taking place September 7th, 2011, at Fort Mason Center in San Francisco, in affiliation with SOCAP11, the annual Social Capital Markets conference dedicated to the flow of capital toward social good.

The Five Fund Forum is a sustainable investment showcase presented by Watershed Capital Group, bringing together five leading international cleantech and sustainable investment funds with investors, such as family offices, funds of funds, LPs, asset managers and strategic investors.

Only accredited investors who are serious about sustainable investing are eligible to participate. For more information or to enroll, please visit Five Fund Forum VII.

New release on leading US sustainable investing trends

Wed, 31 Aug 2011 14:29:00 -0400

C-SocPhil director co-authors article in the Journal of Investing

BOSTON — In the fall edition of the Journal of Investing, Meg Voorhes, research director at US SIF Foundation, and Joshua Humphreys, senior associate and director of the Center for Social Philanthropy at Tellus Institute, have published a new article on “Recent Trends in Sustainable and Responsible Investing in the United States.”

Based on research conducted for US SIF by a team of researchers at Tellus Institute’s Center for Social Philanthropy, Voorhes and Humphreys describe several of the leading measurable trends driving the +$3.1 trillion sustainable and responsible investing space, including the increasing incorporation of environmental, social and governance (ESG) factors by institutional investors and money managers, the growing use of shareholder advocacy and active ownership strategies, and the expansion of community investing institutions, providing responsible access to capital to underserved low-and-moderate income communities.

Voorhes and Humphreys present a bird’s-eye view of the landscape of investment products now incorporating ESG factors — from mutual funds and ETFs to institutional separate accounts and commingled funds, to alternative investment vehicles. They highlight the leading ESG issues and themes shaping sustainable investment (from labor and human rights to climate change), as well as the motivations that are leading managers to take ESG issues into account.

The article is available here, free for JOI subscribers and fee-based for non-subscribers.

For more data-driven insights at the nexus of finance, philanthropy and sustainability, drawn from the Center for Social Philanthropy’s research, please visit the C-SocPhil Knowledge Center.

ABOUT THE CENTER FOR SOCIAL PHILANTHROPY

The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working at the frontiers of philanthropy and finance. We provide data, research, resources and tools to help mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.

C-SocPhil hosts Responsible Microfinance Luncheon with Oikocredit USA

Thu, 14 Jul 2011 00:00:00 -0400

Tellus Institute roundtable tackles controversies in international microcredit

BOSTON — The Center for Social Philanthropy at Tellus Institute and Oikocredit USA co-hosted a lunch meeting today with leading Boston-area impact investors to discuss controversies and challenges in the rapidly changing microfinance field.

The meeting provided an opportunity to introduce Oikocredit USA’s new National Director Sharlene Brown to the Boston impact investing community. Sharlene comes to Oikocredit USA after working with leading social finance organizations such as Domini Social Investments, US SIF - The Forum for Sustainable and Responsible Investment (formerly known as the Social Investment Forum), and Grameen Foundation, and she arrives at a time of organizational transition ahead of the anticipated retirement of its current Executive Director Terry Provance in 2012.

Brown and Provance joined C-SocPhil director Joshua Humphreys in leading the discussion. Dr. Humphreys provided a broad critical perspective on microfinance and the globalization of subprime lending, while Provance and Brown provided insights into recent controversies that have plagued specific microfinance organizations in India, Bangladesh, Mexico and Nicaragua, based on their long-standing work with partners in the field. Repeatedly they stressed the challenges faced by microfinance organizations and investment vehicles to remain true to their central mission of fighting poverty when profit-maximizing investors continue to commit capital to the field. Brown also provided insight into the kinds of questions that investment advisers should be asking as they begin to seek responsible investment opportunities in the space.

Clearly, there remains a critical role for mission-driven philanthropic and responsible impact investors to engage with microfinance institutions and investment vehicles in order to ensure that poverty alleviation and social empowerment remain central to the industry and thoroughly reflected in lending practices.

Investment advisers and analysts, portfolio managers, and other trustees and officers from groups such as Accion International, Ballentine Partners, First Affirmative Financial Network, the Harvard Initiative for Responsible Investment, Kiva, Oxfam, Rainbow Solutions, Springcreek Global Investments, the Sustainability Group at Loring, Wolcott, and Coolidge, The Philanthropic Initiative’s Center for Applied Philanthropy, Trillium Asset Management, the Unitarian Universalist Service Committee, US Trust, Veris Wealth Partners, and Zevin Asset Management joined in a wide-ranging, frank discussion about default rates, asset building and asset stripping, governance challenges, usury, currency and credit risk management, due diligence, gender dynamics, commercialization and securitization problems, and emerging innovation opportunities in areas such as mobile banking, credit reporting and rating, and new transparency standards for the industry.

For more information about the event or about C-SocPhil’s work on microfinance and other forms of impact investing, contact Josh Humphreys at jh@socialphilanthropy.org or (617) 575-9660.

ABOUT THE CENTER FOR SOCIAL PHILANTHROPY

The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.

ABOUT OIKOCREDIT USA

Founded in 1975, Oikocredit is an international cooperative microfinance investment vehicle that seeks to empower the poor with credit. Today, Oikocredit is one of the world’s largest sources of private funding to the microfinance sector and a provider of credit to trade cooperatives, fair trade organizations and small-to-medium enterprises (SMEs) in the developing world. Oikocredit promotes global justice by empowering disadvantaged people with credit. It reaches more than 28 million people through 875 partners in 71 countries.

As a responsible investor, Oikocredit supports the adoption of client protection and transparent pricing principles, and encourages poverty assessment by its investees and project partners. In recognition of its strong commitment to environmental, social, and governance (ESG) standards, Oikocredit was awarded CGAP’s inaugural ESG award in October 2010. In 2011, Oikocredit joined the United Nations Principles for Investors in Inclusive Finance as an inaugural signatory, reaffirming its commitment to expanding access to affordable and responsible financial products and services for poor and vulnerable populations.

Tellus endowment research cited in Boston Globe

Sat, 23 Apr 2011 01:54:00 -0400

C-SocPhil’s report on endowments and the financial crisis in the news

BOSTON — The Center for Social Philanthropy at Tellus Institute was cited today in an online story on the pending Massachusetts Higher Education Transparency Act.

As Matt Rocheleau reports on Boston.com, “The bill is driven by a report released last spring that examined six area schools, including five in and around Boston.

“The report, issued by the Center for Social Philanthropy at Boston-based Tellus Institute and partially funded by the Service Employees International Union, says some non-profit, tax-exempt higher education institutions were involved in high-finance-style practices that contributed to the global financial crisis.”

“They made foolish financial decisions,” said state Senator Patricia D. Jehlen, a Somerville Democrat and the lead sponsor of the bill. “And the question is now, have they changed or are they, like many people on Wall Street, doing the same thing they were before the financial crisis and making other people pay for their mistakes?”

C-SocPhil documents community impacts of delayed redevelopment projects

Thu, 03 Mar 2011 00:00:00 -0500

Sr. Fellow James Goldstein files affidavit in support of community groups in Atlantic Yards dispute.

BOSTON – On March 3, James Goldstein, Senior Fellow and Director of the Sustainable Communities Program at Tellus Institute, joined a panel of leading authorities in urban planning and community development who submitted affidavits on behalf of a coalition of community organizations in Brooklyn, New York, challenging the Empire State Development Corporation (ESDC) and Forest City Ratner over the impacts of major delays in the controversial Atlantic Yards project.

In his affidavit, Goldstein analyzes several large urban development initiatives which have experienced lengthy construction delays impacting local communities in Boston and New London, Conn.

Goldstein concludes his affidavit by stressing, “The recent cases of Filene’s One Franklin development, Harvard’s Allston Initiative, and New London’s Fort Trumbull project all highlight the quantifiable and qualitative costs that arise in the course of unanticipated project delays. They invite a much more deliberate reconsideration of expectations about project costs and benefits once a delay occurs and, as in the case of One Franklin, demand a much more thorough analysis of the unanticipated impacts that inevitably arise from those delays.”

Research supporting Goldstein’s analysis was provided by a team from the Center for Social Philanthropy at Tellus Institute, led by the Center’s director Joshua Humphreys.

According to Humphreys, “Goldstein’s affidavit highlights the real costs that project delays can have on surrounding communities. We’re delighted to bring our organization’s expertise to the table in support of the petitioners’ attempt to hold this private, for-profit developer and their public nonprofit partner accountable for their impacts on the community. The cases of Harvard University’s Allston project and Vornado Realty’s Downtown Crossing disaster in Boston, as well as the notorious New London, Conn., redevelopment at Fort Trumbull provide fresh empirical evidence that project delays can have major consequences on communities that need to be thoroughly assessed. A new environmental impact statement is needed, and real community governance needs to emerge in the Atlantic Yards project.”

The other affidavits were submitted by Ronald Shiffman, the founder and former Executive Director of the Pratt Center for Community Development and a professor of urban planning at Pratt Institute, and Majora Carter, the founder and former Executive Director of Sustainable South Bronx and president of the Majora Carter Group.

The petitioners include several of the sponsors of BrooklynSpeaks, an initiative of civic associations, community-based organizations and advocacy groups concerned about the future of development at the Atlantic Yards site in central Brooklyn. The Prospect Heights Neighborhood Development Council, the Atlantic Avenue Local Development Corporation, the New York Chapter of the Congress for New Urbanism, and the Fifth Avenue Committee, among others, are actively involved on behalf of the affected neighborhoods.

“When it approved the 2009 MGPP [the project’s modified general plan], ESDC ignored the law, the facts, common sense and, most importantly, the opportunity to engage the community to help make Atlantic Yards work for Brooklyn,” said Gib Veconi of the Prospect Heights Neighborhood Development Council. “The statements of these experts show how ESDC was deficient in its approval of Forest City Ratner’s proposed changes to the construction schedule, and that ESDC failed to learn from either the failures or successes of other large urban redevelopment projects.”

“Even though construction on the Barclays Center arena is underway, it’s not too late for the public to have a voice in the future of Atlantic Yards,” said Michelle de la Uz, executive director of the Fifth Avenue Committee. “Since ESDC and Forest City have so far refused to engage the local community or its elected representatives in a meaningful way, we have no choice but to ask the Court for a reversal of the 2009 MGPP and to halt further construction. Appropriate study of the impacts of 25 years of construction must be made.”

The full affidavit by James Goldstein can be found online here.

More information on the Atlantic Yards litigation can be found at http://www.brooklynspeaks.net/.

About the Center for Social Philanthropy

The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working at the frontiers of philanthropy and finance. The Center provides data, research, resources and tools to help foundations, donors, and mission-driven investors leverage their assets more fully for long-term sustainable social and environmental impact. The Center’s work fosters greater financial transparency, accountability and sustainability and helps a wide range of stakeholders to understand and engage in today’s increasingly complex capital markets. Since 2009, the Center has been housed at Tellus Institute, a sustainability think tank in Boston.

Humphreys speaks on just investing at Brown

Fri, 11 Feb 2011 02:54:00 -0500

C-SocPhil director joins panel on “Investing in Justice”

BOSTON — Joshua Humphreys, senior associate and director of the Center for Social Philanthropy at Tellus Institute, joined representatives from the Responsible Endowments Coalition and the Service Employees International Union for a panel discussion on the theme of “Investing in Justice” at Brown University.

The event was organized by student organizations in the Open the Books Coalition ahead of the winter meeting of the Brown Corporation. On the Corporation’s agenda was a recommendation from the University’s Advisory Committee on Responsible Investment Policy not to reinvest in HEI Hotels and Resorts, a hospitality private-equity firm with a notoriously bad reputation for its labor relations. Despite the stigma, leading college endowments have routinely invested in the firm’s funds.

Coverage in the Brown Daily Herald is online here.

C-SocPhil Director on Higher Ed Transparency

Thu, 10 Feb 2011 03:08:00 -0500

Humphreys interviewed by Tufts paper on college financial disclosures

BOSTON — Joshua Humphreys, senior associate and director of the Center for Social Philanthropy at Tellus Institute, was interviewed at length for an article in The Tufts Daily about pending legislation in the Massachusetts State House that would require fuller disclosure of financial information by private colleges.

The legislation, inspired in part by research on endowments and the financial crisis conducted by the Center for Social Philanthropy last year, would require annual reporting by colleges of investment holdings, excessive compensation, manager and consultant fees, trustee and employee conflicts of interest, and the costs of tax exemptions. The bill was sponsored by Sen. Patricia Jehlen, whose district includes Tufts University.

“Although tax exemption creates costs to the state … there are no good estimates for what those costs are,” Humphreys said. “This bill would require colleges to report on the cost of tax exemptions so that a more well-informed and robust debate can occur about costs and benefits.”

Hearings on the Massachusetts Higher Education Transparency Act will occur on Beacon Hill in June.

Humphreys on endowments in FT: Few lessons learned from crisis

Sun, 09 Jan 2011 00:54:00 -0500

C-SocPhil director quoted at length today in FT piece on endowments.

BOSTON — The Center for Social Philanthropy’s director Joshua Humphreys was quoted at length today in a story that appeared today in the Financial Times on the endowment model of investing

Humphreys sharply criticized colleges and their investment consultants for taking liquidity for granted and embracing much more risk than they could reasonably be expected to manage. He also highlighted how few lessons seem to have been learned from endowments’ exposure to risky asset classes during the financial crisis.

“The underperformance of Harvard and Yale should serve as a wake-up call for smaller funds and make them see that they’re in a sucker’s game because they can’t access the best funds or managers,” Humphreys says.

The full story can be found online here.

New C-SocPhil research on social & environmental investing

Tue, 09 Nov 2010 15:21:00 -0500

Social Investment Forum releases 2010 SRI Trends Report. SRI assets top $3 trillion, up 13% across financial crisis, growing faster than broader market.

WASHINGTON, DC — Despite the recent economic downturn, sustainable and socially responsible investing (SRI) in the United States is continuing to grow at a faster pace than the total universe of investment assets under professional management, according to the new 2010 edition of the Social Investment Forum Foundation’s Report on Socially Responsible Investing Trends in the United States.

Key report findings include the following:

• The pool of assets engaged in SRI strategies – the use of environmental, social and governance (ESG) criteria, shareholder advocacy and community investing — has grown more rapidly than the overall investment universe due to such factors as net inflows into existing SRI products, the development of new SRI products, and the adoption of SRI strategies by managers and institutions not previously involved in the field.

• Since 2005, SRI assets have increased more than 34 percent while the broader universe of professionally managed assets has increased only 3 percent. From the start of 2007 to the end of 2009, a three-year period when broad market indices such as the S&P 500 declined and the broader universe of professionally managed assets increased less than 1 percent, assets involved in sustainable and socially responsible investing increased more than 13 percent (from $2.71 trillion to $3.07 trillion).

• Nearly one out of every eight dollars under professional management in the United States today — 12.2 percent of the $25.2 trillion in total assets under management tracked by Thomson Reuters Nelson — is involved in some strategy of socially responsible and sustainable investing.

The total value of assets managed under policies that explicitly incorporate environmental, social and governance criteria into investment analysis and portfolio construction are valued at $2.51 trillion. Of these ESG assets, $691.9 billion were identified within specific investment vehicles managed by money managers, while at least $2.03 trillion were identified as owned or administered by institutional investors. Of the institutional ESG assets, $206.3 billion were managed through investment vehicles captured in research on money managers. The assets and numbers of fund vehicles tracked as incorporating ESG criteria rose 90 percent since the last SIF study conducted in 2007—from 260 to 493—and their assets increased 182 percent from $202 billion to $569 billion.

Social Investment Forum CEO Lisa Woll said: “Socially responsible and sustainable investing emerged from the recent financial crisis doing better than the overall market in terms of holding onto assets and attracting new investments. What is significant about this strong growth is that it encompasses both retail investors, including SRI mutual funds, and institutional investors, who hold the majority of SRI investments. We have also seen robust expansion of the strategies of shareholder advocacy and community investing. All of these developments show that the key principles of socially responsible and sustainable investing are being more widely embraced. All signs point to more investors looking for investments that support good governance and greater transparency and disclosure on ESG issues.”

Social Investment Forum Board Chair Cheryl Smith, PhD, CFA, president and senior portfolio manager, Trillium Asset Management Corp., said: “During the last three years of prolonged financial and economic turmoil, investors voted with their dollars, showing that they understand the value of incorporating environmental, social, and governance factors in the investment process. Over the three years, investors increased the percentage of their assets managed with socially responsible and sustainable investment strategies. Shareholder advocacy strategies increased in importance, as mainstream investors increasingly joined with SRI investors to support and advocate for strong corporate governance and environmental sustainability. Investors increased their commitment to community investing institutions by 62 percent, as the needs of communities underserved by mainstream banks became increasingly obvious.”

Trends report co-author Joshua Humphreys, PhD, Director, Center for Social Philanthropy, Tellus Institute, said: “SRI is a ray of hope across an otherwise dreary investment landscape. Increasing numbers of investors are moving their money and demanding more ‘responsible returns’ from their investments, by taking environmental, social and governance issues into account. Investment consultants and asset managers are rising to this growing demand from individuals and institutions, and we see impressive growth in new sustainable investment vehicles and strategies across asset classes, from ETFs to alternative investments in venture capital, ‘double-bottom-line’ private equity and responsible property funds that promote environmental sustainability and positive community impact.”

OTHER KEY FINDINGS

• Institutional investors: With $2.3 trillion in assets involved in SRI strategies, institutional investors dominate the SRI universe documented in this report. Of this overall universe of institutional assets engaged in SRI strategies: $2.03 trillion incorporate ESG factors into investment analysis and portfolio selection; $858.8 billion is controlled by institutions that file or co-file shareholder resolutions on ESG issues; and $586.2 billion were identified as involved in multiple strategies of ESG incorporation, shareholder advocacy or community investing.

• Alternative investment funds: The Trends report identifies 177 alternative investment vehicles that incorporated ESG criteria with $37.8 billion in total assets. Alternative investment vehicles include hedge funds, social venture capital and double- and triple-bottom-line private equity funds and responsible property funds, typically organized as unregistered limited partnerships or limited liability companies and available only to accredited institutional and high-net-worth investors. The number of alternative investment vehicles incorporating ESG criteria increased 285 percent since 2007, faster than any other segment of ESG vehicles, while their assets increased 613 percent.

• Mutual funds: The largest share of funds that incorporate ESG factors are mutual funds, with $316.1 billion in total assets invested in 250 different funds. Of these ESG mutual funds, 27—with $176.9 billion in assets—underlay annuity products.

• Shareholder advocacy: A wide array of investors now files or co-files shareholder resolutions at US companies on ESG issues, and hundreds of these proposals come to votes each year. From 2008 through 2010, more than 200 institutions— including public funds, labor funds, religious investors and foundations—and investment management firms filed or co-filed proposals. These institutions and money managers collectively controlled $1.5 trillion in assets at the end of 2009.

• Community investing: Assets in community investing institutions rose more than 60 percent from $25.0 billion in 2007 to $41.7 billion at the start of 2010, reflecting healthy growth in all four categories of community investing institutions that the Social Investment Forum Foundation has tracked since 1999: community development banks, community development credit unions, community development loan funds and community development venture capital funds.

• Exchange-traded funds: Twenty-six ETFs with $4.0 billion in total assets were identified as incorporating ESG criteria. Although ETFs accounted for only 1 percent of the total assets of all ESG investment vehicles, their assets have grown 225 percent since 2007, the fastest of all registered investment vehicles.

• Separate account vehicles: Among separate account managers, 232 distinctive separate-account vehicles or strategies, with $122.4 billion in assets, incorporated ESG factors into investment analysis.

METHODOLOGY
The 2010 Trends report has identified $3.07 trillion in total assets under professional management in the United States using at least one of three socially responsible investing strategies:

• The incorporation of environmental, social and governance (ESG) factors into investment analysis and portfolio construction;

• The filing or co-filing of shareholder resolutions on ESG issues; and

• Deposits or investments in banks, credit unions, venture capital funds and loan funds that have a specific mission of community investing.

The Social Investment Forum Foundation has issued periodic Trends reports on the socially responsible and sustainable investment market since 1995.

ABOUT THE SOCIAL INVESTMENT FORUM FOUNDATION AND SOCIAL INVESTMENT FORUM

The Social Investment Forum Foundation is a nonprofit 501(c)(3) organization. The objective and purpose of the Foundation is to support the activities and purpose of the Social Investment Forum, its sole member, by assuming the responsibilities for, and the management of, certain educational, research and programmatic activities.

The Social Investment Forum is the US membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing (SRI). SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners.

The vision of both organizations is a world in which investment capital helps build a sustainable and equitable economy. The 2010 Report on Socially Responsible Investing Trends in the United States was made possible by support from the following organizations:

Foundations

The Rockefeller Foundation

www.rockefellerfoundation.org

Wallace Global Fund

www.wgf.org

Benefactors

Bloomberg

www.bloomberg.com

TIAA-CREF

www.tcasset.com

Lead Sponsors

MSCI

www.riskmetrics.com/sustainability

Neuberger Berman

www.nb.com

General Sponsors

Calvert Investments

www.calvert.com

Christian Brothers Investment Services

www.cbisonline.com

Clearbridge Advisors

www.clearbridgeadvisors.com

Legg Mason Investment Counsel

www.lmicus.com/sri

Sentinel Investments

www.sentinelinvestments.com

Towers Watson Investment Services

www.towerswatson.com

Trillium Asset Management

www.trilliuminvest.com

United Methodist Church General Board of Pension and Health Benefits

www.gbophb.org/sri_funds

Walden Asset Management

www.waldenassetgmt.com

EDITOR’S NOTE: A streaming audio recording of a related news event will be available on the Web as of 6 p.m. EST on November 9, 2010 at http://www.socialinvest.org. Copies of the 2010 Trends report will be available to journalists upon request. Nonprofits may receive electronic versions of the full report for free. The executive summary of 2010 Trends report is available at no cost. Visit the Social Investment Forum at socialinvest.org.

MEDIA CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com

Huff Post coverage for C-SocPhil endowments report

Tue, 08 Jun 2010 03:41:00 -0400

In the Huffington Post, Bob Samuels reviews the Center for Social Philanthropy at Tellus Institute’s recent report on “Educational Endowments and the Financial Crisis,” principally authored by Joshua Humphreys, senior associate and the Center’s director.

An excerpt from Samuels:

Not only are large endowments and pension funds plagued by conflicts of interests, but as the Tellus Institute report explains, these huge pots of money contributed to the global financial meltdown: “By engaging in speculative trading tactics, using exotic derivatives, deploying leverage, and investing in opaque, illiquid, over-crowded asset classes such as commodities, hedge funds and private equity, endowments played a role in magnifying certain systemic risks in the capital markets. Illiquidity in particular forced endowments to sell what few liquid holdings they had into tumbling markets, magnifying volatile price declines even further. The widespread use of borrowed money amplified endowment losses just as it had magnified gains in the past.” One reason why these wealthy universities have taken on so much debt is that as they started to lose at the global speculative casino, they decided to double down on their highly leveraged investments.

Felix Salmon on the problems with university endowments

Fri, 28 May 2010 03:30:00 -0400

Felix Salmon reviews the new Tellus Institute report “Educational Endowments and the Financial Crisis,” authored principally by Joshua Humphreys, senior associate and director of the Institute’s Center for Social Philanthropy.

An excerpt from Salmon:

“But even if they want to continue to chase absolute returns, it’s clear that the endowment model massively overestimated their appetite for illiquid assets. The idea was that because they’re investing with the longest conceivable time horizon, they can put a lot of their money into highly illiquid investments. But then they got bit by the fact that their universities were naturally likely to fall back on endowment monies at precisely the point at which illiquid markets seize up completely. Endowments should be countercyclical buffers, when it comes to universtity finances, not pro-cyclical exacerbators of financial crises.

“And they should also be a lot more transparent than they are. Writes Humphreys:

When reported, school-specific data are nonstandardized, inconsistent, incomplete and fragmentary, and scattered across municipal, state, SEC and IRS filings, incommensurable annual reports, and costly proprietary financial databases unavailable to the general public.

“There’s no excuse for this. Let’s force endowments to standardize their public reports, and show, rather than tell, just what their highly-paid employees are doing to deserve all their millions of dollars in remuneration. And let’s force them, too, to spend a lot more time concentrating on liquidity risk management, and to cast a skeptical eye on the amount of leverage that these institutions really need.”

Read Salmon’s full story here and the Tellus report here.

C-SocPhil endowments report on Bloomberg TV

Fri, 21 May 2010 18:00:00 -0400

Humphreys quoted on Dartmouth trustee conflicts of interest.

Bloomberg Businessweek’s Roben Farzad talks with Matt Miller and Carol Massar about how Harvard University, the richest U.S. college, and five of its New England peers succumbed to Wall Street’s influence on investment strategies, took on too much risk and made the financial crisis worse, according to a report by Tellus Institute.

Highlights:

Miller: I love the quote from Joshua Humphreys, who’s the lead author of the report the story’s based on: “Can you imagine the investment committee meetings at Dartmouth? Basically, half the room has to leave, including the chair of the investment committee.”

[Awkward laughter]

Mossar: Wild!

Farzad’s conclusion: “There’s a lot of soul-searching to do here in academia.”

Full video here: http://www.bloomberg.com/video/60276066/

C-SocPhil Director on WBUR

Fri, 21 May 2010 00:00:00 -0400

Humphreys stresses community impact from endowment declines.

BOSTON — Joshua Humphreys, director of the Center for Social Philanthropy at Tellus Institute, appeared in a story by Monica Brady-Myerov on WBUR public radio discussing the Center’s recent report on college endowments and the financial crisis:

Joshua Humphreys, the lead investigator, says falling endowments have ripple effects on the regional economy, as is the case with Harvard’s stalled Allston expansion, which Humphreys said is causing significant local loss. “Over a very short period of delay of only three years, and it’s assumed that Allston is going to take much longer to get back if it’s going to be done at all,” Humphreys said. “Nearly $1 billion in lost economic impact in the Boston metro region.” The report suggests the schools should invest with greater liquidity and lower volatility, and put away money for a rainy-day fund.

For the full story, “Report Questions College Investment Strategies,” visit http://www.wbur.org/2010/05/21/endowment-study.

Tellus C-SocPhil releases new report on endowments and the financial crisis

Thu, 20 May 2010 14:07:00 -0400

C-SocPhil report documents social costs and systemic risks of the Endowment Model of Investing.

View the report here: http://www.tellus.org/publications/files/endowmentcrisis.pdf

BOSTON — A new report, released by the Center for Social Philanthropy at Tellus Institute, demonstrates the consequences of colleges and universities placing an increasing share of their endowments into high-risk investments, including derivatives, hedge funds, private equity, commodities and other “real assets.”

During and after the recent financial meltdown, the influential “Endowment Model of Investing,” pioneered by Harvard and Yale universities and widely emulated by other endowments and institutional investors, destroyed tens of billions in endowed wealth at colleges and universities, up to 30 percent of endowment value at some of the wealthiest schools.

It also contributed to the magnification of systemic risk in what economists and policymakers have called the “shadow banking system,” a weakly regulated, highly fragile global constellation of institutions deploying capital outside of the regulated banking system in ways that have magnified systemic risks in the capital markets.

The hardship caused by these measures has rippled out in the form of lasting job losses, stalled construction projects, and local business downturns in college communities that used to be secure havens of employment and economic resilience.

“While much attention is rightly being paid to the role of for-profit financial institutions in provoking the recent financial crisis in the weakly regulated shadow banking system, the role of nonprofit institutional investors in heightening risk in the capital markets requires much closer scrutiny as well,” said Dr. Joshua Humphreys, the lead author of the report and Senior Associate and Director of the Center for Social Philanthropy at Tellus Institute in Boston. “The data we analyze in the report make clear that the Endowment Model of Investing is broken and needs to be greatly overhauled. Endowments need to become much more resilient to market volatility, and colleges should reclaim their historical role as nonprofit stewards of sustainability, both in their investments and in their local economies.”

The report examines six privately endowed New England colleges and universities—Boston College, Boston University, Brandeis University, Dartmouth College, Harvard University and the Massachusetts Institute of Technology—as case studies for exploring deeper connections between educational endowments and their impact on our institutions, our communities, and our economy. Even after the crisis, these six schools control nearly $40 billion in endowment assets, more than 12 percent of the roughly $310 billion held in college and university endowments nationwide at the end of FY 2009. They are among the largest employers in their communities in the Boston metropolitan region and the Upper Valley of western New Hampshire and eastern Vermont.

The report raises questions of weak oversight regarding how the high-risk, high-return Endowment Model is being implemented at the schools in this study. It documents the rise of highly compensated, Wall-Street-style chief investment officers as powerful figures on college campuses. It questions colleges’ disproportionate reliance on trustees and investment committee members drawn from the business and finance sector—including the very sectors most involved in the recent economic meltdown. It also spotlights potential conflicts of interest that could arise when the investment firms of trustees from the finance industry provide investment management services to the very colleges on whose boards they serve. The report also calls for greater transparency in endowment management, especially given the substantial public subsidies colleges and universities receive in the form of property-tax breaks, tax-deductible endowment gifts, tax-exempt investment income, and low-interest, tax-exempt bonds.

The report points out that in addition to layoffs and reductions in force on campus, the sudden postponement of planned construction projects due to short-term endowment losses, most notably Harvard‘s ambitious Allston Initiative, translates into lost jobs, broken promises, and diminished opportunities for community economic development. Based solely on potential earnings from the anticipated jobs that fail to materialize from the Allston delays, the report conservatively estimates that more than $860 million in expected economic activity will be lost over the next three years. Longer delays will deepen community economic losses. The report notes that proposals to cut back educational programs and to close institutions such as the Rose Art Museum at Brandeis University have weakened community cultural development in less readily quantifiable, but no less important ways.

View the report here: http://www.tellus.org/publications/files/endowmentcrisis.pdf

Media contact: Joshua Humphreys, jh@socialphilanthropy.org or (617)575-9660.

C-SocPhil director speaks at Resource Generation family philanthropy retreat

Sat, 20 Mar 2010 22:04:08 -0400

Joshua Humphreys presented MRI strategies at Resource Generation’s “Creating Change through Family Philanthropy” Retreat, March 19-21, 2010, Briarcliff Manor, NY.

BRIARCLIFF MANOR, NY — The Center for Social Philanthropy’s director Joshua Humphreys, a lecturer at Harvard University and a Senior Associate at Tellus Institute, discussed proxy voting, shareholder activism and other mission-related investing and active ownership strategies at a panel devoted to “The 95% Solution — Aligning Mission, Program and Investment” at Resource Generation’s ”Creating Change through Family Philanthropy” Retreat.

The retreat took place at the Edith Macy Conference Center in Briarcliff Manor, NY, over the weekend of March 19-21, 2010. The panel was led by Dana Lanza, the Executive Director of Confluence Philanthropy and a C-SocPhil Advisory Board member.

Resource Generation works with young people of financial wealth around the country and across the globe to align their personal value and political vision with their financial resources in order to pursue progressive social change. The family philanthropy retreat provides an opportunity for young people involved in their families’ philanthropic giving to connect with others faced with similar issues.

C-SocPhil Director speaks to Harvard Philanthropy Study Group

Thu, 22 Oct 2009 00:00:00 -0400

Joshua Humphreys discusses Leveraging Philanthropic Assets for Long-Term Social and Environmental Impact at Harvard Kennedy School

CAMBRIDGE, MASS. — The Center for Social Philanthropy’s director Joshua Humphreys, a lecturer at Harvard and a Senior Associate at Tellus Institute, delivered a presentation today on “Leveraging Philanthropic Assets for Long-Term Social and Environmental Impact” at the Philanthropy Study Group of the Hauser Center for Nonprofit Organizations at Harvard’s Kennedy School.

Dr. Humphreys’s presentation may be viewed online here.

Formed in October 2008, the Practical Issues in Philanthropy Study Group (PSG) at Harvard Kennedy School’s Hauser Center for Nonprofit Organizations brings together students, researchers, faculty and practitioners to explore contemporary issues, controversies and challenges within philanthropy. The monthly meetings feature practitioners and researchers working in the sector. Topics include the growth of philanthropy globally, the rise of new funding and management approaches, questions around accountability and the role of intermediary organizations, and the relationship between philanthropies, the state and the private sector.

The group is convened by Steven Lawry, a Senior Research Fellow at the Hauser Center, and a Midcareer Fellow in Philanthropy at the Hauser Center. For more information about upcoming and past meetings, visit the Hauser Center online here.

C-SocPhil in FT story on green investing

Mon, 04 Feb 2008 00:47:00 -0500

CAMBRIDGE, MASS. — The Center for Social Philanthropy’s director Joshua Humphreys was interviewed for one of a series of stories on environmental investing that appeared today in the Financial Times.

“There are more than 100 retail funds and strategies that incorporate environmental criteria into portfolio management and they have more than $40 bn (£20 bn, €27bn) in assets, says Joshua Humphreys, a lecturer at Harvard University and director of the Center for Social Philanthropy.

“…The range of products cuts across the green horizon, encompassing carbon emissions, alternative energy, climate change, energy efficiency, ‘clean technology’ and water resource management. But for now, most advisers who provide these products are self-made specialists.”

Click here for a download of the complete spread.