Some within philanthropy have begun to champion the idea that the percentage of assets given annually as grants, regardless of whether it is 5 percent or slightly higher, represents just a small portion of the total financial assets that foundations have at their disposal. The entire corpus of an endowment can be put to philanthropic use: through socially responsible investing, ensuring that funders aren’t investing in businesses antithetical to their missions; through shareholder activism that allows foundations to advocate for changes in corporate policy; and through “program related investments" (PRIs) and loans from the corpus in ventures with a social benefit that may generate enough cash to repay the investment.
Jed Emerson, senior fellow at the Hewlett Foundation, has written extensively about how foundations might use their endowments more effectively, including a 2002 opinion piece, “Horse Manure and Grantmaking," in Foundation News and Commentary and a 2003 article, “Where Money Meets Mission," in the Stanford Social Innovation Review.
Unlocking the Power of Proxy: How Active Foundation Proxy Voting Can Protect Endowments and Boost Philanthropic Missions (2004), is a guide produced by Rockefeller Philanthropy Advisors and the As You Sow Foundation to help foundations think about shareholder activism and develop policies related to proxy voting.
A few examples of foundations using endowments more actively to promote their missions include:
- The F.B. Heron Foundation in New York is trying to break down the “wall" between program and investment management by making market-rate investments from its endowment that support its mission without jeopardizing the value of the corpus. By the end of 2003, mission-related investments and commitments made up 19 percent of Heron’s endowment, and in 2002 actually outperformed the foundation’s traditional investment portfolio. The foundation is now aiming to increase that proportion and to grow the universe of other institutional funders that make mission-related investments.
- The Abell Foundation in Baltimore sets aside about 15 percent of its portfolio for “venture investments" into small- and medium-sized businesses that benefit the community by creating jobs and establishing corporate headquarters in Baltimore.
- The Rockefeller Foundation’s Program Venture Experiment (ProVenEx) was allotted $18 million from the foundation’s program budget to provide venture capital to business enterprises that are directly related to the Rockefeller Foundation’s overarching mission to achieve both social and financial returns.
- The Jesse Smith Noyes Foundation established a socially-responsible investment strategy in 1993 that invests in companies committed to the environment, sustainable natural resource management, and a safe and healthy workplace while
 screening out companies that work counter to the foundation’s mission.. It has also become a leader in promoting shareholder resolutions and proxy voting to leverage its programmatic work and to encourage corporations it invests in to act more socially-responsible.
Paralleling efforts to change the use of institutional endowments, Claude Rosenberg, founder and chairman of NewTithing Group, has promoted a similar trend for individual donors, encouraging them to consider all of their assets when giving, rather than only annual income. The NewTithing website includes the PrudentPal Charitable Giving Planner, an online tool to help donors to calculate how much they can comfortably give—based on both assets and income—to charity each year.
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