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January 20, 2007


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If investments had sleeves, the values they represent wouldn't be written on them. It would take an oracle, or an oracle-wannabe, to interpret them. That's the problem with Lucy's position, as I see it. Should a liberal funder -- one who cares about health care for the poor, for example -- divest his Phillip-Morris stocks? Maybe. But does this liberal funder also care about a person's right to choose whether or not to smoke? Do the employment opportunities for laid-off Phillip-Morris employees exercise his imagination?

My beef is with what appears to be a shallow reading of the notion of "moral consistency." With any set of actions, you need to (1) correctly attribute beliefs/desires/values to the actors, and (2) demonstrate that these are inconsistent. Only ideologues approach these tasks without fear and trembling.

"Only ideologues approach these tasks without fear and trembling."

Did someone call? Har, har, har! Heh. Ahem. Well.

Look, it's okay for some donors to wear your hearts on their sleeves. That's the entire point of think tank work, after all. But I think we can say with some objectivity that donations which preserve the status quo are the safest and best.

Albert, thank you. I was feeling quite isolated. I can indeed see how foundation assets can be used as bludgeon, for fair purposes or foul, to bully those who need bullying, in the opinion of the foundation, and that could be called "consistency," but I don't know if it would be moral, necessarily, more like ideological consistency, and perhaps even ruthlessness. Moral consistency - anyone who has read tragedy knows where that leads.

Is there all that much difficulty with what Lucy proposes? Investing in Birkenstock is better than investing in Raytheon or Wal Mart. That seems clear enough to me. The realizations of profit from entities that are actively misanthropic are never going to be enough to counter the harm they do.

I'll add that the horror of losing a job comes not so much from the loss itself, but from the fear of being unable to find a new one.

I don't know, if this is all about marketing, it comes down to impressions, and branding. I am afraid that it feels that way to me. "Feel good" as good. I can see value aligned porfolios selling well in certain markets. Birkenstocks is a good example, and Ben and Jerrys, and Newman's own. So stock up on good companies. And feel good. But what does this really do for a better world? Does it drive up the stock price? And that encourages other companies to be nice too? Or do other holders of the stock just sell it and it all washes out?

What interests me is the initial venture funding for, say, new media, or low cost loans as mezzanine funding for truly idealistic, change-making startups. Foundations can do this. It is called program related investing. The rules are clearly promulgated by the IRS, but not much of it is done.

Something too can be said for buying huge stacks in "bad" companies and voting the proxies to influence their behavior.

On a sad note, Goldman apparently owns 8% of the NYTimes and is pressuring them to adopt "best practices" to bolster profits. That means dumbing the paper down and makining it more sensationalistic, and laying off reporters, and adding fluff.

I could see Pew Foundation deciding to own 10% to help keep the Times from being pressured by the likes of Goldman.

But now we are talking about hardball power relations. Machiavellian deal making. Not the feel good stuff about values being aligned by buying Birkenstock shares.

Tutor, I was under the impression that the choices had been narrowed down to decisions over investment vehicles. I doubt any major donor would ever consider relinquishing control enough to foster eventually independent start-ups or organiztions, not without securing a return on investment or some means of continuity of control. Could anyone persuade them to do so?

Owning stock in the start-up or loaning key dollars to a new organization would give the funders considerable influence. They would be like venture capitalists, and could demand some degree of concessions, I would think, as to direction. This would be true social venture funding model, patterned on high engagement VC money. Some of this is done, but it is still the exception not the rule. (Concrete example: Rather than giving grants to a nonprofit engaged in preserving and showing vintage films, the foundation loans them money at a lower than market rate to purchase a building in which to house the archives and show the films. The business plan shows that debt service can be covered from ticket sales.)

Owning stock in the start-up or loaning key dollars to a new organization would give the funders considerable influence

Often kills a good idea, if not the entire start-up.

Thanks,JJ. Sounds like the voice of experience. "Engaged philanthropy" as it is called often does evoke that kind of under the breath muttered response from the recipients.

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