Wednesday, 10 January 2007

Standing in the Gates for probity

The gates of infamy will not prevail

This is a comment in response to a blog on Black Looks titled Opening and Closing the Gates on poor corporate social responsibility investments in the light of grand philanthropic initiatives, the subject being the Bill and Melinda Gates Foundation.

One cannot argue with the point that the foundation is on the one hand sponsoring global health initiatives and then investing on all these other firms. I must say the Los Angeles Times study does make poor attributable reading as a clear example of treatment juxtaposed with probably causative environments is illustrated.

More interestingly, the subject is in Nigeria where the worst of environmental crimes have been committed, the rape of the people, their land and dignity has been without let such that the region is a hotspot of insurgency that impacts on global oil prices.

Foundations need to grow

I am however, sure those oil companies are not the only areas in which the foundations have invested funds and oil companies are working at improving their corporate social responsibility being urged on by people of influence; these are shareholders – further down in the study it does show that some foundations are getting involved in shareholder activism, however, this is not their core purpose.

Foundations also cannot stagnate by just having a pot of money and spending it, they have to keep the funds in an organic state, hopefully of growth - using available market economies to maximise returns that would go to affect individual people's lives all around the world.

Investor dynamics make money

Warren Buffett the investor who contributed the largest personal philanthropic gift last year did not gain such financial muscle from investing in companies that have no economic future through some socialist and Utopia ideal, some of his ideas would probably play in the investment decisions of the foundation.

This is not to say that ethical investment is the exclusive preserve of socialist or liberal persuasion.

In the end, if rotten companies are to be influenced, the message is better sent by being a notable shareholder that would be noticed than being a non-investor who cannot affect the bottom-line and the decision matrix of the organisation.

In how many pies?

Yes, Bill and Melinda should try to keep an eye on where the foundation invests, their 15 Guiding Principles allude to that, the study goes on to state that 41% or $8.7 billion of the foundation’s assets are invested in corporations that that countered the foundation's charitable goals or socially concerned philosophy.

Now, we have to make up our minds about how we respond to philanthropy, does the foundation take on the additional mantle of becoming a Greenpeace, Amnesty International and Médecins Sans Frontières as well as benefactor of these well funded global initiatives that they have embarked on?

Foundations do have to grow

This is a quote from the article in the LA Times – “This endowment is managed by Bill Gates Investments, which handles Gates' personal fortune. Monica Harrington, a senior policy officer at the foundation, said the investment managers had one goal: returns "that will allow for the continued funding of foundation programs and grant making." Bill and Melinda Gates require the managers to keep a highly diversified portfolio, but make no specific directives.”

Any organisation that needs to retain a influential profile in funding and grant making needs the best investment advice they can get and those are hardly schooled in Mother Theresa’s convent in Kolkata – most importantly, they need to have a highly diversified portfolio, and it would appear that probably up to 59% of the foundation’s funds are invested in ethically reassuring projects.

With the quality of returns that have come from oil and minerals over the last few years, it would crass stupidity for foundations not to avail themselves of possible returns from these industries.

These industries are people too

Many of these industries make up part of the socio-economic landscape of the affected communities that also receive treatment sponsored by these foundations, there are not enough “clean” jobs from “clean” companies to deal with unemployment in our globalised world.

However, it is incumbent on governments, corporations and their investors to tend to the civilisation of genuine corporate social responsibility, excluding charitable foundation funds from “rotten” organisations might as well affect the people the foundations offer to help; then the foundations would not only have to provide treatment, they would also have to take on socio-economic issues to handle hunger, shelter and security.

The burdens of expectation

We cannot place too great a social burden on philanthropic foundations and expect them to thrive in their goals, the study highlights issues that need to be addressed, dialogue and discourse between these journals and the foundations might create greater movement to deal with these issues than denigrating philanthropies with journalism that bears the likeness of social responsibility but is really opportunistic at best and unfairly deplorable at worst.

Disclaimer: I am no apologist for the foundation or the companies affected.

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