Gates reassesses investments

Well, sensitive to bad press from the LA Times, the Gates Foundation announced a turnaround on its investment policies and will seek to incorporate some socially responsible screening of their investment portfolios. This is being hailed as a bellwhether for the philanthropic world, though the original piece (actually a two-parter) struck me as something of a hatchet job and selectively choosing some anecdotes to make the Foundation look bad.

I hadn’t read the other story associated with the piece which follows a family with my surname (no relation) who were unscrupulously given home loans by a company in which the Gates Foundation has invested. While the selective use of these heartwrenching anecdotes may not say much about the broader patterns of Gates investments, the second article notes that the only companies the Gates’ folks don’t invest in are tobacco companies. Given the scale of their holdings, it may make sense for them to at least think about a broader screen or at least more active use of their proxy votes in company board meetings. That said, I’m still on board with what I said in my last post, the articles have a pretty anti-business feel and seem to have an agenda to go after the Gates Foundation.
(hat tip: the folks at THD).

Ruth Levine of the Center for Global Development, which just received $10mn in funding from the Gates Foundation, asked this rhetorical question in support of more social screening on the part of the Gates Foundation:

Is it too much to expect that foundations, which exist to promote public well-being, would think as carefully about the impact of their investments as they do about their gifts?

I think that’s probably fair, particularly since the Gates Foundation’s footprint and influence in the broader philanthropic sector is so large, but I stand by take on the actual reporting. I also wonder what the LA TIMES writers expect the Gates Foundation to do. Yank all their offending investments, no matter how tenuous a firm’s ties are to some egregious act by one of its factories, subsidiaries or investments. Some of those few companies investing in Africa may be doing a lot of net good. As one of the poster’s on the CGD blog said:

It is not clear to me that the Gates Foundation would be creating the most social good by screening their investments and removing all companies that produce social harm (i.e. polluters). In fact, there may be a better role for them as leaders in proxy voting and/or proposing shareholder resolutions to effect change in company behavior. History has strongly suggested that even relatively small minority support for shareholder resolutions (2%-10% of all voting shares) can greatly impact a company’s behavior.

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