Transparency can transform the impact of our investments

12th August 2021, words by Dominic Burke

At the ACF’s 2019 conference, ‘Funding on a finite planet’, its Chief Executive predicted increasing scrutiny of foundations’ choices in the context of climate breakdown and declining institutional trust. In particular, she asked whether we have been sufficiently attentive to the “68 billion elephants in the room – our £68 billion pounds worth of endowments?”

Many of us who help to manage these endowments are experiencing such a sharpened focus already. Where colleagues, grant-holders, and perhaps even Board members, have previously been content so long as the money was coming in, now they are keen to be a part of a conversation about how investment capital can best serve the public benefit and our organisational objectives.

While there may be no single destination, the Stronger Foundations initiative’s Investment report is an invaluable guide for charting our individual and collective journeys. Its fourth pillar – transparency and responding to scrutiny – helps to bring clarity about where we are and a check that we are on the right track. Crucially, it can also catalyse collaboration to help our collective £68 billion change the investment landscape for good. Exploring similar terrain, the poet David Whyte suggests that, “to confess is to declare oneself ready for a more courageous road.”

At Lankelly Chase, we’ve become much more open about our approach to investments: where we are now (including publishing portfolio holdings quarterly), where we are headed, and the actions we are taking in service of our mission. This has supported greater mutual accountability with grant-holders – not least those with ethical fundraising policies -, engagement from colleagues, and revealed opportunities to use leverage points available to us as an active investor (such as shareholder resolutions) in pursuit of shared goals.

As we embed racial justice at the centre of our work, acknowledging how the Foundation’s financial resources have been accumulated through extractive economic practices has pushed us to redouble our commitments. Indeed, we have developed a Racial Justice Accountability Plan which specifically addresses our relationship with financial capital.

Of course, there can be practical challenges to transparency, including the layers of intermediation through which our choices sometimes play out. Foundations often employ investment consultants who help select fund managers, who may themselves then select other funds to invest in, all before we arrive at the level of specific companies or assets.

Inspired by the ambition of the ‘ESG Olympics’ to bring foundations’ investments “out of the shadows” (see the Stronger Foundations report for more on this excellent event), we hope to make inroads by sharing publicly the ‘Statements of Intent’ which we have agreed with our fund managers.

These explain why we have appointed them to help implement our mission-aligned investment investment strategy, how we expect to work together, and how we will know whether the relationship is going well. They capture a shared understanding of our intentions, which we will report our progress on and undoubtedly reiterate.

In fact, as more of us pursue transparency and welcome scrutiny, we have been able to identify opportunities to pool our financial power. After all, the sector’s £68 billion must catalyse changes in investment practices and mindsets which will influence many times that amount. By sharing fund manager and company insights within the Charities Responsible Investment Network, for example, we’ve been able to speak alongside fellow charitable investors with more authority than any one of us might be able to alone.

The Stronger Foundations Investment report notes how foundations have used the 360Giving initiative to increase transparency about their grants, including to understand ourselves better, send a message of accountability to stakeholders, and to be part of a peer-network. Given transparency about our investment practices can help harness the remaining 95% or so of our financial resources in support of change, it’s time that we applied a similar standard to our investments.

Dominic Burke – Investment Director, Lankelly Chase

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