In 2019, the Kalamazoo Community Foundation (KZCF) established a Socially Responsible Investment (SRI) option in order to increase alignment with our core values and equity priority. Susan Springgate, vice president for Finance and Administration, and Kelly Campbell, finance manager at KZCF, worked with Greenleaf Trust to create this new option.
The goal of socially responsible investing is to achieve strong risk adjusted returns in investments that have a positive impact on the world. The SRI pool had a successful first year with a return of 22.1%, slightly ahead of the return for the Foundation’s endowed funds of 19.2%.
The goal of socially responsible investing is to achieve strong risk adjusted returns in investments that have a positive impact on the world. The SRI pool had a successful first year with a return of 22.1%, slightly ahead of the return for the Foundation’s endowed funds of 19.2%.
KZCF’s SRI pool utilizes funds managed by firms that incorporate environment, social and governance (ESG) screens, considerations and restrictions in the management of their funds. Thus, they identify companies to actively remove or include based on specific ESG factors. ESG factors include the following issues:
- Environment (climate, pollution)
- Community development
- Diversity
- Human rights including child labor
- Labor relations
- Corporate governance
- Products such as alcohol, weapons, gambling, tobacco
Local nonprofit, Interfaith Strategy for Advocacy & Action in the Community (ISAAC), was the first agency to recommend its Endowment Fund at KZCF be invested in the Socially Responsible Investment option. ISAAC is a faith-based community organizing group made up of congregations and organizations that pursue solutions to issues of injustice in Kalamazoo County.
The organization made the recommendation to align the fund’s investments with ISAAC’s values of equity and community. According to ISAAC, its commitment to Socially Responsible Investment is a new way it is working toward its mission: cultivating the Beloved Community.
KZCF staff and ISAAC leadership meeting to officially recommend the ISAAC endowment fund for Socially Responsible Investing.
"Choosing SRI means we’re not supporting various companies that don’t align with our values and it’s a wonderful thing," said Tobi Hanna-Davies, vice president of Communications at ISAAC. "There is no moral conflict of interest."
Trends show an increased interest in SRI and the demand is making it become a more viable investment option. According to Lucas Mansberger, investment strategist at Greenleaf Trust in Kalamazoo, average investors as well as giant institutional investors want more SRI options which pushes change in awareness of investment risks from ESG issues.
"In the past, it was hard to find ways to invest that reflected your concerns if you were socially aware," Mansberger said. "The number of SRI funds and strategies have grown by the hundreds."
In the past, investors may have had to compromise investment returns if they had an interest in investing responsibly. "Historically, if you wanted your investment to be impactful that meant taking a lower type of return," Mansberger said. "Now the best, world-class money managers are doing ESG risk and return research for all of their clients not just for those already interested in SRI. They believe that paying attention to risk and return opportunities related to ESG issues will lead to better returns overall."
Hanna-Davies agrees. She first inquired about the SRI option in 2017, before it was available at the KZCF. "As soon as the option was ready, we set up a meeting right away with our executive director, president and treasurer and members of the KZCF staff. At that meeting, after getting all our questions answered, we decided right away that we wanted to transfer our endowment to Socially Responsible Investing."
She shared the move to Socially Responsible Investing inspired new donors to contribute to the ISAAC Endowment Fund at KZCF.
"At the end of 2019, we were about $6,000 short from the $50,000 minimum for a fully endowed fund," Hanna-Davies said. "We let our donors know how close we were to the goal and reminded them about SRI and we got a flood of donations as a response. We even surpassed our goal."
If you are a fund representative interested in KZCF’s Socially Responsible Investment option, contact your KZCF Donor Relations Officer or call 269.381.4416.
This article was featured in our latest Annual Report.
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