First off, you should know that philanthropy in the United States is a growth market.
As the New York Times noted recently in an analysis piece on philanthropists using their foundations to push policy changes:
Over the past 30 years, as the gap between wealthy and poor grew ever wider, total philanthropic giving almost tripled….
This was one of a number of articles this week that looked at how philanthropists are increasingly putting their tax-sheltered money behind for-profit or personal ventures — sometimes aimed at achieving a social good and sometimes not.
The New York Times led the examination starting with an excellent article by Stephanie Strom (published on Thanksgiving Day) entitled To advance their cause foundations buy stocks.
Strom opened her article with an example of the Bill & Melinda Gates Foundation investing in a biotech company that works on vaccines — a portfolio management strategy known as “program-related investing”:
A growing number of foundations are using such investments, known as P.R.I.’s, to connect with profit-making ventures that advance their missions. But as they become more popular, some officials in the nonprofit field worry that this and other newer mechanisms are blurring the lines between profit-making businesses and charitable work.
Strom quotes Jeff Raikes, CEO at the Gates Foundation, as saying the idea is to make sure their investments serve the same goals — improving health, fighting poverty — as their philanthropy.
This is an interesting about-face for the Gates Foundation, which in response to a high-profile critique in 2007 by the Los Angeles Times had taken the position that its stock investments would be based solely on their financial attributes and were not selected with respect to the philanthopy’s humanitarian missions. Continue reading