Strategies for Scaling Philanthropic Impact Through Values-Aligned Investing

The Marguerite Casey Foundation (MCF) updated its investment policy statement to align its endowment with its grantmaking work. The foundation’s endowment continues to grow, beating industry benchmarks, while supporting the mission of the organization. Dan Gould, vice president of investments and operations at MCF, outlines four pillars that inform MCF’s values-aligned investing, including diversifying asset managers and engaging in shareholder advocacy. 

Marguerite Casey Foundation’s (MCF) board of directors signed off on an ambitious investment policy statement (IPS) four years ago, which aims to bring 100 percent of our financial resources into lockstep with our vision for a better world. We know the portion of our endowment (5.5 percent) that funds our grantmaking creates a huge impact through our grant recipients. We wanted to see what would be possible if we scaled that impact by aligning the remaining 94.5 percent of our endowment with our core grantmaking work, which is focused on building power in communities that have long been denied access to it.

Two years later, MCF brought our endowment above the billion-dollar mark for the first time in the foundation’s more than 20-year history and we continue to see our values-aligned investing beating industry benchmarks while activating the full weight of our endowment to advance our vision.

MCF uses four pillars to guide our values-aligned investing, which we share so that other funders may replicate this success and help us build momentum in the philanthropic sector to change how we, as a sector, manage our capital.

Pillar 1: Invest in Diverse Asset Managers

At MCF, we screen asset management firms to ensure that a minimum of 51 percent of the firm is owned, controlled, and/or operated by Black, Indigenous, or managers of color, or by women managers. This percentage reflects the power dynamic we want to see in firms managing our endowment, and it aims to address who is making decisions and benefiting from the economics of the firm.

So far, we’ve shifted more than 33% of our endowment to diverse managers and plan to increase to 50% by the end of 2025. To meet this goal, we realized that we first had to take an honest look at our IPS and identify factors that presented inadvertent barriers.

Barriers to Hiring Diverse Asset Managers

Our former IPS included restrictions regarding assessing managers’ track records. Philanthropy typically wants asset managers with long track records, reducing perceived risk. However, Black, Indigenous managers, managers of color, and managers who are women may not have long track records for many reasons, including the structural barriers imposed by white supremacy and heteropatriarchy. MCF revised our IPS to mitigate these factors, allowing us to consider a whole new universe of emerging diverse managers, by considering the track records more broadly than the amount of assets under management and the standard 5+ years track record.

Our IPS previously included a stipulation that we would need to work with firms that have a minimum amount of assets under management. Philanthropy often invests under the assumption that managers responsible for managing assets of $250M or more are considered lower risk. The data does not support this assumption, so with the support of our board, MCF dropped our minimum amount of assets requirement to $10M, tremendously expanding our potential investment opportunities.

Pillar 2: Sharpen Your Investment Screening for the Long Term

Core to MCF’s investment policy is a longstanding holistic due diligence screening process for any entity we invest in.

Investors in our sector typically consider traditional investment metrics and include environmental, governance, and social factors. For us, this means asking questions such as:

• Is the entity implicated in the climate crisis?
• Does the entity have a diverse board?
• Is the entity honoring the sacrifices made by its employees?
• Is it addressing the racial and gender pay gap?

These questions are critical to our job as fiduciaries and help us screen investments according to a risk framework that incorporates long-term considerations as well as our organizational values and vision.

MCF takes seriously our understanding that the best philanthropy listens deeply to the leadership and expertise of our grant recipients on the frontlines of the work. Our risk parameters necessitate excluding any investments that actively work against our mission, as well as any investment we see as having no contribution to society. In practice, this means screening out asset management firms that work against the interests of our grant partners and the communities they serve. As such, we don’t invest in entities that engage in predatory lending, prison funding, prison labor, or civilian firearm production.

We recently strengthened our risk parameters to begin reducing exposure to entities supporting or promoting immigrant detention, citizen and immigrant surveillance, non-compliance with the Community Reinvestment Act, and anti-LGTBQ+ policies—all issues that are addressed by our grant recipients.

We see this as common sense. Why would we settle for having 5.5 percent of our assets go toward creating a liberated future, and leave the remaining 94.5 percent of our endowment invested in entities causing harm to our planet or the communities we serve? Our roles as stewards of the foundation’s assets require nothing less than an unwavering commitment to eliminate investments in funds that work against our vision of a just and free world.

Pillar 3: Shareholder Advocacy

When we do find companies in our portfolio that make decisions that go against our values, MCF uses our status as shareholders to engage directly with companies and related asset managers, urging them to improve their products and services or modify practices that may cause harm to the communities we serve.

The shares we own give us a voice that everyday workers might not have when they’re organizing to get their employer to recognize the sacrifices they make as workers. Employees fighting for a living wage, health care, or other rights are oftentimes from the same communities we support with our grantmaking, so it only makes sense for us to intervene in this space.

I’m proud to say that in 2022, MCF leveraged our status as shareholders to file or co-file nine shareholder resolutions—the first in the foundation’s history. In 2023, we filed to sponsor or co-sponsor more than 15 resolutions urging many of the largest corporations to do better for their workers and the environment.

For example, in the aftermath of the 2022 Supreme Court Dobbs ruling, which struck a severe blow to reproductive rights, MCF worked to hold healthcare corporations accountable for their lack of transparency surrounding reproductive justice issues. With nearly half a century of relative reproductive freedom now overturned, the need for accessible reproductive care has never been more urgent.

Since the Dobbs ruling, the repercussions have been acutely felt, especially within marginalized communities. Black pregnant individuals, in particular, face alarming rates of maternal mortality, underscoring the intersectionality of reproductive justice with racial disparities. At MCF, we recognize that reproductive justice is not solely a matter of personal choice but a multifaceted issue encompassing racial justice, economic equity, and the rights of incarcerated individuals. Our commitment extends beyond rhetoric; As stakeholders in healthcare corporations such as HCA Healthcare and Tenet, we leverage our investments to advocate for comprehensive reproductive care, including abortion access, safeguarding the bodily autonomy and health of all individuals, regardless of their circumstances.

As a foundation, our stake in this fight is not just ideological; it’s material. Since MCF owns stock in healthcare corporations, we take seriously our responsibility as fiduciaries to leverage those investments for the public good at every opportunity—not only with our grantmaking programs.

Pillar 4: Use Impact Investing for a Just Economy

MCF uses economic impact grants to ensure our endowment invests in projects that are increasing wealth for communities that have long been denied wealth-building opportunities. Our economic impact grants aim to drive as much capital as possible to entrepreneurs of color and to the communities we serve through new economic models that empower workers.

These grants are an important part of our work to fully align our investment policy with our broader vision for a better world and complement the work of our partners by resourcing low-income communities that are subjected to heavy surveillance, policing, and imprisonment. Through these grants, we support leaders, organizations, and initiatives that are working to create models and standards for economic representation that prioritize the needs of underrepresented and excluded communities.

Aligned to Win

It is clear that there is a more humane way to make, manage, and move money than most funders do now. I envision a future for philanthropy where capital has a double bottom line: to maintain long-term purchasing power and increase the net positive contribution to our vision and values. We’ve demonstrated how it’s possible and hope others will embrace these practices in ways that make them the norm. It’s a tall order, but I believe this moment demands nothing less.

If you’d like to get updates and more information about MCF’s values-aligned investing, get in touch.

Dan Gould is the vice president of investments and operations at the Marguerite Casey Foundation

The views and opinions expressed in individual blog posts are those of the author(s) and do not necessarily reflect the official policy or position of the National Center for Family Philanthropy.