Documentary on Lester Brown’s Plan B will appear March 30, 2011 on PBS. Watch it.
Thirty-eight US billionaires have pledged at least 50% of their wealth to charity through a campaign started by investor Warren Buffett and Microsoft founder Bill Gates.
The same effort is underway in Europe to get wealthy individuals to give away half their fortunes before they die to charity. I am against this idea, but for a different reason than most of the European billionaires are using. Names, government should be doing this job. My objection is mainly based on impact.
Traditional philanthropy takes the principal and invests the money to achieve only financial returns, and gives away 5% to maintain non-profit status. Few of these large endowments, family offices, individuals, etc. try to achieve financial returns as well as achieving a positive social and environmental impact (impact investing). This traditional philanthropic route, namely give away 5%, which represents a portion of the interest, to charity, is a very poor use of capital. If the asset owner created a portfolio that achieved social, environmental, as well as financial returns, 100% of the money would be leveraged for society and the environment. In addition, if 5% of the returns were given away, the total leverage would be 105%. I don’t know about you, but I learned that 105% is larger than 5%.
A majority of philanthropy is ego. People love to cut ribbons, see their names on buildings, wings, plaques, etc. If people are driven by ego, that is fine, but I don’t think the taxpayer should finance this. By shifting from interest to principal, we impact more, and don’t require a tax break to mobilize the money. In the United States, Federal tax law requires philanthropies to give away 5% of their total assets each year to maintain their nonprofit status. In these days of tight budgets, it might not be such a bad idea if more money was invested in impact investing.
If Warren, Bill, and the other billionaires are listening, “how about really leveraging money for the commons, by doing impact investing and leveraging much more, without having to go around trying to convince people to give half their money away. As astute businessmen, I am surprised that after all these years, they are still doing the same low impact approach. As Jerry Maguire said” Show me the money”.
Please enjoy this content and if you really like it, let us know or even better, share it with your friends and colleagues who might also be interested.
Japanese trade unions recommend ESG integration for pension funds TBLI optimistic on outcome fifth Asia conference
RENGO, the Japanese trades union confederation announced plans, during last weeks TBLI CONFERENCE™ ASIA 2010, to integrate ESG- factors into its investment decisions. These pension funds represent a significant part of the country’s institutional retirement savings, which as a whole is more than JPY 50 trillion (€450 bn). This move is especially important because of the close relations between RENGO and the new government of Japanese Prime Minister Yukio Hatoyama.
For the fifth time TBLI CONFERENCE™ organized the largest annual global networking and learning event on Socially Responsible Investment (SRI) on May 27th and 28th 2010, this year in Tokyo, Japan.
TBLI founder and CEO Robert Rubinstein on this development: “Sustainable Development has been slow in uptake to date in Japan. This step forward is a gigantic impulse for impact investment.” At this two-day conference RENGO stated ESG is the way to regain trust within the financial sector. By the end of the year a report will examine how pension funds could steer away from short-term returns in favour of ESG-related, long-term investments.
TBLI GROUP™ specializes in Triple Bottom Line Investing (TBLI) and ESG (Environmental, Social and Governance). Based in Amsterdam, The Netherlands, TBLI GROUP™ seeks to raise awareness of sustainable investment in the financial sector by assisting investors and providing a global network for parties who share this goal. TBLI CONFERENCE™ has an annual edition in both Asia and Europe. More than 375 participants, all leaders from industry, finance and government, visited TBLI CONFERENCE™ ASIA 2010 May 27-28, 2010.