Let’s Make A
Civic $tewardship LeagueUNLOCKING CIVIC INVESTMENT A$$ET$: Building Social & Economic Equity and Civic Fiduciary Pride, Strengthening a Free and
Vibrant Internet, and Reinvigorating Democracy
Submitted to Knight NewsChallengeFrom Marcy Murninghan, Ed.D.
18 March 2014
It’s time for us to build a national Civic Stewardship League, with local chapters and multiple overlapping parts. Its purpose: Make tax-exempt institutional investors, big companies, and capital markets more accountable to sustainable prosperity and the public interest. Its process: a series of Web-enabled projects that educate, empower, and engage. Its outcomes: more informed decisions about how the money power can advance sustainable prosperity and the public interest, in a pluralist representative democracy.
Problem: Companies and capital markets are capable of doing more to reduce social and economic equity
gaps while improving the environment, democracy and the Common Good. Meanwhile, the average person
feels powerless and maybe even apathetic and/or alienated.
Current Opportunity: Lots of cool things happening to help
companies and capital markets achieve more sustainable
prosperity and Common Good priorities, but very little public
education, engagement, or empowerment to inform it.
Historic Precedent: Not only that, history is on our side. The term “public interest” appears 316 times in the original SEC enabling legislation affecting corporate disclosure, market regulation, and investment management—almost always in the same sentence as "protect shareholders"
The term “public interest” appears 34 times in the Securities Act of 1933; 223 times in the
Securities Exchange Act of 1934; and 59 times in the Investment Company Act of 1940.
●●●
The thing is, most people don’t realize this.
Most people think that the sole purpose of financial markets is to make money.
But that’s wrong.
Financial markets exist in service to society. They’re embedded in social, cultural, political, historical—even religious—beliefs about “prosperity” and “happiness”, about “ethics” and “virtue”.
That’s what “equity” and “fiduciary duty” are about.
For example, here are some of the major players in the corporate and financial accountability ecosystem that are changing the way we interpret “fiduciary duty”. In 1972, there were only 3. In 2014, there are many!
Social Clubss
STRATEGY: Direct nonprofit investment assets toward reducing social and economic equity gaps, to strengthen sustainable prosperity and the public interest.
Hospitals
Museums
SchoolsPrivate
Foundations
Public CharitiesFraternal Societies
War Veterans
Posts
HMOs, Managed
Care OrgsBusiness & Sports Leagues
Labor Unions
Farm BureausSocial
Welfare Orgss
Community
Foundations
Alumni Clubs
Country Clubs
Cemetery
CompaniesInsurer
s
Identify billions of $$$ in “civic assets” (~$2.7 trillion nationwide) embodied in tax-exempt investment
portfolios, and leverage that fiduciary power toward social and economic
equity, sustainability, and the public interest—where it belongs.
Sounds great, but what kind of organizations are
we talking about?
U.S. Nonprofit Organizations, 2008
501(c)(6) Business Leagues72,582 organizations
501(c)(4) Social Welfare Orgs
111,561 organizations
501 (c)(3) Organizations
• Civic Associations• Service Clubs• Advocacy Organizations• HMOs and Managed Care Plans• Many others
• Chambers of Commerce• Business Associations• Boards of Trade• Professional Sports Leagues
501(c)(3) Public Charities998,758 organizations
Large Organizations(Form 990 filers)
• Hospitals• Colleges• Human Services• Museums• Community Foundations• Many others
Small Organizations(Below revenue / asset threshold to file 990)
• Community Theaters• Neighborhood orgs• New Organizations• Many others
Congregations
(Registration optional)
501(c)(3) Private Foundations118,368 organizations
Grantmaking FoundationsFamily, Corporate, Independent
Foundations Operating Foundations
Unregistered Organizations — Total Unknown
501(c)(5) Agricultural, Horticultural & Labor Organizations56,269 organizations
501(c)(7) Social & Recreation Clubs57,030 organizations
501(c)(8) Fraternal Beneficiary Societies & Associations
58,166 organizations• Fraternal Organizations• Lodges• Benefit Providers• Insurers• Many others
• Country & Golf Clubs• Fraternities & Sororities• Athletic Clubs• Alumni Clubs• Many others
• Farm Bureaus• Labor Unions• Labor Organizations• Many others
501(c)(10) Domestic Fraternal Societies & Associations
20,301 organizations
501(c)(13) Cemetery Companies
10,121 organizations
Other Exempt Organizations
32,251 organizations
501(c)(19) Post or Organizations of War Veterans
34,155 organizations
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Civic Stewardship LeagueAmerican Endowments
Type # Asset ValueColleges &
Universities 4,599 $ 356 B
Foundations 101,438 $ 683.4 BReligious
o ICCR Coalition 300 $ 100 Bo Various faith
traditions 222,145 $ 25.2 B
Health & Hospitals 38,512 $ 962.3 BSocial Purpose (mix
of advocacy, civic clubs) / Other (business leagues; social & recreational clubs)
N/A
Source: http://nccsdataweb.urban.org/PubApps/profileDrillDown.php?state=US&rpt=PC
Lots of
Types!!
Select Group of Top 64 Tax-Exempt Institutional Investor Assets Under Management for Suffolk County , MA (FY 2011, 2012)
Total Asset Value:
$ 51,004,893,354(See attached listing)
Source: National Center for Charitable Statistics (NCCS): http://nccsweb.urban.org/PubApps/statePicker.php?prog=geoCounties¶m=q
Lots of Dough!!
Leverages portfolio investments across asset classes. consistent with values and mission. Recognizes importance of business innovation, strategy, and multiple capitals to value creation—financial, human, social, environmental, built environment, and intellectual—that also impact the public interest.
The Ethical, Integrated Fiduciary
DOMESTIC & INTERNATIONA
L• SHAREHOLDER RESOLUTIONS• CORPORATE DIALOGUE• INTEGRATED REPORTING / ESG&E Risk Measures• SUSTAINABILITY CONTEXT / Threshold Investing & Net Positive• INDUSTRY ALLIANCES on public interest themes
• CLIMATE BONDS• SOCIAL IMPACT / SOCIAL POLICY BONDS• COMMUNITY DEVELOPMENT LOAN FUNDS• MUNICIPAL BONDS• SCHOOL BUILDING / REHABILITATION BONDS• INFRA-STRUCTUREREPAIR & UPGRADE
• COMMUNITY
BANK DEPOSITS
SPECIAL FUNDS FOR
COMMUNITY PURPOSES
• COMMUNITY FIBER-OPTIC CABLE• PRE-K EDUCATION• JOB DEVELOPMENT• URBAN FARMING
PUBLIC EQUITY
FIXED INCOME
ALTERNATIVE
SHORT-TERM / CASH
POOLED
• PRIVATE EQUITY• LBOs • MEZZANINE(hedge funds, absolute return, event-driven)• VENTURE CAPITAL• PRIVATE EQUITY REAL ESTATE• SUSTAINABLE ENERGY & NATURAL RESOURCES
Civic Stewardship League
3 M’s for Reducing the Social & Economic Equity Gap and Restoring Civic Fiduciary Accountability
Map tax-exempt investment assets in your region that need unlocking, across all categories (not just universities and colleges)
Motivate development of whole portfolio investment policies and practices that reflect sustainability values impacting the Multiple Capitals—human, natural, social, intellectual, built environment—and the Common Good (e.g., civic moral capital)
Monitor full use of fiduciary power, including impacts on Multiple Capitals and the Common Good
Q. So, what’s the strategy? A. Carry out the 3 M’s
Civic Stewardship LeagueFinal thoughts: