Unlocking the Power of the Proxy
31 October 2005 at 12:10 pm
In a move aimed at encouraging foundations to play more active roles in corporate-governance and social-responsibility issues of publicly held companies, US based Rockefeller Philanthropy Advisors has produced a publication called Unlocking the Power of the Proxy.
The guidebook offers foundation representatives all the information needed to understand how to exercise their fiduciary responsibilities relating to proxy voting.
American foundations have total endowments of more than $US400 billion, much of it invested in the equities of U. S. companies; this puts them on par with other large institutional investors.
Yet Rockefeller PA says most foundations have ignored the opportunities inherent in using the proxy vote to engage management on crucial decisions and, in turn, protect the investments on which their missions depend.
In Australia it’s estimated that more than $5 billion dollars is under investment by Foundations and Trusts for future distribution and this is increasing with the growth of Private Prescribed Funds. There are now 300 PPFs, an estimated 370 philanthropic foundations and the recent ‘Giving Australia’ report says that there are some 7000 business foundations operating to make charitable donations.
In the US, sixty percent of respondents to a recent Council on Foundations survey reported that they delegate proxy voting to investment managers, who often automatically vote in accordance with management’s recommendations.
Doug Bauer, the senior philanthropic advisor at Rockefeller Philanthropy Advisors the publications is meant to arm foundations with a thorough understanding of their rights and responsibilities connected to the proxy vote– and its potential impact – and provide the tools and guidance needed to confidently take appropriate action with management.
He says the main concern is that foundations consider the implications of their votes so they can act in an engaged, informed manner that is in keeping with their specific missions.
He says that even among those foundations that actively vote their proxies, relatively few have formal policies to guide officers voting on the publicly traded companies held in a foundation’s investment portfolio.
Such a policy can boost a philanthropic mission in two important ways:
– Supporting actions that seek to strengthen management at publicly traded companies, protecting long-term shareholder value and the value of foundations endowments; and
– Strengthening a foundation’s charitable mission by using proxy voting to support social and environmental goals that are often at the heart of a foundation’s work.
Conrad MacKerron, Director of the Corporate Social Responsibility Program of As You Sow Foundation, and principal author of Unlocking the Power of the Proxy says “conscious proxy voting sends a much-needed message to companies that shareholders are watching and expect honest, responsive management”.
Unlocking the Power of the Proxy walks readers through the many issues relating to proxy voting, from the roles played by all involved entities such as investment managers to definitions of key terms and a discussion of related legal issues.
The guidebook includes step-by-step advice for developing formal voting guidelines and policies, including how to move the guidelines through potential internal roadblocks; it then clearly explains how to implement the guidelines once they are approved.
The guidebook gives readers examples of US philanthropic organisations that have taken leadership positions regarding active proxy voting, and directs readers to additional resources.
Doug Bauer says that at its core, proxy voting means simply paying attention to issues raised by shareholders that have corporate governance or social implications for foundations.
Rockefeller Philanthropy Advisors is an independent, Not for Profit service that develops and manages effective giving programs. Based in New York City, it traces its antecedents to John D. Rockefeller, Sr., who in 1891 began to professionally manage philanthropy “as if it were a business.” He set the style of family giving by specifying that grants would be used “for the well-being of people throughout the world.”