The Boston Foundation Exercises the Power of Proxy Voting

June 19, 2002

Boston, MA -- The Boston Foundation is the first community foundation in the country to develop a policy to actively promote its values by exercising its right to proxy voting for its investments. Proxy voting, the basic mechanism through which shareholders can influence the governance of corporations in which they hold stock, has increasingly become the preferred tool for shareholder activism. The Boston Foundation recently voted, along with a majority of shareholders, to require more diversity among new board members of a major American corporation.

The Boston Foundation took over full fiduciary responsibility for its endowment three years ago with the launch of the Fund for the 21st Century. This Fund, created for the investment of the Boston Foundation’s $630 million endowment, was designed to promote the prudent stewardship of the more than 650 individual funds held by the Boston Foundation for the benefit of the community, its donors, and for the charitable organizations the Foundation serves.

The Fund for the 21st Century is broadly diversified across asset classes and investment styles in order to enhance the Boston Foundation’s investment returns in all market environments. The Fund also includes an alternative investment program, using products such as venture capital, private equity, and real estate. Now, with the decision to actively vote its proxy shares, the Boston Foundation will fully assume its role as a civic steward and responsible shareowner committed to the highest standards.

“As an institutional investor, the Boston Foundation recognizes that proxy voting rights have moral as well as economic value, and therefore should be treated as assets,” said Jim Pitts, Senior Vice President for Administration and Finance at the Boston Foundation. “The Foundation can, and should, do no less than vote our proxies in accordance with the Foundation’s publicly stated policy and guidelines.”

“The Boston Foundation is upholding the very highest standards of civic values with this decision,” said Dorothy S. Ridings, President and CEO of the Council on Foundations, the national organization of grantmaking foundations and corporations. “By bringing its values to life in this way, the Boston Foundation has made a commitment to ensure that its grantmaking, fundraising, and management operations all reflect the Foundation’s mission of promoting access, equity and diversity.”

Because of the Boston Foundation’s commitment to access, diversity, fairness and respect, it will vote on shareholder resolutions in accordance with these values, particularly on issues related to the environment, community well-being and citizenship, diversity and equity, and good corporate governance.

“The Boston Foundation is at the heart of our civic community,” said Robert Glassman, the Boston Foundation Board member who led the effort to shape the Foundation’s policy on proxy voting. “Because of this important role, there must be consistency between the stated values of the Foundation and the ways it handles its investments. I think of it as a kind of moral symmetry, in which social returns are entirely congruent with financial returns. If the program activities of the Foundation – our grantmaking and civic leadership – are informed by basic values that are important to all of us, shouldn’t our investment activities be value driven too? I see proxy voting as a part of our fiduciary duty – especially because it is a far more precise tool than simple divestiture of stock.” Glassman, former Chair of the Boston Foundation’s Investment Committee, was inspired by his role as Co-Founder and Co-Chairman of Wainwright Bank & Trust Company, which is considered to be a national leader in socially responsible business practices.

Jim Pitts agrees, noting: “With the Foundation’s decision to vote its proxies, it has eclipsed the crude tools of divestiture. If you simply divest yourself of a company’s stock, you’ve lost any power you may have to persuade the company to do the right thing in the areas that concern you most.”

The Boston Foundation worked with Dr. Marcy Murninghan, an Adjunct Professor at Harvard Divinity School, to help develop the policy. The proxy guidelines were adopted at a meeting in December of 2001, and expanded in 2002. The Foundation retains Institutional Shareholder Services (ISS) – a leading provider of proxy research – to monitor upcoming votes for companies in which it holds stock and notify the Foundation about them.

“For generations, people have chosen the Boston Foundation as their partner in philanthropy, confident that it would be continuously doing the right thing by the current definitions of the day – not only in grantmaking but in stewardship of funds,” says Paul Grogan, President of the Boston Foundation. “For someone who gave the Foundation a gift early in the 20th century, here we are, nearly 100 years later, engaged in the most sophisticated kind of socially-responsible investing. And for donors considering setting up a Donor Advised Fund today, the Foundation’s position on voting proxies offers something that no other community foundation in the country does.”

The Boston Foundation has used its core values to guide its work in the community throughout its 87-year history, and has been incorporating these same values to guide the Foundation’s investment policies for a number of years. In the early-1980s, under the leadership of former Board Chair Dwight L. Allison, Jr., TBF divested itself of investments in companies with ties in South Africa. And in 1985, led by Board member David Rockefeller, Jr., it divested its stock in companies that were substantially engaged in the business of tobacco. Recently, it has made a commitment to go one step further when it comes to socially responsible investing.

The Boston Foundation, one of the nation’s oldest and largest community foundations, has an endowment of nearly $630 million and made grants of close to $50 million to nonprofit organizations this year. The Boston Foundation is made up of more than 650 separate charitable funds, which have been established by hundreds of donors either for the general benefit of the community, or for special purposes. The Boston Foundation also sponsors special initiatives, convenes groups of people to explore important issues, and works with other organizations and with government to find new ways to build community. For more information about the Boston Foundation and its grantmaking, visit our website at, or call 617-338-1700.