Boston Foundation strategy hailed for increasing divestment pressure on Sudan: Approach advances ethical goals in an age of pooled investments

March 14, 2007

Boston – The Board of the Boston Foundation today announced it has undertaken a two-part strategy that calls for the Foundation to distance itself from companies that are engaged in business in the Sudan. This includes, first, divestment of any direct holdings in such companies, and, second, a new approach of shorting stocks that are held indirectly by the Foundation as the result of investments held in pooled funds.

The decision affected holdings in five companies, representing $1.546 million in assets.

“Using our assets to move an ethical agenda forward is an important part of the history and culture of the Boston Foundation,” said Paul S. Grogan, president and CEO of the Boston Foundation.

The strategy was devised to reflect the complex realities of institutional investing while at the same time directing the Foundation to step away from specific investments in a nation whose government has been widely assailed for bankrolling and supporting genocidal violence in the Darfur region and beyond. Already, millions of local residents have been displaced and hundreds of thousands have been slaughtered by government-backed militias known as the Janjaweed.  The violence continues to grow, currently spreading across international borders into the nations of Chad and the Central African Republic.

The strategy achieves divestment without disrupting the investment program of the Foundation. This is a supple approach that addresses the fact that institutions such as the Boston Foundation have little or no control over specific investments in pooled funds or separate managed accounts. It enables the Foundation—or other institutions that use this strategy—to retain positive working relationships with top investment managers while eliminating an economic interest in companies that are doing business with the government in Sudan.

“The strategy devised by the Boston Foundation is a true ‘silver bullet,’” said Eric Reeves, a professor at Smith College who is credited with starting a college campus-based movement to encourage large investors including states and universities to use the power of divestment to press for the end to genocide in central Africa. "This removes the last impediment for large-scale investors because it makes it possible to offset pooled investments in Sudanese oil development and the companies doing business in this and other commercial sectors that support a genocidal regime.”

The current policy on investments in the Sudan was approved by the Board of Directors of the Boston Foundation at its meeting on Dec. 14, 2006, after a presentation by the Investment Committee, which is made up of four members of the Board. It included two parts—a policy on direct investment and one on the more complex matter of pooled investments.

In specific, the Board directed the Foundation this way:

    • The Boston Foundation should not invest directly in any company targeted as providing significant revenue or arms to the Sudanese government;
    • The Boston Foundation should inform the foundation’s investment managers responsible for indirect         holdings that the foundation is supporting the targeted divestment movement;
    • Foundation staff should continue to monitor the situation in the Sudan and the targeted divestment movement; and
    • Foundation staff should sell short shares in targeted “worst offender” companies to offset positions in these companies held indirectly in pooled funds. This will eliminate the Foundation’s economic interest in the targeted companies without interfering with the investment managers.

The indirect Sudan strategy involves shorting stocks currently held in many investment pools—in particular those of companies investing in the Central African nation’s booming oil industry. The Foundation will continue to monitor the investment pools it uses, and will “short” specific stocks deemed to be inappropriate for investment according to its divestment policy using a separate brokerage firm.

It can also accommodate the realities of pooled investments, in which shares of stocks in specific companies can enter and leave a portfolio over a relatively short period of time. The use of a separate brokerage firm to manage the shorting process makes it possible to continue to take full advantage of investment companies with strong performance records without interfering in their expert investment practices.

The Foundation has developed the list of companies to be divested with the assistance of the Sudan Divestment Task Force. This organization—the only entity in the area of socially responsible investing that is focused solely on the Sudan—releases an updated list of companies every quarter. This list is provided to more than 500 fiduciary institutions around the world that collectively represent more than a trillion dollars in assets.

For the Boston Foundation, which holds assets of more than $830 million, this divestment reflects a long tradition of innovation, in which accrued assets are leveraged to achieve ethical, socially responsible goals. Earlier, it was the first community foundation in the country to exercise its right to proxy voting, in which stock holdings are used to influence corporate policy. The result has been a clear voice on issues ranging from racial and ethnic inclusion—promoting the value of diversity in corporate boards, for example—to environmental practices that serve the broader community.

Proxy voting built on earlier efforts to use the Foundation’s financial clout to affect social policy. The Boston Foundation was a leader in the 1980s in the effort to hasten the end of the apartheid in South Africa through divestment from companies that profited from that system of racial exploitation; and it divested from companies in the tobacco business in 1995.

“My hope and expectation is that we will see investors across the country take advantage of this strategy,” said the Rev. Ray Hammond, Boston Foundation Board Chair. “The way divestment can work as a tool for sweeping changes is all about leverage. If we can get to critical mass, in terms of the investors taking a stand, and we begin to have a visible impact on companies that continue to prosper from investments in the Sudan, we will have the chance of truly significant impact on events at ground level in the Darfur region of the Sudan.”


The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation, with assets of over $830 million.  In 2006, the Foundation and its donors made more than $70 million in grants to nonprofit organizations and received gifts of $73 million.  The Foundation is made up of some 850 separate charitable funds established by donors either for the general benefit of the community or for special purposes.  The Boston Foundation also serves as a major civic leader, provider of information, convener, and sponsor of special initiatives designed to address the community’s and region’s most pressing challenges.  For more information about the Boston Foundation, visit or call 617-338-1700.