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

Sour

ce: N

ation

al C

ente

r for

Cha

ritab

le S

tatis

tics,

201

4

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&param=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: