Giving to Brown

Social Choice Fund

The 168 hybrid solar panels installed on the roof of the Katherine Moran Coleman Aquatics Center in 2012 provide both electricity for the building and heat for the pool. Part of Brown's commitment to being environmentally responsible, it was the largest hybrid solar installation in the country when completed, and the first on a college campus.  Credit: Mike Cohea/Brown University

Donors of gifts of $25,000 or more to Brown's endowment now have the option of having their gifts invested in a mutual fund of companies that are environmentally responsible and that are working toward sustainability.

In February 2007, the Brown Corporation approved the creation of a Social Choice Fund within the University's endowment. This quasi-endowment fund will be invested in companies that are environmentally responsible and that are working toward sustainability, such as more efficient use of natural resources or reduced environmental burdens.

Brown takes seriously the moral and social responsibilities that attend its investments. The Advisory Committee on Corporate Responsibility in Investment Policy (ACCRIP), an advisory panel of faculty, students, staff, and alumni, was established by the University in 1978 originally to study issues of investment in companies doing business in South Africa while the apartheid system was still in force. Today, the ACCRIP considers issues of investor responsibility, including the environment, human rights and other issues of social responsibility, as they affect the University's investment policies and practices.

This following provides more information for donors interested in using this alternative investment option when making a gift to Brown's endowment.

May I make a gift of any size using the Social Choice Fund as an investment option?

Consistent with University policy regarding gifts to endowment or quasi-endowment, a minimum gift of $25,000 will be required to contribute to the Social Choice Fund. Its payout rate will be governed by the Brown spending policy. (See “The Brown University Endowment,” page 9, for detailed information on the University's spending policy.)

Will a gift to the Social Choice Fund count as a gift to the Brown Annual Fund?

No. Like other gifts invested in Brown's long-term pool, gifts invested in the Social Choice Fund are considered gifts to quasi-endowment (see below). Gifts to the Annual Fund must be the unrestricted, expendable, current-use gifts.

May I stipulate how I want my gift to be used?
The express use of the Social Choice Fund will be to provide resources for undergraduate financial aid, graduate financial aid, and unrestricted purposes. Unrestricted gifts of $25,000 or more to Brown's endowment are always welcome, of course, and donors may use the Social Choice Fund as an investment vehicle for such a gift allocation. A gift of $250,000, for example, invested in the Social Choice Fund could also create a named undergraduate scholarship, and a gift of $500,000 could create a named graduate fellowship. The same policies, payout rate, and stewardship will apply; the difference is only in how your gift is invested.

Is there a maximum gift that can be allocated to the Social Choice Fund?

The University will consider accepting large restricted gifts for investment in the Social Choice Fund. Special terms and gift levels for such gifts will be discussed with the donor and will be consistent with University policies.

Why will this investment option be quasi-endowed, and what is the difference between an endowed fund and a quasi-endowed fund?

By law, the University cannot invade the real principal value of a true endowed fund. Since the investments in the Social Choice Fund will not be as diversified as the University's long-term pool, we cannot assure you that your gift will maintain its purchasing power in perpetuity. Because we will be applying the established endowment payout rate to the Fund, if the Fund cannot meet the payout rate, the University may need to expend some of the principal of the gift. Therefore, the Social Choice Fund will be considered a quasi-endowed fund.

How will the Social Choice Fund operate? 

The University's Investment Office has selected Portfolio 21 as the investment tool for Brown's Social Choice Fund. Portfolio 21, an equity mutual fund run by Portfolio 21 Investments, of Portland, Oregon, is a no-load mutual fund that concentrates on companies which have made a commitment to environmental sustainability and which have demonstrated this commitment through their business strategies, practices, and investments. Portfolio 21 invests globally, is diversified across sectors, has a large-cap leaning, and takes a “growth at a reasonable price” approach. The institutional share class in which Brown is invested has a 1.2% expense ratio as of 9/30/13. For detailed information on Portfolio 21, please ask to see a current prospectus, or quarterly report, which will be provided by your Regional Development Director or a member of the Planned Giving staff.

How has Portfolio 21 performed?

The chart below shows Portfolio 21's performance compared to its benchmark, the MSCI World Equity Index:

 

Portfolio 21's Performance (Annualized)

(As of 9/30/13)

1-Year

3-Year

Since Brown
Investment 

(6/08)

Since Portfolio 21
Inception
(10/99)

Portfolio 21

20.1%

9.3%

3.6%

5.2%

MSCI World Index

20.2%

11.8%

2.4%

3.6%

 

Portfolio 21 is an equity mutual fund. Such funds as a group tend to be volatile, producing high returns during strong markets and low (or negative) returns during weak markets. Brown's general endowment takes a more diversified approach, investing beyond the stock market in financial sectors such as bonds, natural resources, real estate, and private equity. Because of this diversification, when compared to a broad stock market index like the S&P 500 or the MSCI World, our endowment tends to underperform during a bull market, but also provides some protection against loss of principal in a weak one.

Tell me more about Portfolio 21's investment strategies.
Portfolio 21 is a global growth equity fund seeking long-term capital growth. Portfolio 21 is permitted to invest in common stocks of domestic and foreign companies of any size market capitalization. In general, Portfolio 21 will hold 60 to 100 stocks, primarily large cap companies, and non-US companies are expected to represent around half of the portfolio. The companies must satisfy certain environmental, social, and governance criteria and exhibit financial characteristics that indicate positive prospects for long-term earnings growth. You can read more at Portfolio 21's excellent and informative website: www.portfolio21.com.

What role will the University's Investment Office have?

The Investment Office maintains strict oversight over the Social Choice Fund, reviewing it regularly for effectiveness. Although the Social Choice Fund has performed up to expectations to date, the University retains the right to transfer the funds into the general endowment in the future if that fails to be the case.