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Let’s Make A Civic $ tewardship League

Let’s Make A Civic $ tewardship League. Unlocking Civic Investment A$$et$ : Building Social & Economic Equity and Civic Fiduciary Pride, Strengthening a Free and Vibrant Internet, and Reinvigorating Democracy. Submitted to Knight NewsChallenge From Marcy Murninghan, Ed.D. 18 March 2014.

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Let’s Make A Civic $ tewardship League

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  1. Let’s Make ACivic $tewardship League Unlocking Civic Investment A$$et$: Building Social & Economic Equity and Civic Fiduciary Pride, Strengthening a Free and Vibrant Internet, and Reinvigorating Democracy Submitted toKnight NewsChallenge From Marcy Murninghan, Ed.D. 18 March 2014

  2. 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.

  3. 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 empowermentto inform it.

  4. Historic Precedent: Not only that, history is on our side. The term “public interest” appears 316 times in the original SEC enabling legislation affectingcorporate disclosure, market regulation, and investment management—almost always in the same sentence as "protect shareholders"

  5. 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. • ●●●

  6. 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.

  7. 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!

  8. Strategy:Direct nonprofit investment assets toward reducing social and economic equity gaps, to strengthen sustainable prosperity and the public interest. Hospitals Public Charities Fraternal Societies Schools Museums Private Foundations Labor Unions Country Clubs Social Clubss HMOs, Managed Care Orgs Community Foundations Alumni Clubs Social Welfare Orgss Business & Sports Leagues Farm Bureaus War Veterans Posts Insurers Cemetery Companies

  9. Identify billions of $$$ in “civic assets” (~$2.7 trillion nationwide) embodied in tax-exempt investment portfolios,and leveragethat 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?

  10. U.S. Nonprofit Organizations, 2008 501 (c)(3) Organizations 501(c)(4) Social Welfare Orgs 111,561 organizations 501(c)(3) Public Charities 998,758 organizations • Civic Associations • Service Clubs • Advocacy Organizations • HMOs and Managed Care Plans • Many others • 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)(6) Business Leagues 72,582 organizations 501(c)(3) Private Foundations 118,368 organizations • Chambers of Commerce • Business Associations • Boards of Trade • Professional Sports Leagues Source: National Center for Charitable Statistics, 2014 Grantmaking Foundations Family, Corporate, Independent Foundations Operating Foundations 501(c)(5) Agricultural, Horticultural & Labor Organizations 56,269 organizations 501(c)(7) Social & Recreation Clubs 57,030 organizations 501(c)(8) Fraternal Beneficiary Societies & Associations 58,166 organizations • Farm Bureaus • Labor Unions • Labor Organizations • Many others • Country & Golf Clubs • Fraternities & Sororities • Athletic Clubs • Alumni Clubs • Many others • Fraternal Organizations • Lodges • Benefit Providers • Insurers • Many others 501(c)(10) Domestic Fraternal Societies & Associations 20,301 organizations 501(c)(13) Cemetery Companies 10,121 organizations 501(c)(19) Post or Organizations of War Veterans 34,155 organizations Other Exempt Organizations 32,251 organizations Unregistered Organizations — Total Unknown

  11. Civic Stewardship League 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!!

  12. The Ethical, Integrated Fiduciary 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. Public Equity Fixed Income Alternative Short-Term / Cash Pooled • Domestic & International • 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-structure • Repair & Upgrade • Private Equity • LBOs • Mezzanine • (hedge funds, absolute return, event-driven) • Venture Capital • Private Equity Real Estate • SustainableEnergy & Natural Resources • Community Bank Deposits • Special Funds forCommunity Purposes • Community Fiber-Optic Cable • Pre-K education • Job Development • Urban Farming

  13. Civic Stewardship League Q. So, what’s the strategy? A. Carry out the 3 M’s 3 M’s for Reducing the Social & Economic Equity Gap and Restoring Civic Fiduciary Accountability Maptax-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

  14. Civic Stewardship League Final thoughts:

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