Nevertheless, some healthcare organizations, although not a majority, are adopting socially responsible investment policies, most commonly against tobacco companies. When Commonfund surveyed 202 healthcare organizations last summer as part of its benchmark study, it found that 41% imposed some restrictions on their investments. Of those with restrictions, 95% had restrictions on tobacco stocks, which meant that the majority of not-for-profit hospitals did not have any policies regarding tobacco investments at all.
The issues surrounding socially responsible investing have become increasingly complex in the nearly three decades since divestment of companies that did business in South Africa ignited firestorms on college campuses around the country, including Harvard University, where Sedlacek was at the time with Harvard Management Co.
Sedlacek defines socially responsible investing as a process that makes investment decisions based on factors other than the evaluation of pure economic return of that investment. Besides divestmentthe most prevalent means to make a social statementinvestors also have the option of being more active by actually using an ownership stake in a company to influence its actions.
One would think socially responsible investing was a no-brainer for mission-driven organizations but the fact is that the vast majority of foundationshealth or otherwisedo not apply social screens at any level, said Kim Moore, president of the United Methodist Health Ministry Fund, Hutchinson, Kan. The fund was formed in 1986 from the sale of 510-bed Wesley Medical Center in Wichita, Kan., to HCA, seeded with $30 million from the proceeds. Those assets have grown to about $74 million; each year the fund provides as much as $3.5 million in grants to improve the health of Kansans, he said.
The fund screens for alcohol, gambling, pornography, tobacco and weapons of mass destruction, Moore said. As for stocks it does own, the fund votes any corporate proxies itself, following the guidelines of the General Board of Pension and Health Benefits of the United Methodist Church. Moore acknowledged that it is difficult to be pure on socially responsible investing so thresholds allowing some tolerance level for corporate activities which violate screens are necessary.