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An Equity Approach Across our Investment Portfolio: Q&A with Tim Ortez, Vice President and C.F.O.

Tim Ortez

The Weingart Foundation’s commitment to equity requires that all of our policies and practices align with our focus on advancing fairness, inclusion and opportunity. Our grantmaking has evolved as a result of this commitment, and we continue to share learnings during this time of transition.

As a part of this equity commitment, we are also looking at the Foundation’s overall investment and financial strategies. How can our investments serve as another way to fulfill our mission? Similarly, we have been exploring how other practices, such as how we select vendors, can be reflective of our commitment to diversity, equity and inclusion.

Tim Ortez, the Foundation’s vice president and chief financial officer, shares his perspective on how the Foundation’s equity commitment is showing up in ways beyond our grantmaking.

What has been the Weingart Foundation’s historic approach to investments, and how is this changing under our equity commitment?

Tim: Historically, the Foundation followed a very conservative and traditional investment approach. Like most foundations our size, we hired an independent investment advisor, who used assumptions about capital markets to help us select a combination of investments—which were primarily index funds—that would help us achieve a target return. Periodically, we would rebalance our investment positions to align with this asset allocation, but essentially, we stayed the course and tried to earn a return sufficient to sustain our grantmaking.

Now, we’re focused on more than a financial return. We’re trying to make investments that can also help advance our mission and values. And we’re also asking ourselves if any investments we’ve already made conflict with our mission or these core values.

What is the goal of the Foundation’s current investment approach?

Tim: Our Board’s commitment was to align everything we do with our mission, but I think our goal is much bigger than that. I see our goal as using all the Foundation’s resources to advocate for our values and maximize our impact. For example, studies have shown that less than 1% of the $36 trillion invested in North America’s capital markets is managed by women or persons of color. This lack of diversity in the financial sector can lead to missing investment opportunities that might benefit underserved communities and populations.

We still want to earn a financial return on our investments, as we want to continue to sustain our grantmaking, but we also want to spur societal changes that address this implicit bias. That’s where mission related and impact investments can come in. These will be tools to use, in addition to our grants and Program Related Investments, where we can potentially facilitate change.

Can you describe the process the Foundation’s Board went through to arrive at this current approach to investments?

Tim: The commitment we made was not only bold in our approach, but unconventional. Many foundations only carve out a portion of their portfolio for social impact investment. Our Board decided to holistically integrate mission investing across our entire portfolio. The first step was to identify objective criteria we felt we could use to examine our investments and current practices, to determine if we were in alignment with our core values. This process required a lot of back and forth with our Board, in group meetings as well as one on one. We then had to determine if we had the right resources. We had to evaluate our investment advisor and ask if we had the right partner for this journey. We also had to examine our investment policy. Our approach will continue to evolve as we continue to learn, and our program grows.

What were some questions or challenges that came up along the way?

Tim: The first challenge was developing objective criteria to examine our existing investments. Everyone has a different set of values and priorities that are important to them and we wanted to take a very strategic, long-term view. These values ultimately belong to the Foundation, so they should be transcendent, to pass down to future Boards and staff, to help objectively measure alignment with the Foundation’s mission. This was not a quick or easy process. Secondly, social justice as an investment priority is broader and not as easy or straightforward to invest in as, let’s say, the environment. And finally, we had to determine the right approach. For example, divestment is a commonly used approach, but the operational challenges to total divestment can be cost prohibitive. And as a stockholder you have a voice, and if you divest, you lose that voice. So, shareholder activism is another strategy. We want to determine the best way to achieve the greatest impact.

Where are you currently in this work?

Tim: We recently made a change in our investment advisor and have brought on a firm with significant mission investing experience that is working with us to develop and implement an impact investing strategy throughout our entire investment portfolio. Their team is very diverse and brings great experience and a shared commitment to underserved communities. We are still in the early phases of this work, but we’ve begun to identify an approach that will seek out investments in companies that support economic and community empowerment, as well as diversity and inclusion. We’ve also identified a list of principles to guide our investments, including, “Do no harm.” We plan to continue making incremental changes over the years, learning as we go.

Under your leadership the Foundation is also changing its approach to how it selects vendors. Can you describe this?

Tim: We want to work with others who share our core values. This includes money managers, vendors and contractors. We’re trying to be consistent in all our practices, and intentional. And by asking these important questions of our vendors and contractors, we are focusing attention on the issues of diversity, inclusiveness, fairness and equality. It’s surprising how the respondents’ answers often lead to further discussion about these issues and their own self-reflection. We’re going to keep pushing and try to advance our agenda in everything we do at the Foundation.

You are also starting an internship program in accounting and finance at the Foundation. Why?

Tim: The investment management sector as a whole is not very diverse. Some reasons are geographic and some are socio-economic. Working my way through college, I saw very few opportunities to explore the field of investments and financial management, and those rare opportunities I did see rarely went to women and never seemed to go to a person of color. And being raised by a single mom with barely enough money to keep a roof over our heads, I certainly didn’t know people who could have helped me or provided mentorship. I would like to see greater diversity in the financial sector and, by providing young people with the opportunity and experience to stimulate interest and participation, help disrupt the cycle of implicit bias that leads to the status quo. Ultimately, this will help these disciplines be more effective in serving underserved communities.