Unitarian Universalist Common Endowment Fund – Impact Investing

Tim Brennan served as Treasurer and Chief Financial Officer of the Unitarian Universalist Association – he has been part of the UUA’s Investment Committee, Socially Responsible Investing Committee, Retirement Plan Committee, and the UUA Health Plan Board of Trustees.

Tim led the UUA’s shareholder advocacy efforts, pressing companies to address such issues as climate change, BGLTQ rights, political spending, and corporate governance.

Tim came to the UUA after seven years with Ceres, the national network of institutional investors working to advance corporate responsibility for the environment.

https://uucef.org/

UUCEF

What is the Unitarian Universalist Common Endowment Fund (“UUCEF”)?

It is an investment fund – highly diversified – it is available to UUA organizations, primarily congregations. We are all independent entities, we came out of the 19^th Free Church movement. Each congregation makes its own decision about how it wants to handle its assets.

Who can invest in it?

It is just for institutions, we are exempt from most security laws – we are prevented from taking individual assets for that reason.

What is the mix of investments?  US individual stocks, bonds, international? How much trading is done (turnover ratio)?

It is highly diversified– it includes, us equities large caps, small caps, emerging markets, fixed income strategy, alternative strategies, private equities – we employ about 20-25 managers.

How is the fund set up? Everyone invests into the same mix? Pooled investment?

We pool investments.

How much is in the fund?

200 million dollars- about half of that belongs to the congregations and the rest is the UUA endowment.

What are the fees?

Fees tend to step down as investments go up. Our positions may vary- which allows us to get pretty good fees.

SRI

What are the values being addressed by the UUCEF?

I would say that our investment committee brings UUA values to bear in mind in every investment position – there are 7 core principles that undergo UUCEF- which are considered to make all our decisions.

What does UUCEF do for “Engagement” – shareholder advocacy? Examples of issues? Team with other organizations? (ICCR)?

On advocacy, we have a long history. The UUA was a co-filer of the first ever shareholder resolution issue. This resolution asked for companies to give actions and opportunities to people of color. We’ve had a lot of engagements with companies and had success. We also ask companies to incorporate protections for LGBTQ people and stricter non-discrimination policies.

Do you hold companies that might not be ‘responsible’ so that you can engage with these companies? (Marathon Petroleum, Exxon Mobile)

In those cases, with other companies, we have small pools – we buy small pieces, small holdings. We can engage selectively this way. We are able to do some movement there as well.

What are some examples of Community investing that UUCEF invests in? Boston Impact Fund, Ujima (Boston?) – how much of the fund is in community investing?

We do a fair amount – back in the 90s the Social Investment Forum recommended that its members allocate 1% to community investing – which we have done ever since, it is a couple million. We do a lot of micro finance, community funds housing. We created BlueHub Now which is a Boston community fund – we do a lot of different things. More recently we did Ujima, we help tiny local businesses in communities in Boston that are predominated by people of color. They have people in those communities who actually vote on the investments – what they think they want in their communities and we love these people. We invest in businesses primarily led by people of color and women.

How does “Investment selection” make an impact?

I think it’s just aligning your investments with your values – it’s how you feel about making money. We screen out tobacco companies – but they don’t lose any sleep over it. My own belief is that that is now moving the markets. If we stir towards better ESG performers and other big investors I believe that lowers cost of capital- and raises it for poorer performers. So as the market shifts, as ESG is integrated more deeply, it puts a pressure on companies to be better ESG performers.

The Unitarian Universalist Common Endowment Fund (“UUCEF”) is an alternative for UU Congregations that currently manage or direct the investment of their own assets.  The Fund is more than a single investment option – it is an investment program that implements a range of key tasks that may be challenging (and costly) for any single UU Congregation to perform on its own.  Under oversight of the Board, the Investment Committee selects professional outside advisors and Investment Managers.

Socially responsible investing (SRI) is ensuring that our investments are aligned with our values. None of us want to make our financial returns at the expense of seriously harming ourselves, other humans, or the environment.

The four components of socially responsible investing include:

Screening: Negative Screening is trying to avoid doing unnecessary harm, such as by avoiding investments in companies that are serious polluters, employ sweatshops, or have racist or sexist policies. Positive Screening is preferring investments in companies that provide a societal good as well as a safe and attractive return, such as companies with good environmental records.

Shareholder Activism: proposing and representing resolutions at annual stockholder meetings to encourage companies to adopt policies consistent with your values.

Proxy Voting: using your shareholder voting power to vote on important issues of corporate governance, and proposed shareholder resolutions, through the annual proxy voting process

Community Investing: setting aside some portion of funds, often 1%, to be invested in local businesses that generate jobs and opportunities in addition to an attractive return. Many Community Development Financial Institutions exist for managing such investments for you.

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