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Nonprofit Organizations as Ideal Type of Socially Responsible and Impact Investors

Fritz, Tizian M. and von Schnurbein, Georg. (2015) Nonprofit Organizations as Ideal Type of Socially Responsible and Impact Investors. ACRN Oxford Journal of Finance and Risk Perspectives, 4 (4). pp. 129-145.

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Abstract

Nonprofit organizations (NPOs) as mission-driven organizations could profit from investing in stocks diametrically opposed to their mission, as they serve as a perfect hedge. Earning more income from oil or tobacco companies when there is a greater need for ecological interventions or cancer research might help effectively fighting the cause. We show the flaw in this logic as in its optimal state, this strategy is at most a financial zero-sum game. However, as NPOs strive at creating net value by aiming at a most effective mission-accomplishment, socially responsible and impact investments may offer a better way of doing so. We present NPOs as an ideal type of a socially responsible and impact investor and give the corresponding formal economic reasoning. For mission-driven organizations only the combination of financial and mission-based goals allows for an effective, goal-oriented financial decision-making. The full application of this logic is what is broadly understood under the term of mission investing (MI). Based on a theoretic introduction, we present a formalized way of analyzing multidimensional tradeoffs in the case of NPOs being mission-driven investors. This formalization will supply NPOs with a tool that enables them to capture their investments’ financial and mission-based impact and therefore the full benefit of responsible and impact-driven investments.
Faculties and Departments:08 Cross-disciplinary Subjects > Center for Philanthropy Studies (CEPS) > Stiftungsmanagement (von Schnurbein)
UniBasel Contributors:Fritz, Tizian Marco and von Schnurbein, Georg
Item Type:Article, refereed
Article Subtype:Research Article
ISSN:2305-7394
Note:Publication type according to Uni Basel Research Database: Journal article
Language:English
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Last Modified:30 Jun 2016 11:00
Deposited On:23 Jun 2016 09:38

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