In conversation with Susan Kay and Andrew Gnaneswaran
The Vivensa Foundation has taken quite a journey as an organisation, not least when it comes to our investment practices. Like many trusts and foundations, for a long time our focus was on generating the £5m of grant funding we award each year. We weren’t necessarily scrutinizing our £170m portfolio and how the funding is generated – and we certainly weren’t leveraging our entire endowment to further our mission.
In this article, we talk to Chief Executive Susan Kay (SK) and Chief Investment Officer Andrew Gnaneswaran (AG) about what they learnt through the development of our new investment strategy and the underpinning values framework.
How did you begin the journey towards creating a more impact-intentional investment portfolio?
SK: When I joined as Chief Executive in 2016, the Board was starting to have regular conversations about the reputational impact of having certain investments in the portfolio. This enabled me to make the link between our investment practices and our wider strategy. I shifted the conversation on to the idea that we could do more with our portfolio than just generating money to award grants. There were some pioneering foundations moving to impact-intentional investment practices. They were an enormous source of help, inspiration and support. But they all told me that their boards had not reached their decisions easily!
In 2019 our Board made the decision to exclude tobacco investments completely from our portfolio and add responsible investment practices to our investment management mandate. Then in 2020, we agreed to use a windfall gain we had made from the sale of some land to create a social investment portfolio. We published our first Impact Investment Strategy and appointed Andy as Chief Investment Officer.
AG: When I joined in 2023, I was given the task of working closely with our investment advisors to implement a responsible investment approach across the portfolio. Also, to review our approach to our social and private investment allocations.
What impact did the Butler-Sloss case* have?
SK: It was helpful. It was another hook for me to ask the Board of Trustees to re-examine our investment policy. And it was evidence that you don’t have to invest for maximum financial gain. It gave us permission to prioritise other objectives.
AG: Yes, it moved the conversation on about understanding how our investments might not be supporting our mission, but potentially could be harming it. We, like a number of other foundations, don’t think it went far enough. The current wording allows trustees to ignore the negative impacts their investments could be causing – and focus just on financial returns. We have interpreted it broadly. Essentially, all investments are assessed on risk and return. But to those parameters we have chosen to add impact on people and planet. And we also chose to underline that we have a high tolerance for risk. This is what separates us from a pension fund’s investment approach, for example.
*The Butler-Sloss versus the Charity Commission case culminated in 2022. The court ruled that while charity trustees generally have a duty to maximise financial returns, they also have the discretion to exclude investments that they reasonably believe to conflict with their charitable purposes.
How did you get the Board of Trustees on side?
AG: Through facilitating discussions at Board meetings, it emerged that there were almost as many interpretations of ‘Impact Investing Policy’ as there were trustees! The existing document was not helpful in providing a clear steer to our advisers. And not helpful for making decisions about suitable investments for us as an organisation. We had a lot of discussions before we could codify a policy that was less open to interpretation – and was clearer about what we were seeking to achieve.
So what did you do?
SK: The language used by the investment community can be very confusing. We took a paper to the Board which went back to first principles and definitions. We also had discussions about personal values and whether these could/should be aligned with organisational values. By getting everybody clear about different investment types, it was easier to have the conversation about how we should go about implementing our policy.
AG: The journey also involved clear differences of opinion – and accepting that getting a unanimous agreement might not be possible. We had to be pragmatic and settle for consensus instead. There was a lot of debate about whether we should adopt a policy of engagement rather than divestment, for example. While Board members could really see the value of engaging with companies to influence them to change their harmful behaviours, the majority accepted the practical limitations due to our size and resources. Because we are reliant on advisors and fund managers it got us thinking about how we select suitable people to assist us in implementing our policy.
The initial idea was to devise a framework that would help inform investment decisions in a more objective way. At first, we thought this would be a framework to evaluate the impact of an investment on people and planet. But after some initial exploration we decided to adopt a different approach.
Why did you choose to work with Tribe Impact Capital?
AG: We brought Tribe in at the start of 2024, due to their strong approach to partnership working. They saw this as a useful intellectual and practical challenge to try and figure out with us, and something which could be relevant to other impact-conscious asset owners. They already had their own way of assessing fund manager approaches, and this was a really useful place to start.
SK: This part of the process took the best part of a year! And then we had a bit of a lightbulb moment. The backdrop to this thinking was our work on our wider organisational strategy re-fresh. In our research grant-making policies, we had adopted a values-based approach. This involved accepting that our role in the idea creation and development process of the work we fund is limited. And we have even less control around how those ideas subsequently impact the health and well-being of older people. The approach we do take is to design selection and application processes that reflect our values and principles. This informs the way we select award-holders and partners. We believe that organisations and people who share these values are positioned to create the long-term impact that is core to our mission. So we decided to extend this approach to selecting and evaluating our fund managers and investment advisors.
What have you learnt through the process?
SK: We had to get comfortable very quickly with imperfection but we accepted that this is simply a starting point. For others hoping to do the same, you should expect it to be more than one conversation…more than six conversations… more than ten conversations! I had to find different ways and hooks to keep bringing it back to the Board. It’s important that everyone understands it’s not just about money. It’s firmly attached to your organisation’s mission, identity, values and reputation.
AG: An organisation of our size will always be heavily reliant on external investment consultants to help manage our portfolio. This can lead to a reliance on existing commercial processes, which don’t fully capture the ambition of what impact investors aim to do. We think this process has the potential to put some power back in the hands of the emerging breed of impact-conscious asset owners. It has enabled us to articulate our ambitions more clearly. And in a way that is meaningful to non-expert trustees. It has allowed us to challenge asset managers about their investment strategies. We can obtain greater transparency around the impact of the underlying companies within our portfolio.
Read more in our recently published Strategic Framework – a review of the plan period 2020-25.
In the upcoming weeks, we will be publishing our top ten tips for developing a values-based framework for investment. Also, a more ‘nuts and bolts’ article about how we designed the values-based investment framework.