I had someone the other day make a fuss about socially responsible investing. This is a topic, in my opinion, where intelligent people can disagree. On the one hand, investing is about making money and a foundation in order to be a good steward has to invest for the highest return. The very best hedge funds have been useful in most investment environments, and I am certain the managers don't care about whether the companies they invest in (or short) are socially responsible.

On the other hand, some people feel it is wrong for a foundation to invest in businesses that aren't green. Period. I understand this view, but I am troubled by who decides what is socially responsible and what isn't.

What do you think? Should foundations invest only in socially responsible companies? Or, is investing about making money and that's that?

I switched my retirement account to all "socially respoonsib;le" funds and saw creeping growth for several years in which most of my colleagues were seeing high returns. When I did some research, I learned the measures of social responsility are imprecise. So, while a company may earn a high CSR rating for its environmental practices, it may also hire mostly part-time workers so it does not have to pay benefits. Despite many attempts, as far as I know, most of the ratings are based on self reports and have the same kinds of inconsistencies today.

It is nice to see this conversation happening. I would like to recommend a very thoughtful book on this subject: The Revolution Will Not Be Funded - edited by Incite! It offers a history of what the editors call the "nonprofit industrial complex" and how that has shaped todays foundations (including investments). It is a unique perspective that is worthy of consideration.