Letter to Scott Budde

Scott, I waited for the two month "anniversary" of my September 29 correspondence (below) to see if you are ready to move forward on the concerns raised, mainly focused on the Social Choice Account (SCA). A few new related points:

  • You may remember earlier discussions between Steve Schueth and TIAA-CREF (TC) VPs Evans and Scott, where it was determined that if TC was to move toward community investment (or presumably private equity/social venture capital--PE/SVC) for the SCA, it was deemed best to first have a shareholder proxy vote to that effect. This was concluded given how such investment changed the nature of the fund--even if it was limited percentage-wise and it already met the fund's general thrust and prospectus guidelines. Bert Scott and Scott Evans, personally, were open to or supportive of that possibility. It was/is even a way to test the waters on those investment concerns. I hope you might be open now to pursuing that direction with some prep time needed if it is to happen for the 2007 ballot. It would, indeed, allow for that concrete testing of the waters even for the less explored PE/SVC in a measure better than just a survey, for it has possible policy change implications. Calvert participants overwhelmingly approved a proxy to introduce community investment and PE/SVC into its family of mutual funds.
  • Regarding PE/SVC, I could see introduction of that vehicle within TC more generally, with part of that going toward its natural home, the SCA. OR, such investment in the SCA might be the "pilot project" for such investment more broadly within TC. I noted below my contact with prominent folks in the field who could advise. I know that TC is already invested in non-SRI PE, and such investment is a growing field in the SRI community. I am sure it would be attractive for SRI-conscious folks in the SCA and otherwise. As but one possibility, what about Acumen Fund investment within TC and specifically within the SCA? I can see SCA participants, like myself, being VERY excited about Acumen Fund investment.
  • Though I have hinted at it before, I can see closing up shop on our Social Choice for Social Change lobbying efforts (and bugging you!) if we can get that ideal SCA with community investment, PE/SVC, and some work on screening as noted below. At that point, I am hoping that my "work" with TC might be totally finished if we see movement from other folks at TC on issues of shareholder advocacy.
Thanks and let me know, Neil

P.S., I also sent previously a document with a proposed revised SCA fund, written by Steve Schueth, that SCA participants pledged millions toward if adopted.

Neil Wollman; Ph. D.; Senior Fellow, Peace Studies Institute; Professor of Psychology; Manchester College, North Manchester, IN 46962; nwollman@bentley.edu; 260-982-5346; fax 260-982-5043



From: Wollman, Neil J.
Sent: Friday, September 29, 2006 12:15 PM
To: sbudde@tiaa-cref.org
Cc: Wollman, Neil J.
Subject: Scott, our group's further SRI interests/Thanks

Scott:

Though I have mainly been in contact with Amy O'Brien and John Wilcox, since you reached out to me recently I wanted to communicate to you the remaining interests of our coalition group member, Social Choice for Social Change. These are:

1. Community Investment in the Social Choice Account (SCA)

We hope that CDFI investing will soon become a reality in the SCA. While the SCA is less flexible than the Traditional TIAA Annuity, it is flexible enough to add community investments, as managers of other socially responsible funds have come to realize (and perhaps you, as well). It reminds me of my experience years ago as a Macintosh owner: I was told I was at a real disadvantage since I only had five word processing programs to work with rather than the twenty available for PC owners. Yet one good program was sufficient for me. The same is true investment-wise for the SCA. With survey results showing that SCA participants (a) value social concerns as much as financial ones, and (b) are willing to give up some financial return for social gain, the opportunities for community investment have opened up even further. A strong social return will excite SCA participants, I can guarantee you. There are additional reasons to include community investment in the fund, as I have outlined at the annual meeting and in correspondence with Amy.

2. Screening in the SCA


If I understand correctly, your new investing department will be taking a closer look at screening, with the intent of screening more actively rather than simply following KLD/BMSI recommendations. Though KLD screens are generally good, they miss some companies. For example, our coalition pointed out problems with Coke for years, and finally the stock was removed by KLD and the SCA in July. I hope you will be open to the occasional further investigation and removal of other SCA companies should outsiders make a good case for it. There are stakeholders with the resources and interest to conduct much more thorough investigations of particular companies than can KLD and TIAA-CREF, which must monitor thousands of corporations. These groups can provide valuable information and references that you can use to further refine the fund.

3. Social Venture Capital in the SCA


Though less common in SRI circles than community development, social venture capital is gaining prominence and is now recognized more strongly by the Social Investment Forum as an important entity in the SRI world. It carries the same risks and benefits as other venture capital that TIAA-CREF currently invests in, but given the priorities of SCA participants as revealed in your survey , it is clear that they would value investment in socially and environmentally responsible products and services. This is also a way for TIAA-CREF to contribute to a more humane economy and society, in general. I can put you in touch with top professionals in the field willing to present opportunities. (I also know a professor at Columbia who envisions a limited pilot project that would constitute both an investment, as well as research that might further advance the field.) I also know the long-time social venture capital manager for one of the pioneer SRI mutual fund families that has successfully placed a small percentage of assets in such investment. The two most prominent social venture capital interest groups are holding their national conferences in October and November, and I can provide you with that information.

4. Expanded Community Investment within TIAA-CREF Overall

Finally, I hope that TIAA-CREF's very laudable step into microfinance will lead to far more community investment, with a more ambitious goal than that presented at the annual meeting. This would be compatible with the Social Investment Forum's campaign for "at least one percent in community investment." It would mean billions invested on a much shorter timeline. With Amy's and TIAA-CREF's strong connection now to the Forum, I hope you will re-consider your goals and timeline. You could truly lead the way in community investment, helping untold numbers of needy families and revitalizing many U.S. communities.

The inclusion of community investing, social venture capital, and some enhanced screening will make the Social Choice Account a model socially responsible fund that is admired and emulated by others. It would be the true darling of socially concerned investors in TIAA-CREF, who would promote it to others. And it would be an excellent publicity face for the outside world that fits well the phrase, "Financial Services for the greater good."

Neil

Neil Wollman; Ph. D.; Senior Fellow, Peace Studies Institute; Professor of Psychology; Manchester College, North Manchester, IN 46962; nwollman@bentley.edu; 260-982-5346; fax 260-982-5043

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