Aligning your super with your organisation’s values – an essential consideration for NFPs

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Does the superannuation fund offered to your employees align with your organisation’s core values?

A recent survey by Australian Ethical Super revealed that over 80% of Australians identified their superannuation as important for their financial future. Super is one of the biggest investments people will ever make, so it’s important for each and every person to understand where their money is invested.

Unfortunately, the level of engagement Australians have with their super is still very low. The study showed that almost half of respondents don’t read their statements and a similar percentage are invested in the default option of the fund offered by their employer. With job mobility becoming an ever increasing reality it’s easy to see how one person can end up with 10 super fund accounts.

The research also revealed that 2013 may be the year of conscious investing, with three out of five Australians disclosing it is important that their investments are aligned with their personal values; however the survey also showed that most people who consider themselves to be ethical do not know, or are not sure, if their money is ethically invested.

Having been operating for over 25 years, Australian Ethical is now seeing a rapid increase in the number of people who are ready to invest ethically. The returns of ethical funds are also busting the myth that you need to sacrifice financially in order to do good with your money. A recent report from respected independent financial research company, Lonsec, found that our investments in ethical companies outperformed the ASX listed top 200 companies over the last 10 years.

So why is this so important for not-for-profit organisations?

Invariably NFP organisations have a purpose or goal that involves a positive change for society and/or the environment. They may have a singular purpose – like reducing premature death and suffering from heart disease – or multiple goals around a singular theme – like protecting the environment. What is common to all is that the ability to deliver these goals is be based on a team of dedicated employees.

But what if the 9% of salary that staff are paid via their superannuation fund isn’t aligned to the very change your organisation is trying to bring about. What would your employees think if they knew that their money could be supporting investments in the very things they are working to change?

For example, the cancer charity with a default fund that invests in the tobacco industry or a human rights organisation with a fund for employees that invests in companies using child labour or sweatshops.

Without considering the ethics of employee superannuation, organisations could inadvertently be encouraging investments in the very things they are working against.

How does your organisation invest its assets?

Non-profit organisations usually have a policy that guides the investing of their own assets or endowments and in most cases these assets will be a major part of the balance sheet. If your organisation has an ethical investment policy for its own assets, should it consider having a similar policy for the default super fund it offers employees? In the end, more so than any other type of organisation, your employees are highly likely to share your values.

Australian Ethical already has hundreds of non-profit organisations using their super fund as the default option for their employees, and many more giving employees the choice between our fund and another mainstream option. They are also increasingly seeing non-profits take a bigger interest in the ethical principles of their own investment policies and many have already introduced principles which reflect the values of their organisation.

Questions for trustees and HR managers to consider:

• Do you offer your employees a default superannuation fund?
• Do you actively engage your employees in their choice of fund?
• Do you think your employees want to invest their super in line with your values, purpose or goals?
• Does your organisation have an investment policy?  Is it aligned to the values of your organisation?

Australian Ethical Super is the Superannuation Partner for the upcoming Not-For-Profit People Conference, 27-28 August 2013.