“I’ve got a great new charitable venture. What I’m going to do is separate the S&P 500 into socially responsible and socially irresponsible companies. I’ll go long the good companies and short the bad ones.* Of course, I’ll be doing this for altruism, not out of any knowledge of the companies – so I might lose money – but it’s charity! Any losses will be covered by grants.”

*(This means betting on the good companies to outperform the bad–it has the same impact on prices as if you sold the bad companies’ stocks and bought the good companies’ stocks.)

So … does this idea sound as crazy and worthless to you as it does to me? Because it’s exactly equivalent to what people are calling for foundations to do: spend effort going through their investment portfolios so that they may shift their capital from the socially irresponsible investments to the socially responsible investments.

It would be different if someone could construct a well-respected social responsibility index, and convince a large number of foundations to use it. That might arguably be a good charitable activity. But taking a single pool of money, modest- or even large-sized, and devoting it to this would have practically no positive impact. The operation wouldn’t justify its costs.

Hopefully this is a vivid illustration of what I’ve been trying to say: that foundations shouldn’t expend time and resources on “responsible investing,” not because it’s irrelevant, but because there are more important things for them to worry about.

Speaking of which: no more on this topic for a while. Promise.