Photo: Eastern Congo Initiative
While there still is no universal definition of impact investing, when we talk about impact investing, we mean the big impact umbrella that includes Environment, Social, and Government, positive and negative screens, investing with value-aligned managers, and direct investment in companies with positive social outcomes. Impact investments can provide benefits in ways that grant dollars alone cannot, such as providing resources for ideas and people, allowing businesses and ideas that have some form of positive impact to grow and scale, and strengthening markets.
For over a decade, we have been working to move our investment dollars from “doing no harm” to “producing positive social outcomes” for community. Because our Foundation plans to exist in perpetuity, we have a responsibility to invest in a way that deeply supports community. It takes time and intention to invest for positive impact; as we continue to learn and know more, we continue to make more investments that produce social outcomes for our community.
Photo: Root Capital
First mission-aligned investment seeking positive social outcomes was in Vision Fund. With this first microfinance investment, we learned what a mission-aligned investment was, how it can fit within a diversified investment portfolio, and that it is an easy way for a foundation to begin impact investing. We continue to maintain this investment today and, in some down markets, it has been one of our stronger performers.
Knowing that Environmental, Social, Governance (ESG) investments can reduce harm, we begin utilizing ESG metrics in our financial analysis and investing earnestly in ESG global equities. In that, we discover that we can be more intentional to generate positive social and environmental outcomes, not just reduce harm in our investments.
Establish investment policy that intentionally decides not to set aside a certain percentage of the investment program for impact, but instead aspires to have 100% of investments creating impact. As of December 31, 2021, our Foundation is at 71% of assets invested for impact. Our goal is driving more invested capital to any form of impact investing, which means we are supportive of practitioners of all kinds of impact investments without using a “purity test” on impact. We maintain one investment committee to make decisions on all investments.
Begin using ESG metrics in our financial analysis for fixed-income and make first fixed-income ESG investments.
First equity investment in a social enterprise, Asili, a business that offers clean water, agricultural services, and health clinics to area communities in the Kabare region of the Democratic Republic of Congo.
First direct investment in business Burke Agro, a Nicaraguan company helping small-holder farmers utilize regenerative farming techniques, as well as purchasing, processing, and selling their products.
Investment in ReThink Impact, a private equity fund by and for women entrepreneurs in the tech space. This strong-performing investment taught us that we could find and support a variety of funds and managers.
First direct equity Investment in Shared-X, a business founded to accelerate Impact Farming companies, and revolutionize the traditional farming industry by consolidating the value chain and empowering small-holder farmers.
First direct local small business investment in Asiya, a sportswear company co-founded by and for Muslim women. We often use impact investing to invest relatively small amounts in opportunities that produce unique impact or have the potential to grow substantially. Asiya story.
Conduct Carbon Analysis. We analyze our investment portfolio to understand its carbon footprint in carbon intensive industries and sectors. We found that we had a very small percentage – under 2.0% – of our investments in carbon-producing industries and sectors that make their money producing carbon. We continue to use a carbon footprint analysis to guide future investments.
We support and join the Minnesota Council of Foundations Integrated Capital work that produces over $33million in loans and over $11 million in grants to Minnesota Community Development Financial Institutions (CDFIs). We learn from cultural CDFIs how the capital we loan and the grants we make will deeply impact the wealth building efforts of cultural communities. We make our first “integrated investments” – pairing low interest loans with operating grants -totaling $1 million of loan capital dollars and $600,000 in grant dollars to support cultural CDFIs in the Twin Cities:
Aligned to our values about deep partnership, we see our investments as partnerships, and we try to be about more than just the money. We decide to intentionally invest in new, first-time managers to support access to capital for Black, Indigenous, and People of Color (BIPOC) and LGBTQ+ communities, and women, all of which are grossly underrepresented in the investment and business start-up world. We do this in contrast to many traditional investors that are not willing to invest in unproven managers.
Expand Investment Committee to include external community members with commitment to community and experience in impact investing. Two new members join three existing family committee members and embark on creating a framework to guide our impact investing and measurement of outcomes.
We acknowledge that we have significant work ahead to continue to align our investments with our values and make positive change with community.
Photo: Propel Nonprofits