Every seat was filled at Northwest Area Foundation on Tuesday at a grantmaker “think tank” on mission investing.
What is mission investing? According to Mission Investors Exchange:
Mission investments cover two distinct categories: market-rate mission-related investments (MRIs) that have a positive social impact while contributing to the foundation’s long-term financial stability and growth; and program-related investments (PRIs) that are designed to achieve specific program objectives while earning a below-market rate return.
In other words, it’s about using the so-called “other 95%” (beyond the 5% annual grants payout) to achieve mission.
According to MCF’s latest Giving in Minnesota report, Minnesota grantmakers grant approximately $1.7 billion annually and hold almost $18 billion in foundation assets. Through mission investing strategies they can leverage a portion of that $18 billion for social good. (For more on mission investing, also check out NCRP’s Winter 2013-2014 edition of Responsive Philanthropy.)
The Minnesota Experience
Prior to Tuesday’s event, some Minnesota grantmakers completed an informal survey about their experiences related to mission investing. Highlights of the responses included:
- Program-related investments (PRIs) as loans are a commonly used tool and are often directed to economic development for low-income neighborhoods and job creation.
- Growth of mission investing is hampered by lack of staff expertise and capacity, as well as a dearth of effective and experienced investment and legal advisors who understand and embrace the concept.
- Finding investments with a strong financial and social return and measuring results can be challenging.
- Despite challenges, foundations are intentionally pursuing mission investing and even setting targets for percentage of invested assets.
- Community foundations have a growing interest in mission investing among donor advisors.
Also discussed during the “think tank” were increased opportunities to engage in mission investing outside of the nonprofit sphere, such as with social enterprises and for-profit businesses.
For instance, philanthropy could seed investments in green technology or otherwise put dollars behind ideas that will influence the marketplace for good.
Several intermediaries and other organizations are already working in the mission-investing space in Minnesota, including Nonprofits Assistance Fund, Community Reinvestment Fund, MEDA, WomenVenture and others.
At the meeting, Peter Berliner and his colleagues from Seattle-based Mission Investors Exchange also offered their knowledge, expertise and connections. To meet local and national peers, grantmakers can sign up for the Mission Investors Exchange 2014 National Conference to be held in Minneapolis from May 13 to 15. (Early bird registration ends February 28!)
To connect with other Minnesota grantmakers who are pursuing mission-investing strategies, contact MCF at firstname.lastname@example.org.
As event organizers Brad Brown, former head of Social Venture Partners Minnesota, and Susan Hammel, executive director of the Delta Dental of Minnesota Foundation, noted, mission investing is a lot less risky than perceived. And a planned approach with full board engagement can really pay off – in social impact and financial rewards.
– Wendy Wehr, MCF vice president of communications and information services