Two years ago, Baltimore Community Foundation was working to build race equity into its selection process for investment managers when a question was raised. “We asked, ‘Why are we not considering local impact investing that could specifically address race equity and lack of access to capital for communities that have been shut out of wealth opportunities for years?’” recalls Patti Chandler, the foundation’s VP of finance and administration. In a city where the 63% African American population struggles with low income, unemployment, and a lack of wealth, race equity is a primary and urgent focus of the foundation.
The question sent them in a new direction. “Maybe there was a way to address this within our portfolio itself, and not just by choosing investment managers with an equity lens,” says Chandler.
After much research and deliberation, the foundation’s board last June gave the greenlight to shifting 4% of its $125 million in endowment into impact investing. It’s now preparing to make its first three loans.
Baltimore Community Foundation is part of a growing wave of community foundations that are looking to shift part of their endowments away from Wall Street and into local businesses, affordable housing, and projects aligned with their place-based missions.
There are 750 community foundations across the U.S., each dedicated to improving the lives of people in their own defined geographic area. These place-based institutions play a vital role in their communities, making grants and supporting local projects in ways that few other financial institutions can. With their community-based missions, deep local relationships, and assets ranging from $3 million to $8 billion, community foundations are uniquely poised as catalysts for transformative local solutions.
However, as with the broader philanthropic world, community foundation assets are not always aligned with their missions. In fact, sometimes their dollars are actively working against them. […]
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