Place-focused foundations are taking innovative approaches to get capital flowing where traditional capital can’t or won’t go. They are demonstrating the power of impact investing to create real change in communities, from inner city neighborhoods to rural places. And their role in this broad and continually evolving field appears to be growing. The five insights below reflect our collective wisdom and, we hope, are valuable to foundations and other partners who are exploring place-based impact investing.
|Recently, the LOCUS Team attended MIE’s 2018 National Conference, a meeting of leaders in the field of impact investing.|
1. Lead with impact. A common theme across many sessions was the need to lead with impact – to start by asking the question, “What difference are we trying to make?” Community foundations specifically have a role to play in defining that impact. As rooted philanthropic partners, they are in an ideal position to use the tools of community leadership and resident engagement to help identify the change that’s needed. And, they can ensure that any investment considerations include an equity lens so that the benefits of impact investing are broadly distributed. One presenter called community foundations the “conscience of impact investing.”
2. Just do it! The growth in the MIE conference bears witness to the explosive interest in the impact investing field and the progress made in defining the field, providing tools and proof points for potential investors, and beginning to measure impact. However, it’s also very clear that even the largest foundations are still figuring this out! There is no “one right way” to tackle impact investing. Every foundation reaches a point where they need to pivot based on learning from doing – that may scare some folks who would like a more defined roadmap. But, the message delivered over and over again was to take one step at a time, no matter how small, and keep asking “how do I use all of my assets to create impact in my place?”
3. Build partnerships. There is strength in numbers…and partnerships. Many promising stories included partnerships between foundations and community development financial institutions (CDFIs). Northwest Area Foundation combined grants with a program-related investment to help First Nations Oweesta Corporation support the capital needs of Native CDFIs, bringing more capital into Native communities to support entrepreneurs, affordable housing development and other investments. NWAF has a long history of making PRIs – and measuring their impact. Foundations are also working more closely with their donors to drive investment into their communities. The New Hampshire Charitable Foundation offers an Impact Investment Fund to their donors who “want to keep their charitable dollars local, create jobs and expand opportunity.” And, MIE and The Urban Institute just released a report on collaborative place-based impact investing that describes many different partnership models being explored across the country. Many of these models offer ways for foundations to leverage public, private and other philanthropic dollars with their investments.
4. Explore allavailable tools. There are many ways for a foundation to begin to explore place-based, mission-aligned investing – and not all of them are complex! One of the more interesting concepts was using a foundation’s assets to guarantee other investments. A recent blogby The Kresge Foundation demonstrates how foundations can put their balance sheets to work through guarantees. And, the Global Impact Investing Network released a briefon this topic. There were also a number of examples of using strategic grants in combination with direct investments for maximum impact. The Appalachia Funders Network is working to establish a blended-capital fund, combining grant and investment capital, to fund deals and build the pipeline.
The greatest value from MIE was the story sharing and networking. As I understand it, the focus on place-based investing by foundations is a growing interest of MIE and others – as more programming is devoted to this topic, place-focused foundations should get even more value out of the opportunity to learn with and from the innovators in the field. As a zealous proponent of peer learning, these types of gatherings are important opportunities to be inspired to action and to have a chance to build your own practice through the lessons of others. However, you don’t have to wait for a formal gathering to begin this networking. Regional associations of grant makers are often good sources of information about innovators in your region. The Council of Michigan Foundations, for example, does a great job of lifting up inspiring stories of foundations in the state. Check out this videoof the Sturgis Area Community Foundation’s direct investing in the local housing sector. As more foundations explore place-based investing, a clear message from MIE was “you are not alone.” There are fellow travelers of all asset sizes that can help you avoid re-creating the wheel and instead build on the shoulders of those who’ve learned before.
By Deb Markley
Senior Vice President, LOCUS Impact Investing
The full and original article can be viewed on LocusImpactInvesting.org
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