“The most important thing is to start believing the ‘why’ and then get to the ‘what’ and ‘how.’ Investors’ Circle can help with the what and how, but the most important component is the why.”
Rebecca: How did you get the rest of foundation and board interested in mission-aligned investments?
Laura: We needed an internal champion. I was fortunate to be in a position to bring the foundation along, and I stressed the importance of the mission-aligned investments. The most important thing is to start believing the “why” and then get to the “what” and “how.” The why is really that there is so much money left on the table that could be put to use to make the world a better place. Investors’ Circle can help with the what and how, but the most important component is the “why.”
Rebecca: How did you bring your wealth advisor on board with mission-aligned investments?
Laura: Initially, our wealth advisor was hesitant and thought that these investments were too risky. However, along the way, we started to discuss how investing in things that went against the mission of the foundation was not okay. We taught them that there were opportunities in the various asset classes that would provide a similar level of risk that did align with our mission, such as a CDFI which paid the same as a traditional bond. We now have a great relationship with our wealth advisor. They find investment opportunities in every asset class and bring them to our attention. We also find opportunities, and our wealth advisor will do the financial due diligence.
Rebecca: So what is the first step a foundation should take?
Laura: First, believe that your money could be making a much stronger impact on the world. Use more than the mandatory 5%. I like to challenge foundations to think about how they can ask a small non-profit that receives a $10,000 grant to demonstrate that each of those dollars has impact and yet only use 5% of their total dollars for impact. The best way to get started is to start small and realize that you are doing it with the idea that the mission is first. Then, if the company fails or you lose your investment, this can qualify as a program-related investment that counts towards your granting requirement. Every time you make a grant, you have 100% certainty that you will not have those grant dollars returned. It is important to realize that you could make a mission-aligned investment and possibly have a greater than 0% return. Take a small amount of money and make that first investment. Start by making some loans that might have a good risk of not getting your capital back or returning a less than market rate return but that have a significant social impact. A lot of people are talking about impact investing, but the most important thing to do is just to try it!
Rebecca: How has IC’s Patient Capital Collaborative (PCC) fund helped to achieve your investment goals?
Laura: The PCC is a great way to get started. For a low minimum, you can invest in many different types of companies. The team does the due diligence for you and makes the investment decisions. You then get updates on the portfolio and can see how your investments are doing and what impact they’re creating.
Learn more about Laura and the impact she has had on other foundations, such as the Barra Foundation and the Valentine Foundation here. Learn more about impact investing and join Laura and other mission-focused investors in our community by joining IC here.