Cleveland Foundation: Asset Owners & Managers Work to Advance Racial Equity
MIE curated its signature Investment Forum at SOCAP in 2019, focused on how foundations and intermediaries partner to advance racial equity in asset management. MIE's Investment Forum uses a specific discussion format to pair asset owners with different partners that can examine a deal or project from distinctly different angles. As the two voices come together, a holistic picture emerges. The brief case study below walks through how Cleveland Foundation worked with Aperio to construct a Socially Responsible Investment (SRI) Pool that was better aligned with its mission and values surrounding diversity and racial equity as well as emphasizing investments in the community they serve. Visit the links below for details on these topics.
Cleveland Foundation, asset owner
Aperio, investment advisor
As the world’s 1st community foundation, Cleveland Foundation's (CF) core values are deployed through a place-based strategy. It seeks to drive “hard dollars” into the Cleveland region —particularly residents of Cuyahoga, Lake and Geauga counties in Northeast Ohio — and advance gender and racial equity for all. Cleveland Foundation's Board sought to go beyond grantmaking and use the balance sheet to advance mission.
As of 2019, the foundation employs several impact investing approaches, including recoverable grants, below market-rate loans, equity investments, and bank deposits or debt guarantees that are used to fill capital gaps and address community issues, Mission Related Investments (MRIs), which provide a vehicle to support early-stage private equity and venture capital, Benefit Corporations, and public or private companies that are mission-aligned. The foundation’s MRIs frequently center on job creation, economic development, research, and technology advancements that will provide impact for the community. Additionally, the foundation also looks for environmental and sustainable impact investments, housing development investments, and financing for entrepreneur start-up capital.
About the Socially Responsible Investment (SRI) Pool
An additional impact investment, the foundation's SRI pool, consists of fossil fuel-free public equities screened for social and environmental responsibility and gender diversity. It also has a place-based emphasis on Cleveland corporations. The foundation began developing the pool using Aperio's tools, aligning with core values and to provide strong financial returns among array of investment vehicles. To be included in the SRI Pool’s diversity allocation, the company board and executive team must include female and minority representation. The foundation actively seeks investment managers that are at least 50% women and/or minority owned.
The Cleveland Foundation allocated $83.5 million for social impact investing in 2018, with 85% of that coming in the form of PRIs and the SRI Pool. As part of the overall impact investment goal of $150 million, the foundation also hopes to more than double the amount it invests in MRIs and recoverable grants by 2022.