Thought Leadership

Impact Investing—A Philanthropic Imperative? View the Day 1 Plenary of the MIE 2018 Conference

“We need to keep impact at the heart of the impact investing movement," said MIE’s CEO Matt Onek, setting the stage for the 3 days of "Mission Forward!", the Mission Investors Exchange 2018 National Conference.
Participants gathered in a packed main hall for the Kickoff Plenary Session, which began with National Youth Poet Laureate Patricia Frazier reciting her poem, "I am Windy City." Foundation presidents Dana Bezerra of Heron Foundation, Larry Kramer of William and Flora Hewlett Foundation, and Darren Walker of Ford Foundation engaged in dialogue with moderator Tracy Palandjian, Surdna Foundation trustee and CEO of Social Finance to share their diverse perspectives on the role of philanthropy, the potential of impact investing, and the most effective ways to deploy their full range of assets to reduce inequality and injustice.
View the complete recording, and see highlights of this lively discussion, which trended #1 on Twitter in Chicago, below. Click here to see Impact Alpha’s review of the event.

Discussion Highlights

Impact Investing— A Philanthropic Imperative?

"It is no longer defensible for a social justice foundation [ . . . ] to have an investment strategy that simply seeks to drive alpha," stated Darren Walker, in explaining Ford’s $1 billion commitment of endowment resources to mission.
Echoing Walker's comments, Bezerra pointed to Heron Foundation's 20-year history in impact investing — and why foundations have a unique responsibility to recognize the impact of every dollar they spend: "If there's one thing I know for sure, it's that I have yet to meet a community that is willing to opt-in to allow the companies we invest in to pollute their rivers, to poison their soil, and treat their children poorly, in the interests of generating alpha that gives us a little bit of return on the promise that we'll be back to fix it later."

Aligning 100% of Assets to Mission — and Impact

Heron Foundation is among a growing group of foundations that have revamped their organizational strategy to align all of their assets, including their endowment, to mission. While foundations are required to spend 5% of total assets each year on mission-driven programs (in the form of grants and program related investments), a relatively small but growing number of foundations have committed to viewing their entire financial portfolio through a mission lens.
Heron Foundation’s journey to aligning 100% of its assets to its mission, noted Dana Bezerra, was motivated by the belief that "5% of our assets doing 100% of the work is not enough." Bezerra went on to discuss Heron Foundation’s similarly rigorous and holistic approach to understanding the totality of impact—both good and bad—and how important it is to choose the right set of metrics, as those that are too narrowly focused might ultimately work in opposition to best intentions.

Maintaining Healthy Skepticism As the Movement Grows

Although Hewlett Foundation has supported impact investing research through its grantmaking, the foundation has not yet actively pursued impact investments—either in the form of Program Related Investments or Mission Related Investments. Larry Kramer cautioned attendees to reflect on matching the financial tool to the purpose and to weigh the effectiveness of impact investing, vis-a-vis grants: "The nonprofit sector is significantly underfunded [as it is]," he says, "and the trade-off between impact investing and grants is a question we have to ask." Read here for a follow-up post on Impact Alpha elaborating on Kramer’s point of view.

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