2017 Sustaining Member The Patricia Kind Family Foundation

Among our 2017 Sustaining Members, The Patricia Kind Family Foundation (PKFF) has the smallest endowment, yet makes an outsized statement by aligning nearly its entire $35 million corpus with its mission to support Philadelphia area organizations that help people in need obtain health care and related human services, including food, shelter, clothing and education.

 

Trustee Laura Kind McKenna has guided the family foundation for nearly 20 years along its journey. We spoke with her about how even a small foundation can make a mighty impact through impact investing.

 

LKM: At a meeting of Delaware Valley Grantmakers (now the Philanthropy Network of Greater Philadelphia) in 2000, I heard then Vice President of Investments for the Heron Foundation, Luther Ragin, ask, “Why should a foundation use only 5 percent of its assets to work for the greater good while the rest is working like an investment bank?”

That’s when the light bulb went on.

The idea to align more of our assets toward our mission felt comfortable because it met our family's and our foundation's core values. We began mission-aligned investing about 10 years ago. We started by directing some money to The Reinvestment Fund (TRF), a Philadelphia area CDFI. Our foundation has progressed to where almost 100 percent of our endowment is now aligned with mission to greatly increase our impact beyond grantmaking.

 

LKM: Tina Wahl of The Barra Foundation gives me credit for getting Barra interested in mission-aligned investing. I give her credit for getting PKFF started in direct impact investing.

It started in 2012 when Tina called me and said DePaul House (a local transitional housing provider) wanted to start a cleaning franchise to bring in some added revenue and needed a loan. This particular loan wasn’t a fit for Barra but maybe it would work for us, she said.

 

This was a huge turning point for us. I realized this is the innovation! This is the way of the future!

 

We made DePaul House a $37,000, zero-interest loan to buy the for-profit Immaculate Cleaning Service franchise. The advantage was huge. By using a loan DePaul had an incentive to hang in there through difficult times. And twice-a-year financial accounting instilled a level of accountability. They paid back the loan in five years. Plus, by making this a loan, we got $7,000 back every year that we could use for other grants. And in this low-interest rate environment, our cash was making virtually no interest anyway.

 

Another loan example was to Broad Street Ministry, a Philadelphia refuge for the homeless. When their heater gave out, the $250,000 replacement cost seemed out of reach. Our foundation and the van Ameringen Foundation, structured a joint seven-year loan with the payoff scheduled with installments each December when donations peaked.

 

Even if the cash isn’t in the stock market making money, it is in the building and people are warm. Would I rather have the cash sitting in a low-interest account or benefitting the people our mission is focused on?

 

LKM: Start with your foundation board and board chair. Help them understand that you have sizable untapped resources to do the good you were established to do. Using only a small percentage to do the work greatly diminishes your impact. Don’t worry about the type of instruments.

 

Mission lending gave us a voice to encourage others to use their assets beyond grants or to just make money. I gave our pitch for mission-aligned investing to the executive director and a board member for the Alfred and Mary Douty Foundation, a small local foundation helping children in the Philadelphia area. I said, ‘why don’t you take some assets and put them into a CDFI?’ That did it for the board member. He went to another foundation where he is also on the board and asked, why aren’t we doing this?

 

I don’t have a financial background. When PKFF makes a loan or another direct investment we send the financials to The Glenmede Trust to look for red flags. We’ll have already done the mission and leadership due diligence. By the time we send it to our investment managers, we’ve already kicked the tires and have confirmed that the investee is aligned with our mission.

 

In the last few years we rewrote our Investment Policy Statement. Our IPS starts with our mission. Next it requires that the return meet the spending needs of our foundation. Finally, it requires that we invest to preserve capital. The IPS does not state that we are striving to beat market benchmarks.

 

LKM: My current soap box and huge passion is to inspire foundations of every size to align more of their assets with mission. Mission Investors Exchange has resources to help foundations with small endowments and small staff. We became a Sustaining Member to show that it’s not just big foundations with a lot of staff that can do this work. Being a Sustaining Member also helps us share our experience and message with the larger foundation community.

In addition to attending meetings and events, there is value in Mission Investors Exchange’s online resources. I recently used the tools and language from forms on the website to help a nonprofit strengthen its charter school application. We wound up extending them a short-term line of credit using resources we found in Mission Investors Exchange's library.

 

LKM: Just do it. Start with your mission – why you exist as a foundation. Use all the tools in your toolbox. The what and how can come later. You’ll never finish the marathon if you don’t get started.