Speaker Q&A: Leveraging All Foundation Assets in Service of Mission
by Elizabeth Killough, Co-CEO, UnTours Foundation; Lisa Pinckney, Executive Director, Footprint Foundation; and Rochelle Witharana, CFO, The California Wellness Foundation
Earlier this summer, Mission Investors Exchange (MIE) hosted a Virtual Learning Opportunity (VLO), “Road to 100%: Leveraging All Foundation Assets in Service of Mission.” This program built off the momentum of the MIE 2024 National Conference key theme "Utilizing the Entire Endowment," bringing together several trailblazing foundations that have committed to deploy 100% of their assets in service of their mission. Increasingly, foundations are moving to deploy all of their assets towards mission, inspired by two recognitions: that every dollar invested has the potential to create amplified social impact; and that foundations bear a responsibility to their mission across all their assets.
During this VLO on July 9, several dynamic speakers explored the different approaches to get to 100%, the culture and policy shifts needed, examples of 100% aligned portfolios, and solutions they’ve implemented throughout their journey to reach 100% alignment. Below is a Q&A with the event’s speakers Elizabeth Killough, Co-CEO, UnTours Foundation; Lisa Pinckney, Executive Director, Footprint Foundation; and Rochelle Witharana, CFO, The California Wellness Foundation, who spoke with MIE after the VLO about their respective foundations’ journeys of becoming 100% mission aligned.
Why should a foundation work toward a 100% mission-aligned endowment?
Lisa Pinckney: Frankly, it just doesn’t make sense to me that a philanthropic organization would not want to put 100% of its resources to work for good. I really think it is that simple. If 95% of your investments are working AGAINST the 5% used for grantmaking, what is the point of grantmaking? Mission alignment is so much easier to do today than it was 10 years ago. Go for it!
Elizabeth Killough: It does take effort, but our work after all is about fulfilling our missions. You believe in your mission, so why not put every tool in your toolbox toward it? And why not stop your investments that are working against your mission undoing your good works many times over? Lots of help is available, including a new flock of asset managers and consultants who can identify investments that meet your mission AND perform the due diligence on those potential investments for you. There are many smart ways to get to 100% that don’t require you to work weekends.
Rochelle Witharana: Ten years ago, Cal Wellness was like many foundations that had little connection between its mission, endowment assets, and grantmaking. We worked in silos, believing the conventional wisdom that it was impossible to achieve market rate returns through mission-aligned investing. Now we know better through a new approach that allows us to achieve sound returns and support our values at the same time. We adopted mission-aligned investing through a multi-year process that began with a scan to “know what you own and who invests in what you own.” We developed a framework to identify and select diverse fund managers aligned with our mission and values. These highly qualified managers are bringing their lived experience to the decision-making process, making investment choices that support entrepreneurs of color and expand access to capital in under-resourced communities. Today, 90% of our assets are in the hands of fund managers who are women and people of color.
What’s an example of an investment that fulfills your mission?
Lisa: We are 100% mission aligned and hold investments in several funds and investment vehicles, Jonathan Rose Affordable Housing Fund and StoneCastle, for example. These opportunities were brought to us by our investment advisors at AlTi Tiedemann Global. They use the Impact Management Project to evaluate the impact performance of our investments against the U.N. Sustainable Development Goals.
We seek to make local investments too. For example, one of our grantees, LAUNCH, recently had the opportunity to purchase the building they were leasing to house the Kitchen Incubator of Chattanooga. We provided the funds they needed for down payment in the form of a no-interest loan that will be paid back to us in 24-36 months. This is an example of a program-related investment (PRI) - brought to our attention by the grantee with whom we have a deep relationship.
Rochelle: On the venture capital side, we made a program-related investment in Los Angeles-based VamosVentures, a Latino-owned and managed venture fund investing exclusively in Latino entrepreneurs overlooked by mainstream venture capitalists. Though Latinos are the fastest-growing segment of the U.S. population, Latino founders receive only 1.5% of total venture capital. VamosVentures invests in opportunities in health care, financial services and career growth where Latinos are underserved. A full 100% of VamosVentures Fund I portfolio companies are led by diverse founders who are 87% Latino, 43% women, and 83% immigrants.
For VamosVentures, it was catalytic for Cal Wellness to participate in their first round, giving them credibility that helped raise more capital. We also invested in VamosVentures Fund II through our endowment, not as a PRI, and made an introduction to our investment adviser, Cambridge Associates, which decided to provide underwriting for Fund II. This created a virtuous circle in which Cal Wellness expanded access to capital for VamosVentures, which in turn is doing the same for others who have been traditionally undercapitalized. This is one of many examples of how our investments are supporting innovation, expanding wealth, and creating jobs in the communities we serve.
How do you know if a fund has diverse managers? How/where do you find those?
Rochelle Witharana: In collaboration with our investment advisor Cambridge Associates, we developed a framework aimed at creating mission alignment and expanding gender and racial equity in the investment field, in which 87% of fund managers are white men. The framework has two pillars: (1) we ask fund managers to explain how their investment strategies are aligned with Cal Wellness’ mission and values; and (2) we ask fund managers for detailed demographic information about their leaders, owners, and the entire investment team. Cambridge Associates brings us diverse fund managers whose strategies and profiles are aligned with our mission, and we haven’t had any difficulty finding strong candidates. In fact, now that the word is out about our leadership in this area, diverse managers contact us almost every week to find out how they can be considered.
How can I get past the resistance from certain board members for mission alignment?
Lisa: Try to meet them where they are. Mission investing isn’t fringe anymore, and there are so many examples to share. Ask them about their resistance so that you can get a sense of where it is coming from, and address their concerns by sharing examples from other foundations/peers. The field has grown and proven that the financial returns are there - and there are other returns too. Ask them to think how much greater the impact if you were to use the “other 95%,” Win, win, win. We work in a field that gives us a lot of leeway and flexibility. What does the foundation have to lose, really?
Elizabeth: My favorite tool for winning over board members is a confidential Know-What-You-Own report that offers a deep dive into what's actually in your endowment. The Merchants Fund, which provides grants to immigrant entrepreneurs – and which has been transparent with its Know-What-You-Own results – was shocked to learn that it had holdings in border detention centers. That fact alone, brought the full board on board to dive into mission aligned investing. We use Andorra for these reports.
Rochelle: To build support with board members, it helps to take the process in phases, focusing on education and learning every step of the way. You also need solid data and results to support your ideas and recommendations. We spent two years educating our board, including time at every board meeting focused on different aspects of mission-related investing. We took time to explain all the terminology. We brought in other foundation CEOs and CIOs to explain how they are successfully implementing the approach. We brought diverse fund managers into the board room to share their stories, strategies, and the impact of their investment decisions.
In 2018, our board approved a $50 million “carve out” to test the performance of an impact investment portfolio compared to the rest of our investments and a year later added $50 million to the experiment. We proved we could get market-rate returns through mission-related investment strategies, and in 2022, the board decided to have our entire $1 billion endowment managed as a mission-aligned portfolio.
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You can register here for our next VLO, "How Impact Investing Can Help Solve the Affordable Housing Crisis", on Tuesday, Oct. 1, 2024 at 10-11:30 a.m. PT / 1-2:30 p.m. ET.
