Investing with Impact
Using the other 95% of our endowment for good.
Investing with impact is a way to support what we believe in while also being the best financial stewards of our endowment. Alongside our traditional grantmaking in support of inclusive, diverse and equitable arts, culture and visionary leadership (traditionally 5% of our endowment annually), we are investing the remaining 95% of our assets in support of our mission and in alignment with our values; intentionally driving positive impact while continuing to achieve our financial objectives.
Strategically investing our endowment in alignment with our mission allows us to:
Minimize any potential investments that might work counter to our values.
Intentionally drive positive impact while still achieving our financial objectives. We view investing our endowment as a key programmatic area, although our return expectations and our “impact” differ across each of these components of our portfolio.
Our Goal
Our goal, working in partnership with our investment advisor, is to seek out investments which fill a dual purpose – continuing to power the Foundation’s work with strong financial results, while amplifying our mission by creating tangible social and environmental impacts connected to our focus of supporting a thriving cultural community in Denver. Our expectation is that investments which consider impact perform in line with, or better than their peers – with a more holistic view to opportunities and risks in the marketplace.
Portfolio Activation
We primarily seek to activate the portfolio in alignment with our values using three strategies: ESG integration, thematic investing, and actively sourcing diversely owned funds. Throughout our portfolio transition process, our goal is to look for investments that are intentionally activated in those impact themes which are explained more below.
Select Approaches and Sample Investments
Program Related Investments (PRIs)
Program Related Investments are impact first investments directly in support of our programmatic and place-based mission. These investments are generally structured to achieve returns that are below market rate. An example would be a below market loan to support a project that includes creative spaces for a culturally under-resourced part of the community, affordable housing for the creative workforce, or a loan to provide access to capital for entrepreneurs in the creative economy that have been left out of access to traditional forms of capital. PRIs could also be in the form of guarantees or equity. PRIs are eligible to be counted towards the Foundation’s qualifying distribution, but the Foundation has chosen to treat these above and beyond our required 5% annual payout so that any PRIs made are in addition to our annual grants budget.
Mission-Related Investments (MRIs)
Mission Related Investments are impact first investments with a broader lens than a PRI, and not necessarily place-based, but still focused on directly furthering the Foundation’s mission and values. The expectation for these investments is that they achieve a market rate of return. For example, while we might not invest in a manager focused on a single industry sector in our broader endowment portfolio, we may consider an MRI in an equity fund focused on investments in creative economy businesses, or a fund investing in diverse entrepreneurs.
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A recent study by the Knight Foundation revealed that funds owned by women and BIPOC manage only 1.4% of assets in the $82 trillion asset management industry, despite evidence suggesting these funds’ performance is in line with their non-diversely-owned peers. Research also shows that investing in diverse teams can lead to materially positive financial outcomes. According to a recent McKinsey study, companies in the top quartile for ethnic and cultural diversity on executive teams were 36% more likely to have industry-leading profitability. In line with our commitment to equity, proactively sourcing diversely-owned funds and funds working to ensure diversity of the enterprises they invest in is an important component of our impact investing practice.
Shareholder advocacy is an important component of our impact investing strategy. BSF and Aperio partner with As You Sow to manage shareholder resolutions. As You Sow is a leader in the field of shareholder activism, bringing experienced lawyers and corporate liaisons together to push companies to bring about positive change. As You Sow has been a trailblazer in a number of issue areas, including racial justice, and has developed a scorecard to assess publicly traded companies’ progress toward matching their racial justice rhetoric with action.
Quantitative Approaches
Our Investment Advisors track how the managers in our portfolio are intentionally aligned with the U.N. Global Sustainable Development Goals most closely tied to our mission, including Reduced Inequalities, Sustainable Cities and Communities, Quality Education, No Poverty, and Climate Action.
Qualitative Approaches
To gain a comprehensive perspective on the impact we are achieving through the funds and underlying investments in our portfolio, our Investment Advisors highlight select profiles of individual companies held by funds, examples of successful shareholder engagement efforts by our managers, or descriptions of projects in our portfolio that are relevant to our mission (for example, an affordable housing complex in the greater Denver area financed by one of our funds).
How to Engage
If you have a project or investment that you think aligns with our mission and our description of one of the Mission Aligned Investment categories and/or just want to know more, please contact our CFO, Ann Hovland at ann@bonfils-stanton.org or 303.825.3774.
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