Reflections from Mission Investors Exchange
Senior Vice President, LOCUS Impact Investing
- Deb Markley, LOCUS Senior VP, reflects on LOCUS' experiences at the 2018 annual Mission Investors Exchange and the field of impact investing.
I attended my first Mission Investors Exchange (MIE) conference in Chicago (May 14-16), along with several other members of the LOCUS team. I challenged myself and my colleagues to listen and learn, with our place-focused foundation partners in mind. What reflections or insights could we bring back and share that might be helpful to a community foundation in Texas or a family foundation in West Virginia? Our lead take-aways?
Place-focused investors – community foundations, family foundations, individual donors – have an important leadership role to play in mission investing.
Place-focused foundations are taking innovative approaches to get capital flowing where traditional capital can’t or won’t go. They are demonstrating the power of impact investing to create real change in communities, from inner city neighborhoods to rural places. And their role in this broad and continually evolving field appears to be growing. The five insights below reflect our collective wisdom and, we hope, are valuable to foundations and other partners who are exploring place-based impact investing.
1. Lead with impact. A common theme across many sessions was the need to lead with impact – to start by asking the question, “What difference are we trying to make?” Community foundations specifically have a role to play in defining that impact. As rooted philanthropic partners, they are in an ideal position to use the tools of community leadership and resident engagement to help identify the change that’s needed. And, they can ensure that any investment considerations include an equity lens so that the benefits of impact investing are broadly distributed. One presenter called community foundations the “conscience of impact investing."
2. Just do it! The growth in the MIE conference bears witness to the explosive interest in the impact investing field and the progress made in defining the field, providing tools and proof points for potential investors, and beginning to measure impact. However, it’s also very clear that even the largest foundations are still figuring this out! There is no “one right way” to tackle impact investing. Every foundation reaches a point where they need to pivot based on learning from doing – that may scare some folks who would like a more defined roadmap. But, the message delivered over and over again was to take one step at a time, no matter how small, and keep asking “how do I use all of my assets to create impact in my place?”
3. Build partnerships. There is strength in numbers…and partnerships. Many promising stories included partnerships between foundations and community development financial institutions (CDFIs). Northwest Area Foundation combined grants with a program-related investment to help First Nations Oweesta Corporation support the capital needs of Native CDFIs, bringing more capital into Native communities to support entrepreneurs, affordable housing development and other investments. NWAF has a long history of making PRIs – and measuring their impact. Foundations are also working more closely with their donors to drive investment into their communities. The New Hampshire Charitable Foundation offers an Impact Investment Fund to their donors who “want to keep their charitable dollars local, create jobs and expand opportunity.” And, MIE and The Urban Institute just released a report on collaborative place-based impact investing that describes many different partnership models being explored across the country. Many of these models offer ways for foundations to leverage public, private and other philanthropic dollars with their investments.
4. Explore all available tools. There are many ways for a foundation to begin to explore place-based, mission-aligned investing – and not all of them are complex! One of the more interesting concepts was using a foundation’s assets to guarantee other investments. A recent blog by The Kresge Foundation demonstrates how foundations can put their balance sheets to work through guarantees. And, the Global Impact Investing Network released a brief on this topic. There were also a number of examples of using strategic grants in combination with direct investments for maximum impact. The Appalachia Funders Network is working to establish a blended-capital fund, combining grant and investment capital, to fund deals and build the pipeline.
5. Invest in culture change. Mission-aligned investing requires a change in mindset; it requires that staff and board buy into a new way of doing foundation business. Some important questions need to be asked and answered to affect this culture change – What are we trying to impact? What risk-return tradeoffs are we willing to accept? With whom can we partner? How will our investment criteria and committee need to change? These are questions that need to be addressed by staff on both the program and investment sides of the foundation. Learning together is the best way to create an investing strategy that creates real impact.
The greatest value from MIE was the story sharing and networking. As I understand it, the focus on place-based investing by foundations is a growing interest of MIE and others – as more programming is devoted to this topic, place-focused foundations should get even more value out of the opportunity to learn with and from the innovators in the field. As a zealous proponent of peer learning, these types of gatherings are important opportunities to be inspired to action and to have a chance to build your own practice through the lessons of others. However, you don’t have to wait for a formal gathering to begin this networking. Regional associations of grant makers are often good sources of information about innovators in your region. The Council of Michigan Foundations, for example, does a great job of lifting up inspiring stories of foundations in the state. Check out this video of the Sturgis Area Community Foundation’s direct investing in the local housing sector. As more foundations explore place-based investing, a clear message from MIE was “you are not alone.” There are fellow travelers of all asset sizes that can help you avoid re-creating the wheel and instead build on the shoulders of those who’ve learned before.
I’ve spent almost 35 years working in community economic development and the movement of mission-aligned, place-based investing is one of the most exciting I’ve witnessed. My experience at MIE only helped confirm that! As public dollars for development become more constrained, in size and scope, there is real opportunity for place-focused foundations to use their philanthropic capital to leverage public and private resources for community impact. Yes, setting out in the direction of local impact investing takes courage and conviction, and a touch of fearlessness. As one speaker said, “The water has changed because you stepped into it.” Even if your first attempt doesn’t work, you’ve made a difference by trying.
Deb Markley is part of the Local Impact Strategy Solutions team at LOCUS, helping place-focused foundations create greater impact through mission-aligned local investing.