April 10, 2019

NFG speaks with place-based funders on how they are using impact investing to further justice and equity

A newspaper page with graphs and charts for the stock market.

Photo by Markus Spiske on Unsplash

An increasing number of foundations are embracing impact investing as a powerful strategy to potentially make use of all of their assets — not just 5% — to advance their place-based and justice-oriented missions. Last month, several Neighborhood Funders Group members attended Confluence Philanthropy’s 9th Annual Practitioners Gathering to explore how the philanthropic and investment sectors can accelerate movement-building for equity. In reflection, a few folks from NFG’s funder network share their perspectives on, and experience in, mission-related investing.

Beyond grantmaking for racial equity

Soon after Confluence Philanthropy’s Gathering, NFG member Amalgamated Foundation launched the Hate Is Not Charitable Campaign. The campaign brings to light how Donor Advised Funds (“DAFs”) have been used to finance hate groups — often times anonymously — and calls on DAF providers to stop this trend that can fund in direct opposition to some of these foundations’ missions. While the campaign highlights how DAFs can be misused when they are eventually dispersed, Amalgamated is also considering how these funds are being used while they are waiting to be dispersed.

Quote by Tyler Nickerson of Amalgamated Bank: “This is an opportunity for foundations to put all of their resources towards mission alignment and supporting enterprises that center a racial justice strategy.”“DAFs provide a set of resources... that can be risk tolerant, quick moving, and significant in their scale. Utilizing current IRS tax codes, DAF holders are allowed to make program related investments with their resources,” says Tyler Nickerson, First Vice President for Philanthropy Banking at Amalgamated Bank.

By choosing not to invest in some of the market’s largest companies in the fossil fuel, gun manufacturer, and private prison industries, Amalgamated is proactively aligning all of its assets with its values of environmental and social responsibility.

Incourage Community Foundation invests all of its endowed funds, including DAFs, in the same investment pool that includes their impact investments. According to Heather McKellips, Director of Learning & Engagement, "Incourage looks for investment opportunities that advance its vision of an inclusive, adaptive, and sustainable community.” She says, “Prudently thinking through how the principal portion of an investment portfolio (the 95%) can be effectively deployed to positively impact an issue, in addition to the traditional grantmaking portion (the 5%), greatly increases the ability to impact the real issues facing our communities.”

Impact investing strategies

For Incourage, this includes an African American-led private equity fund that seeks to provide business ownership opportunities for entrepreneurs of color and regional Community Development Financial Institutions (CDFIs) that channel capital and technical assistance to underserved populations including entrepreneurs and households of color, and nonprofit organizations serving communities of color. Heather explains, “By investing in CDFIs that do small business lending in a community, area businesses can then more readily access needed funding to start up, retain, and expand operations, meaning more families have jobs and then have less of a need for support services that are often funded by grant dollars.”

Quote by  Mark Paley of The Hyams Foundation: “Hyams does, however, have a long history of utilizing PRIs… These investments are examples of using issue-specific investment models to further Hyams’s racial equity work beyond direct grantmaking.”For foundations just starting with impact investing, it can be helpful to look at these alternatives. NFG member The Hyams Foundation considers itself to be at the beginning stages of its impact investment work and is exploring investment strategies to further its mission to increase economic, racial, and social justice and power within low-income communities in Boston and Chelsea, Massachusetts. In addition to its affordable housing PRIs, Hyams is exploring additional social, economic, and racial justice investment opportunities including social enterprise, wealth building, and solidarity economy models.

“Hyams does, however, have a long history of utilizing PRIs, including two active loans to affordable housing loan funds. These investments are examples of using issue-specific investment models to further Hyams’s racial equity work beyond direct grantmaking,” says Mark Paley, Director of Administration & Finance (and NFG board member).

Quote by Heather McKellips of Incourage Community Foundation: “We have found it to be much more effective to start with the problem or issue, and then look holistically at what the resources are that you, or someone you can collaborate with, can bring to bear.”There are many approaches to impact investing. Unlike Amalgamated Foundation, Nia Community Fund's approach is to invest directly into solutions-focused companies with diverse leaders, rather than screen out sectors. Founder and Director Kristin Hull says, “We begin with our end goal in mind, rather than with traditional investment philosophy. We think about how we can use each dollar to maximize our positive impact.” Their investment dollars go to women and people of color-led businesses working to address social justice and environmental sustainability.

Amalgamated is also exploring new models seeking to expand capital to Black, Brown, and Native communities. “This is an opportunity for foundations to put all of their resources towards mission alignment and supporting enterprises that center a racial justice strategy,” says Tyler Nickerson.

Impact investing should always be centered around core values. Evaluating how a foundation is putting its values into practice can even start with how they interface with the investment industry itself. For example, Nia Community Fund looks for companies, funds, and investment managers that use a racial justice lens, and predominantly works with women and people of color.

Quote by Kristin Hull of Nia Community Fund: “Our investment dollars far outweigh our grant dollars and so we are really strategic with both buckets and do as much to leverage what we have and have every dollar be as effective as possible.”Incourage Community Foundation takes their role as an investor even further by being “active owners who vote proxies and practice other forms of shareholder engagement to encourage inclusive and fair labor practices, strong governance, and responsible environmental practices by corporations doing business in our state,” according to Heather McKellips.

Amalgamated’s Tyler Nickerson suggests that investors and grantmakers “listen to the communities in which they seek to support. They know what the community needs and the type of businesses it can support. Community members also know who is a fair employer and a good steward.” He notes that centering those voices and racial justice is key in developing solutions like a fair and equitable business strategy, whether it involves grocery stores or clean energy or manufacturing jobs.

Takeaways and lessons learned

1. Much like a healthy business model, communities need diverse forms of investment.

“Communities need multiple types of capital to become inclusive, thriving places. Charitable grants can’t be the only the tool to build greater equity within community,” says Tyler Nickerson. “Grants coupled with investment capital will create an integrated stream of resources to build communities where all people can succeed.”

2. For some funders, the grant-to-investment ratio can be strengthened, even while preserving an endowment’s lifespan.

Nia Community Fund’s Kristin Hull points out, “Our investment dollars by far outweigh our grant dollars and so we are really strategic with both buckets and do as much to leverage what we have and have every dollar be as effective as possible.” Nia Community Fund focuses on working beyond the status quo and investing into a just, sustainable, and inclusive economy, which means having an investment policy statement and investment practices that keep equity and justice as the core principles.

3. Focus on community needs first, and develop your investment model accordingly.

While foundations often start with an investment product that they then try to figure out how to use to address their focus issues, Heather McKellips of Incourage Community Foundation says, “We have found it to be much more effective to start with the problem or issue, and then look holistically at what the resources are that you, or someone you can collaborate with, can bring to bear."

4. Spread the risk and enhance the impact through collaboration.

This collaboration is key to moving the philanthropic and investment sectors to a more integrated and effective model. Confluence Philanthropy and NFG are creating spaces to explore ideas around impact investing, such as the Hyams Foundation’s interest in engaging with other organizations on what racial justice investment metrics could look like.

Amalgamated’s Tyler Nickerson advises, “Find your allies and ask them to join in community-based solutions. Doing so spreads the risk, expands the capital stack, and helps move other institutions in their learning journey.”

February 28, 2020

NFG Newsletter - February 2020

February is Black History Month and, in this newsletter, NFG honors Black resistance. Given the persistence of structural racism and the legacies of segregation, NFG has mobilized philanthropy to support POC-led organizing for equitable development since our start 40 years ago. Through our member-led and local advisor-led programming, we are lifting up how Black communities are reclaiming land ownership and addressing the racial wealth gap through grassroots power building.

At the beginning of the month, NFG’s Amplify Fund staff and steering committee spent a day with local organizers, non-profit leaders, and organizations in Charleston and Edisto Island, South Carolina — one of Amplify’s eight sites. Both national and local grantmakers learned alongside some of Amplify’s grantees, including the Center for Heirs’ Property PreservationLow Country Alliance for Model CommunitiesCarolina Youth Action Project, and South Carolina Association for Community and Economic Development, which are bringing together Black, Latinx communities and youth in the region to fight for community power, land rights, and environmental justice in the face of corporate power, criminalization of communities of color due to gentrification, and land theft.

This week, NFG’s Democratizing Development Program (DDP) hosted a two-day Health, Housing, Race, Equity and Power Funders Convening in Oakland, California. Over 100 participants grappled with how anti-Blackness and xenophobia fuel the complex housing & health crisis and community trauma, and heard examples of concrete organizing wins led by Black women from Moms 4 Housing and Alliance of Californians for Community Empowerment. Organizers from around the country urged grantmakers to significantly invest in long-term general operating support, community ownership models, POC leadership, and 501(c)4 funding for Black, Indigenous, and POC communities engaging in policy and systems change around housing affordability and justice. 

From Amplify’s funder collaborative to the DDP convening’s planning committee, funders organizing other funders has been a key part of our work. Funder members: how are you stepping up as an organizer and moving more resources for power building in Black, Indigenous, and POC communities? We invite you to connect with NFG staffprograms, and upcoming events — including our National Convening — and be part of our community where we bring funders together to learn, connect, and mobilize resources with an intersectional and place-based focus. 

Onwards,
The NFG team

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January 23, 2020

NFG Newsletter - January 2020

Animated fireworks with the text "40 Years Strong"

This year marks NFG's 40th anniversary. During our early years, NFG was one of the few spaces in philanthropy specifically focused on people of color-led, grassroots organizing, and power building as the key to effective social change strategies. Today, NFG continues to be many funders' political home at a time when moving resources to struggles for justice is critically important: communities of color are bearing the brunt of the housing crisis, growing wealth and income inequality, and climate change; white nationalist backlash is rising; and our democracy is profoundly threatened. NFG is a space to draw support, deepen relationships, and find co-conspirators as we propel philanthropy to shift power and money towards justice and equity.

In 2020, the NFG network is continuing to explore structural racism in health and housing, racial capitalism, migrant worker justice in rural areas, reimagining community safety and justice, and more. We will also return ‘home’ to NFG’s founding city — Washington, D.C. — for our 2020 National Convening.

As we celebrate 40 years, our dynamic community of grantmakers and grassroots leaders is what makes us strong. This newsletter spotlights The Libra Foundation, an NFG member that shares our commitment to organizing funders in moving more resources to frontline communities and movements.

Keep reading below for more opportunities to engage with NFG. Whether you are new to NFG or a long-time member, we look forward to collaborating with you to accelerate racial, gender, economic, and climate justice.
 
Onwards,
The NFG team

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