Grow Your Giving with Impact Investment Options

hawkins@growyourgiving.org Individual & Family Giving, Professional Advisors

Did you know that you can invest your charitable fund’s assets using options that align with your values? The Greater Kansas City Community Foundation can collaborate with you and your financial advisor to help you customize your investment strategy to include impact investments, which may include the following:

Publicly Traded Investments
The most accessible impact investments are mutual funds and exchange-traded funds (ETFs) that invest in publicly traded debt or equity securities of companies that adhere to sustainable environmental, social and governance (ESG) criteria in their decision making.
Examples: Vanguard ESG Funds, BlackRock ESG Funds.

Private Debt and Equity Funds
Private debt or equity investments can allow you to target a specific social or environmental impact, while still providing a financial return.
Examples: Water.org, Cnote’s Wisdom Fund

A Community Foundation donor brought to our attention their interest in supporting women through microloans. In collaboration with the donor, our staff identified Cnote’s Wisdom Fund as a potential impact investment. The Wisdom Fund is a “fixed income vehicle that increases capital access and lending for women-owned businesses. It brings new thinking, experimentation, and sustainable solutions to drive wealth creation for women, specifically low-income and women of color in the United States.”

Community Investments
If you want to focus on a geographic location, the Community Foundation can help identify organizations in your community that are making investments to address issues such as affordable housing, financial inclusion, small business funding, sustainable agriculture or fair trade.
Examples: Local investment funds that lend money to contractors to rehabilitate abandoned housing, local venture funds that provide capital to startup businesses.

A Community Foundation donor was specifically interested in investing in the KC Regional Small Business Relief and Recovery Loan Fund which provides relief to local businesses impacted by the COVID-19 pandemic. The Community Foundation facilitated the investment into Equity² which provides equity capital to Alt Cap, a local Community Development Financial Institution.

Custom Investments
Let us know if you have identified a potential impact investment in a mission-driven impact fund or nonprofit organization. We can help you determine if you can use your fund’s assets to invest.

Publicly Traded Investments vs. Private Debt and Equity Funds
When selecting public or private impact investments, it’s important to understand some key differences:

Publicly Traded Investments

Private Debt and Equity Funds

Targets
Mutual funds or ETFs invested in public companies selected for their adherence to designated environmental, social and governance policies.
Targets
Private investments to address specific needs and objectives at a local, regional, national or international level.
Rates of Return
Rates of return are competitive with comparable market returns.
Rates of Return
Rates of return may be minimal or comparable to standard market returns. Investments with minimal returns (often called “concessionary returns”) could also be considered “recyclable grants” when investors use loan repayments as capital for loans to other organizations.
Liquidity
These investments may be made at any
time and provide daily liquidity for your fund’s grants.
Liquidity
The investments are made opportunistically as projects are conceived by nonprofit organizations. Assets may be locked for five to 10 years, with very little liquidity for your fund’s grants. The Community Foundation recommends using a maximum of 25% of your fund’s assets for direct investments.

 

Authored by: Ashley Hawkins, Content Specialist