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Hundreds of foundation officials to learn about investing for good

Philanthropic foundations give 5 percent of their assets each year to further the causes they support — education, the arts, helping the poor or homeless — then invest the remaining 95 percent to earn more to continue (and, they hope, increase) giving in the future.

More and more these days, foundations are realizing that, in addition to the positive work they do with their grants, they can expand their reach and foster more results by also investing their assets in companies or projects that do good and promote their vision.

It’s called mission investing, and it’s a hot topic in the nonprofit world. (It does not, as I first wrongly guessed, have anything to do with missionaries. Instead, it involves using a foundation’s investments to enhance its mission.)

And it’s why hundreds of philanthropic foundation leaders from around the country will be in Minneapolis this week discussing ways they can invest their funds in ways that will further their core missions.

Gary L. Cunningham, chief program officer at the Northwest Area Foundation, says it’s a great opportunity for the Twin Cities to host the sold-out Mission Investors Exchange conference that runs Tuesday through Thursday at the Minneapolis Marriott City Center.

“All these investors coming to town is a very big deal; they’re making social impact investments that are driving business and industry around the country,” said Cunningham, who’s on the host committee for the conference.

The concept’s roots seem to go back to the days of protest over college and foundation investments in companies that did business with apartheid South Africa, and it has evolved into investing a foundation’s assets in places that will compound the good work.

Proponents talk about two types of mission investing:

  • Market-rate mission investments, which hope to foster  specific social and/or environmental goals while still getting market-rate returns for the foundation.
  • And below-market mission investments, which won’t earn as much as the broader market and are usually low-interest loans for specific projects by nonprofit or for-profit enterprises that address social and environmental challenges. When repaid, the money goes for new charitable investments.

A primary goal of this week’s conference, sponsored by the Mission Investors Exchange, is to share ideas and experiences, said Melanie Audette, the group’s education and training manager:

Gary Cunningham
Gary Cunningham

“They will learn primarily about the best ways to address some of our biggest challenges — including income inequality and climate change — by investing locally or globally.”

Audette said some good examples of that can be found in Minnesota, such as the Saint Paul Foundation providing loans to small businesses and investing in new technologies like they do at the SW Initiative Foundation, based in Hutchinson.

“This will be a chance for colleagues to share what’s working for them,” Audette said.

Cunningham said 400 people are registered; there’s a waiting list of 100 more.

Those attending will come from family, community and corporate foundations of all sizes. Many are well known, like the Ford, Rockefeller, MacArthur foundations. They’ll also have representatives of nonprofit and for-profit organizations, banks and other financial institutions.

All, Audette said, want to learn “how to use the tools of investing to make people’s lives better, as well as identifying ways that foundation leaders can expand the scope of their work and partnerships with other investors.”

Among the projects that the exchange points to as an example of mission investment is the $2.1 million low-interest loan fund to promote job creation, announced last week by the Saint Paul Foundation.

Two other nonprofits ― Neighborhood Development Center (NDC) and Metropolitan Economic Development Association (Meda) ― will lend the money to East Metro business start-ups and expansions that are creating employment opportunities.

Carleen Rhodes, president and CEO of the Saint Paul Foundation, said: “The capital will be recycled several times in the next 10 years. As businesses repay their loans, NDC and Meda will lend it again to other job creators.”

Melanie Audette
Melanie Audette

Cunningham notes that many nonprofits work hard to aid, not harm, their own missions when investing.

“If we’re not careful, we might have one hand fighting against the other,” he said. “For example, you might be helping people buy homes, so you don’t want to invest in a company that might be guilty of predatory lending practices.”

In addition to speeches and workshops on the nuts and bolts of mission investing, those attending the conference will also see some examples of Twin Cities projects like the Nice Ride bikes, Midtown Market and affordable living sites.

They’ll also visit some American Indian projects and redevelopment in Northeast Minneapolis and along the Central Corridor light-rail line.

Featured speakers include:

  • Retired U.S. Sen. Olympia Snowe from Maine
  • Kat Taylor, CEO, One PacificCoast Bank

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