Investing for Maximum Impact: A Unified Investing Strategy ...


Published on

  • Be the first to comment

  • Be the first to like this

Investing for Maximum Impact: A Unified Investing Strategy ...

  1. 1. Investing for Maximum Impact: A Unified Investing Strategy for Foundation Asset Management Jed Emerson, Generation Foundation, Copyright 2006
  2. 2. Moving from Grantmaking to Investing in Value Creation: <ul><li>Foundations should not seek to engage in philanthropy alone, but rather to make use of philanthropy as one of a number of tools to invest assets in maximizing social and environmental benefit and impact, through the efficient allocation of capital. </li></ul>
  3. 3. +1 -1 +1 -1 Financial Investments & Numeric Returns Social Capital Investments & Social Returns A Zero-Sum Dissonance: The Traditional Value Proposition Quad A Quad B Quad D Quad C Economic Value Social Value
  4. 4. Foundations Have the Potential to Manage Six Asset Classes in two groups: <ul><li>Financial Assets </li></ul><ul><ul><li>Grants </li></ul></ul><ul><ul><li>Debt </li></ul></ul><ul><ul><li>Equity </li></ul></ul><ul><li>Nonfinancial Assets </li></ul><ul><ul><li>Time - Basic Engagement </li></ul></ul><ul><ul><li>Talent - Intellectual Property </li></ul></ul><ul><ul><li>Network - Political Capital </li></ul></ul>
  5. 5. Financial Tools: <ul><li>Traditional Grants </li></ul><ul><li>Recoverable Grants </li></ul><ul><li>Program Related Investing </li></ul><ul><li>Blended Value Investing </li></ul><ul><li>Venture Capital </li></ul><ul><li>Asset Alignment of Corpus with Mission </li></ul><ul><li>Proxy Voting and Corporate Engagement </li></ul>
  6. 6. PRIs in the Blended Value Investment Spectrum Fixed Income Below-Market Investments Guarantees Senior Loans Subordinated Loans Cash Cash Public Equity Private Equity Market Rate Investments Adapted with permission from F.B. Heron Foundation’s “New Frontiers in Mission-Related Investing” Program-Related Investments Equity Grants
  7. 7. Unified Investment Strategy Capital Allocation Grant (Program) Available Capital Grant (Infrastructure) Grant (Research and Development, Seed Funding) PRIs and Recoverable Grants FROI Risk Boundary Risk Free Rate Treasury Notes ---------- Community CDs and Investment Notes. Traditional Diversified Investment Portfolio Equity Linked Zero Coupon Bond With SRI Index Options VC Fund Or Angel Investing Private and Public Equity Investing Socially Responsible Angel and Social Venture Capital Fund Investing SROI Risk Boundary A Unified Investment Portfolio
  8. 8. An Example of Unified Investing and Asset Allocation… … at the F.B. Heron Foundation.
  9. 9. For more information… <ul><li>Please see “ The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental Value Creation ,” as well as the supporting annotated bibliography and other documents available at </li></ul><ul><li>Or contact Jed Emerson at </li></ul>