Getting to Yes: Strategy, Tactics & Governance


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Kristin Hull.
Trustee, Hull Family Foundation.

Kristin Hull's presentation from the 2009 Take Action! Impact Investing Conference in San Francisco.

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Getting to Yes: Strategy, Tactics & Governance

  2. 2. Overview Context and background Creating a plan to get started How we do it Our portfolio What’s next
  3. 3. Context and background Progressive, socially minded family with strong philanthropic interests Separate vehicles for family office (internally managed) and family foundation Family background in financial services and investing Early stage of development of shared mission and vision for family foundation Interest in expressing values and driving impact through investing, but hard to get started  Difficult finding an entry point  Sense that needed a clearly defined shared mission and vision for the foundation before getting started
  4. 4. Process we usedStep 1: Flesh out goals and Step 2: Develop strategy Step 3: Implement parameters •Allocation - how much over which •Proceed with•Discuss financial targets period of time from which buckets execution of initialand requirements both •Goals - what are financial goals, targets identified inabsolutely and relative to liquidity needs, and key risk strategy developmentrest of the portfolio parameters for the allocation and session •Liquidity Produce as a part of the overall portfolio •Create expanded illustrative •Process - Who will be involved in “short” list of managers •Duration inventory of which ways? How will the “team” and offerings for •Return expectations/ potential benchmarks function to implement the strategy, market-based products and•Determine key social managers to deploy the capital, and manage opportunitiespriorities support the portfolio •Conduct outreach and •Issues strategy •Staging - How will capital be (when appropriate) development drawn as part of the target structure for mission- •Geographies•Identify operational allocation? Is a near term cash driven opportunitiespriorities management solution required? •Support diligence, •Hands on vs. hands Or will existing positions be manager selection, off for the family and liquidated only as new transaction structuring, Matlock investments are made? and execution as •Direct vs. through •Initial targets - identify some desired managers and funds quick wins - some investments that can be pursued and executed quickly
  5. 5. Getting started Use mission investing to help support development of foundation mission and vision rather than wait for vision before getting started Begin with foundation assets vs. family office… …but have context of overall asset allocation across the two buckets Focus on fixed income  Expectation of future contribution allow for target of capital preservation {this turned out to be a good asset allocation bet)  Tax efficiency  Robust set of opportunities  Good way to get started, get early feedback, and preserve option value (vs. real estates or venture capital)
  6. 6. Concept Diversified pool of deep impact investment opportunities Return target is inflation + 1% (preserve real giving power) Weighted towards self-liquidating instruments (loans; debt funds) with a smaller proportion of illiquid instruments with high impact leverage
  7. 7. Approved Allocation Portfolio Element Target Allocation Safer  Liquidity: Pool of highly liquid, secure,  $1-3 MM depending onMore liquid market-rate, mission investments anticipated liquidity need designed to generate impact while preserving liquidity for foundation check-writing  Core: Professionally managed,  $10-14 MM in a separate market-rate portfolio benchmarked to managed account commercial standards (e.g. Lehman agg) - diversified, flexible exposure to areas of interest  Private Placements: Opportunity to  $3-5 MM: 4-6 transactions at invest more narrowly in high impact $500k - $1 MM opportunities of interest Riskier  Direct: Most targeted - direct loans to  $750k-$1.5 MM: 2-4 transactionsLess liquid groups with strong mission fit at $250k-500k-7-
  8. 8. Where we are Approval to invest foundation in 100% mission fixed income $11.5 MM in new mission investments made ($12.8 MM approved) across issues including:  Independent progressive media  Affordable housing  Green jobs Balance of “uninvested” funds are still driving mission impact at ShoreBank Voted proxies for broader family office holdingsHull Family Foundation is 100% invested in mission – in the process of investing mission deposits in more direct deals across impact areas and geographies
  9. 9. Our portfolio Invested/executed  Community Capital Management: $10 MM managed, “green” community bond separate account  One California: $1 MM insured deposit  Public Radio Capital: $250,000, 3 years at 3%  Habitat for Humanity: $246,000, 7 years at 5% to support home ownership for deeply disadvantaged families  Proxy Voting: Voted proxies on 100+ companies in Savant portfolios  ShoreBank Committed  BRAC Africa: $1 MM investment in 4 year 8% notes to fund African expansion of leader microfinance organization
  10. 10. What’s next? Pipeline transactions under review  Root Capital: Finance for fair trade coops in the developing world  Blue Orchard: Leading lender to MFI’s  Barefoot Power: Working capital for solar lantern company serving East Africa  Renewable Funding: Mezzanine line for household solar and energy efficiency finance company Expand beyond fixed income and beyond the foundation  Family office?  Social venture capital?