Our mission at the Heron Foundation is to help people and communities help themselves out of poverty. Our strategy calls for us to address root causes and invest in organizations poised to help us achieve our mission, regardless of sector or tax status. Back in 2012, we determined that the challenges we were trying to address demanded every resource we could muster. So we decided to invest 100 percent of our endowment towards fulfilling our mission, by fiscal year end 2017. We achieved that goal on December 21, 2016.
Going forward, we will work to optimize our portfolio for mission and finance together. But beyond that, we will strive to capture and share what we’ve learned, and improve our approach to investing so that we can contribute to improving practices in the broader market.
What we learned on the way to 100 percent:
1. When we determined to invest our entire endowment in alignment with mission, we chose to take the “enterprise view” of our portfolio. This practice has been labor intensive, but has sharply improved the integrity of the underwriting and monitoring of our holdings.
2. We continue to see evidence that the legal form of an organization is relevant to but not determinative of its ability to have a positive social impact.
3. The generalized anxiety that many foundations and some impact investors exhibit over the possible risks of being financially transparent is excessive. That level of angst, and the lack of candor that sometimes results, seem obsolete and even self-deluding in an increasingly transparent world.
4. We have seen no evidence that direct impact investments by foundations have more impact or are likely to be more successful than indirect investments through funds or intermediaries of various types. In fact, we have seen ample evidence to the contrary (including our own case).
5. We believe the net contribution approach allows for comparability to peers, meaningful benchmarking, and variability of results over time. Admittedly, applying this concept to our whole portfolio for monitoring purposes will take some work—not only by us, but also our partners.
6. Conventional foundations operate with a strict separation between the investing operation (investing for maximum profitability, with no regard for mission) and the giving side (granting with maximum regard for mission with no regard for return). To deploy all our capital—financial, social, human, and more—for mission, we transformed our business model from this divided one.
7. Many have asked us about staffing and what kinds of skill sets we have found that we need. Our experience thus far is that there are hybrid skill sets—investing and subject expertise—that we have combined in a diverse “team of the whole.”
Read the full article about mission investing approach by Clara Miller at Stanford Social Innovation Review.
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