MISSION INVESTING:
BEYOND THE 5%

The Northwest Area Foundation supports people and organizations working to build assets, wealth, and opportunity in our region by promoting good jobs and financial capability. For more than 10 years, we’ve made endowment investments that fuel and sustain our grantees’ work.

Challenge

 

Yearly, we distribute 5% of our assets in support of programs and policies championed by our grantees. But we’ve also questioned whether we couldn’t be doing more with the remaining 95% of our assets.

2004–14 Strategy: Mission Investing

In 2004, we began using mission investing to address persistent gaps in capital to seed and grow businesses in our region. Mission investing offers both economic and social returns and furthers our strategy of promoting good jobs and financial capability.

Results to Date

While we did not meet our financial return target, we did achieve significant social returns.

Social
Returns

(as of 12/31/13)

 

Job growth compared to -0.4% for US private sector

Living wages for all employees of portfolio companies

Quality jobs with health and retirement benefits

Financial
Returns

(as of 6/30/14)

Insights

CUSTOM FUNDS

Custom funds increase the ability to target regions and outcomes, but limit the opportunity to partner with other investors and can be difficult to invest.

IMPACT OBJECTIVES

Impact objectives should be defined prior to investment and be understood and agreed on by all parties.

MARKET EVENTS

Market events, like those resulting from the 2008 recession, significantly impact returns; diversifying across multiple managers and investment strategies reduces risk.

New Strategy:

An Expanded Commitment

In 2014, we expanded our commitment to mission investing, dedicating another $10 million to PRIs and an additional $30 million to MRIs. This $40 million represents roughly 10% of our assets – above and beyond the 5% we allocate for grantees.

Action

Our commitment to mission investing has increased. We will dedicate another $10 million to PRIs and make MRIs that yield market rates of return on $30 million. Based on our experience and PCV’s analysis, we’re changing our investment approach.

USE INTERMEDIARIES

Instead of developing a custom fund, we’re investing through established managers and funds.

EXPAND OUR GEOGRAPHIC FOCUS

We’re expanding our focus to support businesses beyond our region, helping us meet our social impact targets and partner with other funders.

DEFINE SOCIAL IMPACT BEFORE INVESTING

We’re establishing targets at the outset to better achieve and evaluate success.

Outcomes

For More Information

Find out more about our past and future mission investing.

Contact Us