Impact Investing attracts new resources
by Sakura Takano, Director of Community Assets & Impact Investing
Rotary Charities has been in the business of regional grantmaking for 42 years, deploying over $60 million to community projects since our inception. Program-related investments (PRIs) are another financial tool we’ve used in the pursuit of a fair and thriving region, making low-interest loans and loan guarantees in support of local nonprofits. Our PRIs have been as broad as our grantmaking, bolstering initiatives in need of alternative financing from childcare, job training and housing to art and recreation.
This activity is part of a deep history of foundations using their capital outside of grantmaking that traces back to the 1960s, when the Ford Foundation began lending in communities with limited access to commercial finance. Unlike grants, these investments bear nominal interest and the principal is repaid to the foundation, which in turn relends it to other nonprofit organizations in alignment with mission goals.
Fast forward to 2007 when The Rockefeller Foundation coined the term “impact investing”, putting a name to investments made with the intention of generating a financial return alongside social and/or environmental impact. I happened to be an Associate at the Rockefeller Foundation during this exciting and formative time of what is now estimated to be a +$400 billion market by 2020, spanning from international development enterprises or local community projects to the reallocation of endowment portfolios to align with mission.
In 2014, Rotary Charities explored how PRIs could be expanded to unlock, leverage and attract resources to our region. The investment policy was updated to allow impact investments from endowment funds, and we began building relationships with experienced partners that could amplify the community impact of a dollar invested with technical assistance and new connections.
Thus far, we have invested $1.5 million in three community development financial institutions. These partners act as intermediaries to funnel our money into needed projects. Our investments are diverse, supporting needs in early childhood education capacity, affordable housing development, and small business lending. As our partners elevate local projects on a broader scale, there is potential to attract additional investments to our region.
As we are a just starting to hit our stride in this new strategy, be on the lookout in the forthcoming months for what we are learning along the way. We hope to work with other foundations and funders to think through what an impact investment strategy can mean for their communities. We will also publish a report on project-level impacts that have been catalyzed by these connections to funders that would otherwise not have been active in our region in 2020.
Learn more about our impact investing strategy and partners. Read about the recent investment made by our parnter IFF to support the expansion of Dann's House, supportive housing for people experiencing homelessness and alcohol use disorder with a harm reduction model.
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