Originally aired on 5/10/17. While Impact Investing is making headlines left and right, many of us still don’t know as much as we’d like about the basics of investing or have the tools we need to meaningfully engage the finance side of philanthropy. How can a philanthropic organization use its investment dollars in furtherance of its mission? To help demystify the trends and provide background on what investing is and how finance works as a transformative force in social justice, we welcome Executive Director and Co-Founder of Transform Finance, Andrea Armeni. The presentation will include a grounding in “Investment 101” to help us all have the same language to explore this topic, and explore how justice, power and finance can work together to contribute to meaningful social change. Co-host Alex Haber, Program Manager at RSF Social Finance and former EPIP Bay Area Co-Chair, will also be sharing updates and insights from his work with RSF and the emerging “Shake the Foundations” collaborative that seeks to use philanthropic assets as a tool for community-controlled and owned reinvestment.

1. INVESTMENT 101 & TRANSFORMATIVE
FINANCE
EPIP Webinar
May 19, 2017
EPIP Host: Biz Ghormley
Presenters: Alex Haber & Andrea Armeni

2. 2
Emerging Practitioners in
Philanthropy (EPIP) is a
national network of
foundation professionals,
social entrepreneurs and
other change makers who
strive for excellence in the
practice of philanthropy.

3. 3
We provide a platform
for our community to:
Connect
with others
Learn &
practice
leadership skills
Inspire
emerging ideas in
the social sector

4. Get in touch!
Please reach out with any questions or to
learn more about membership!
Biz Ghormley
biz@epip.org
Director of Operations & Member Services

5. What’s Next?
• Next EPIP Webinar!
• CounterHate Webinar – June, specifics TBD
• All Events - epip.org/events
• In lieu of a 2017 EPIP Annual Conference –
Unity Summit!
• September 18-22, 2017 in New Orleans, LA
• CHANGE Philanthropy's Unity Summit – changeunitysummit.org

6. Housekeeping
• Use the question box for
• Technical difficulties
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• Content questions for Q&A
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• This webinar will be recorded
• Complete the post-webinar survey, please!

7. Speakers
Alex Haber, RSF Social Finance, former EPIP Bay Area Co-Chair
Andrea Armeni, Transform Finance

8. Why
Mission
Aligned
Investing?
03

9. Why EPIP?
03

10. RSF’s
Approach:
Integrated
Capital
03
Coordinated use of grants, loans, and
investments to support mission-driven
enterprises

11. Shake the
Foundation
s
03
Emerging economic justice project made up
of both foundations and economic/climate
justice movement organizations advocating
for foundations to participate in a financial
commons

12. EPIP WEBINAR
A Foundation’s Mission:
the Investment Side of the House
Andrea Armeni
Transform Finance
May 10, 2017

13. ABOUT TRANSFORM FINANCE
§ Building a bridge between capital and social
justice: advancing a community-centered vision for
finance with investors and practitioners
§ Convening the Transform Finance Investor
Network: a community of practice for asset owners
– such as foundations – committed to deep
community engagement, non-extractiveness, and
fair allocation of risks and returns
EPIP Webinar – Foundation Investments – 5/10/2017

14. WHAT IS A FOUNDATION?
A vehicle for disbursing philanthropic capital?
… or is it something else?
EPIP Webinar – Foundation Investments – 5/10/2017

15. EPIP Webinar – Foundation Investments – 5/10/2017

16. WHAT HAPPENS TO THE OTHER 95%
EPIP Webinar – Foundation Investments – 5/10/2017
§ Traditional view: foundations must maximize the
returns to the endowment to ensure there’s enough
to disburse in grants.

17. THE OTHER 95%
As you seek to perpetuate the endowment and
maximize it…
§ Risk of acting at cross purposes
§ Missed opportunity to do more in furtherance of
mission
EPIP Webinar – Foundation Investments – 5/10/2017

18. THE OTHER 95% - ACTING AT CROSS-PURPOSES?
EPIP Webinar – Foundation Investments – 5/10/2017

19. THE OTHER 95% - MISSING THE OPPORTUNITY
EPIP Webinar – Foundation Investments – 5/10/2017

20. THE OTHER 95%
Corollary:
§ Adding other considerations may reduce returns
§ May violate the law
Anti-Corollary:
§ Not necessarily the case
§ Keep focus on what the ultimate goal is
EPIP Webinar – Foundation Investments – 5/10/2017

21. MAKING USE OF THE OTHER 95%
Philanthropy is a drop in the bucket:
You can’t fight for social change
with one hand behind your back
EPIP Webinar – Foundation Investments – 5/10/2017

22. THE OTHER 95%: ALIGNING CAPITAL WITH MISSION
§ Alternative view (1): we will seek to minimize
misalignment and use some assets in furtherance of
mission
§ Alternative view (2): all our assets – from grant to
endowment – should be in service of mission
EPIP Webinar – Foundation Investments – 5/10/2017

23. THE OTHER 95%:
AVOIDING MISALIGNMENT, FOSTERING ALIGNMENT
§ “Screening” and Divesting
§ Mission Related Investments (MRIs)
§ Program Related Investments (PRIs)
EPIP Webinar – Foundation Investments – 5/10/2017

24. THE OTHER 95%: AVOIDING MISALIGNMENT
SCREENING AND DIVESTING
Avoiding investments in what is directly antithetical to
the mission:
§ “I can’t be making my money from private prisons”
§ Penalizing bad actors via cost of capital
§ Signaling function
EPIP Webinar – Foundation Investments – 5/10/2017

25. THE OTHER 95%: FOSTERING ALIGNMENT
MISSION RELATED INVESTMENTS
§ Market-rate investments from the foundation’s
endowment corpus that support the mission of the
foundation by generating a positive social or
environmental impact.
EPIP Webinar – Foundation Investments – 5/10/2017

26. THE OTHER 95%: FOSTERING ALIGNMENT
MISSION RELATED INVESTMENTS
How big is this space?
§ Not clear – see the resources provided – but it’s
certainly growing
EPIP Webinar – Foundation Investments – 5/10/2017

27. THE OTHER 95%: FOSTERING ALIGNMENT
MISSION RELATED INVESTMENTS
EPIP Webinar – Foundation Investments – 5/10/2017

28. THE OTHER 95%: FOSTERING ALIGNMENT
MISSION RELATED INVESTMENTS
EPIP Webinar – Foundation Investments – 5/10/2017

29. THE OTHER 95%: FOSTERING ALIGNMENT
PROGRAM RELATED INVESTMENTS
EPIP Webinar – Foundation Investments – 5/10/2017
Actually defined by the IRS (unlike MRIs):
§ Primary purpose of the investment is to accomplish
the foundation’s exempt purposes
§ Production of income or appreciation is not a
significant purpose
§ Can count toward the annual 5% (but should they?)

30. THE OTHER 95%: FOSTERING ALIGNMENT
PROGRAM RELATED INVESTMENTS
§ Loan to farmers at below-market rate to improve
water management
§ Equity investment to develop drugs that would not
otherwise be developed because they target poor
populations
§ A loan guarantee so a non-profit child care can get
a bank loan to expand facilities
EPIP Webinar – Foundation Investments – 5/10/2017

31. THE OTHER 95%: FOSTERING ALIGNMENT
PROGRAM RELATED INVESTMENTS
Developing a whole PRI program:
§ Establish the alignment and the impact thesis
§ Understand constraints and preferences
§ Figure out investable opportunities
§ Develop a carve-out Investment Policy Statement
§ Establish a due diligence and selection framework
§ Find a pipeline of investable deals
Example: TF work on alternatives to predatory lending
EPIP Webinar – Foundation Investments – 5/10/2017

32. 100% ALIGNMENT WITH MISSION
§ A duty? An opportunity?
EPIP Webinar – Foundation Investments – 5/10/2017

33. WHY DO FOUNDATIONS PLAY A SPECIAL ROLE
IN THE IMPACT INVESTING SPACE?
§ Outsize influence
§ Driving best practices
§ Risk-taking
§ Access to relevant information from the program
side
EPIP Webinar – Foundation Investments – 5/10/2017

34. THE MRI AND PRI SPACE
WHAT CAN PROGRAM OFFICERS AND OTHERS DO?
§ Help lift up voices from communities
§ You are the expert on the effects of these
investments
§ Don’t be intimidated by the lingo (but also, learn a
bit about finance)
§ Find out who are the right interlocutors and who
holds power
§ Go for small wins within a sequencing strategy
EPIP Webinar – Foundation Investments – 5/10/2017

35. BABY STEPS FOR FOUNDATIONS
§ Hold conversations on this with both program and
investment staff
§ Move your cash
§ Vote your proxies, improve your managers, ask
who’s getting rich off of this…
§ Increase transparency
§ Do a training for the program side and/or the
investment side to learn more
EPIP Webinar – Foundation Investments – 5/10/2017

36. WHAT CAN PROGRAM OFFICERS AND OTHERS DO?
A concrete example: Funding the Arts
§ Can’t do a grant, but a loan for a new theater would
do nicely
§ It must be repaid, so revenue must come from
somewhere
§ Does it fit within an IPS? Need for a carve-out?
§ Should it come from the 5%?
EPIP Webinar – Foundation Investments – 5/10/2017

37. EFFORTS TO ALIGN:
FOUNDATION ENDOWMENTS AND RACIAL JUSTICE
How can we evaluate the racial justice consequences
of a foundation’s investments? [real project]
An opportunity for all sides of the house to align
§ Program side has the information
§ A review of investments won’t hurt
§ It can actually further the mission!
EPIP Webinar – Foundation Investments – 5/10/2017

38. DISCUSSION
EPIP Webinar – Foundation Investments – 5/10/2017

39. RESOURCES
EPIP Webinar – Foundation Investments – 5/10/2017
§ Mini-glossary
§ List of affinity groups and research
§ The Transform Finance Institute for Social Justice
Leaders

40. Please do get in touch!
Andrea Armeni
Transform Finance
andrea@transformfinance.org
+1 (415) 265-0035
EPIP Webinar – Foundation Investments – 5/10/2017