On Tuesday, April 19th Jessica Droste Yagan moderated the third session of Impact Engine’s 10th annual Chicago Impact Investing Showcase. Throughout this four part series we explored the different types of impact investors (Governments, Individuals, Foundations, and Private Funds); but in this session we highlighted the role of foundations as impact investors, through both endowment and grant or donor advised fund pools of capital.
Following opening remarks by Jessica, the session opened with Debra Schwarz of the MacArthur Foundation. Debra explained how the Foundation defines impact investing and introduced one of the Foundation’s investees, Leon Walker from DL3 Realty Advisors, to talk about his work using responsible real estate development as an engine for economic opportunity (a theme very close to home for IE and most directly advanced by our investment into PadSplit). Laura Kernaghan shared how the Chicago Community Trust (CCT) engages in impact investing, and introduced Leah Missbach Day to talk about her experience in impact investing through her donor advised fund at the CCT, World Bicycle Relief. Lastly the conversation was concluded by Robert Tucker who spoke about the inspiring work of the Chicago Community Loan Fund (CCLF) which can also be invested in via the various donor advised funds of the CCT. All the speakers are real life examples of the good that is created when foundations reach investees through impact investing.
Debra noted that MacArthur Foundation, as an organization that has been around since 1983, manages $8B+ in AUM, and has made over 200+ investments throughout Chicago and the globe, they know there is a spectrum to impact investing. On one side of the spectrum falls conventional investing, and as one moves to the other side they encounter Responsible Investing (Screening), Sustainable Investing (Prioritizing ESG Factors), before finally arriving at Impact Investing which they divide into Finance 1st and Impact 1st. (At IE we think slightly differently and see us having financial returns because we lead with impact but regardless the overall point is valid.) Although not all of MacArthur’s assets are invested with an impact first mindset (~$400M are distributed across Benefit Chicago, Catalytic Capital Consortium, CDFIs, Housing, Chicago, and Climate Solutions), they are making strides throughout the whole portfolio and making sure that everything they do ties back to 3 pillars: providing mission driven innovation, being equitable and inclusive, and lastly being sustainable.
As an investee of the Foundation, Leon said DL3 Advisors has helped create over 3,000 jobs in the Chicago area by doing things that no one was willing to do like building a WholeFoods complex in Englewood. Despite being one of the most heavily trafficked parts of the city, Engelwood was continuously overlooked by developers and fell victim to the wide disparities evident in the city which extend beyond economic terms and even demonstrate up to a 15 year gap in life expectancy vs. some other areas in the North of the city. By working closely with the community, DL3 avoided unchecked proliferation and understood that “revitalization” does not have to mean gentrification. They follow a SEED framework: Shape needs into actionable projects, Empower local developers/ contractors, Expand with non-profit partners, and Direct contracts and opportunities. DL3 also adds special emphasis to the last letter by partnering with efforts like CEMDI. DL3 is just getting started and is currently raising $50M in impact equity to pursue large scale placemaking strategies in Jackson Park, Englewood, South Shore, and Grand Boulevard.
Laura noted that CCT is a public charity with the mission of facilitating philanthropy by pooling donations to local nonprofits. They have over $4B AUM and manage ~100 different portfolios that prioritize impact above all else. To help in this mission, CCT has pioneered a platform for various different impact investing opportunities in order to help donors align their charitable assets with their personal values and amplify the charitable assets and philanthropy of the trust. The platform has worked to ensure that several of the available options focus on disrupting the structural issues with the allocation of capital to individuals and communities. As a user of the platform, Leah reminded us of the powerful words of Rev Dr Martin Luther King Jr:
“Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
Lastly we heard from Robert about the offerings of the CCLF. This CDFI has had as its mission the economic development of the Chicagoland community since its founding back in 1991. Originally established with a $200K investment now worth ~$140M, this CDFI has helped dozens of projects and institutions all while maintaining an AA-*** & Policy Plus rating from AERIS. Some of its recent fundings include the XS tennis center, Ignite Technology, and the Chicago Neighborhood Rebuild program.
In this session we heard both from a large private foundation and a large public foundation (as well as some of their investees and donor advisors), however the topics discussed here are not exclusive to these behemoth organizations. Jessica concluded the session by sharing a personal story of her experience as a trustee of a small family foundation and provided some examples of how they have been able to embed impact into the allocation strategy of the endowment without sacrificing any financial returns, as well as amplifying impact in their program-oriented investments. If you find yourself in a similar situation we urge you to question your DAF fiduciary or foundation advisors and to please count on Impact Engine as a resource to help advance you in your impact journey.
Find more sessions on the 2022 Chicago Impact Investing Showcase page.
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