Investing for Maximum Impact:A Unified Investing Strategy for Foundation Asset Management
Jed Emerson, Generation Foundation, Copyright 2006
Moving from Grantmaking to Investing in Value Creation:
Foundations should not seek to engage in philanthropy alone, but rather to make use of philanthropy as one of a number of tools to invest assets in maximizing social and environmental benefit and impact, through the efficient allocation of capital.
+1
-1
+1-1
FinancialInvestments &
Numeric Returns
Social CapitalInvestments
& Social Returns
A Zero-Sum Dissonance:The Traditional Value Proposition
Quad A Quad B
Quad DQuad C
Economic Value
Social Value
Foundations Have the Potential to Manage Six Asset Classes in two groups:
Financial Assets Grants Debt Equity
Nonfinancial Assets Time - Basic Engagement Talent - Intellectual Property Network - Political Capital
Financial Tools:
Traditional Grants Recoverable Grants Program Related Investing Blended Value Investing Venture Capital Asset Alignment of Corpus with Mission Proxy Voting and Corporate Engagement
PRIs in the Blended Value Investment Spectrum
Fixe
d Income
Below-Market InvestmentsBelow-Market Investments
Gua
rant
ees
Sen
ior
Loa
ns
Sub
ordi
nate
d Lo
ans
Cas
hC
ash
Pub
lic Eq
uity
Private E
quity
Market Rate Market Rate InvestmentsInvestments
Adapted with permission from F.B. Heron Foundation’s “New Frontiers in Mission-Related Investing”
Program-Related Investments
Equ
ity
Gra
nts
Unified Investment Strategy Capital Allocation
Grant(Program)
AvailableCapital
Grant(Infrastructure) Grant
(Research andDevelopment, Seed Funding)
PRIs andRecoverable
Grants
FROI Risk Boundary
RiskFree Rate
TreasuryNotes
----------Community
CDs and Investment
Notes.
Traditional Diversified Investment Portfolio
EquityLinked
ZeroCouponBond
With SRIIndex
Options
VC FundOr AngelInvesting
Privateand PublicEquityInvesting
SociallyResponsibleAngel andSocialVentureCapitalFundInvesting
SROI Risk Boundary
A Unified Investment Portfolio
An Example of Unified Investing and Asset Allocation…
…at the F.B. Heron Foundation.
For more information…
Please see “The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental Value Creation,” as well as
the supporting annotated bibliography and other documents available at www.blendedvalue.org
Or contact Jed Emerson at [email protected]