What Barra Foundation has learned from dipping a toe into mission investing

From Generocity

By Julie Zeglen

Nearly two years ago, Barra Foundation President Tina Wahl knew the tide of change was coming in the funding world — but was hesitant to jump in herself.

We’re talking mission investing, and Wahl wasn’t the only one. As the Patricia Kind Family Foundation’s former managing trustee, Laura Kind McKenna, shared with us around the same time, private foundations are traditionally conservative with their corpus, or that 95 percent of foundations’ assets that remain after the foundation has granted out the mandatory five percent minimum of their endowments.

Kind McKenna, the outspoken advocate for innovative funding models that she is, was frustrated by that and wanted to see much more activity beyond that required five percent — including through mission-related investments, or MRIs, and program-related investments, or PRIs.

There’s a subtle difference between the two, though they both fall under the “mission investing” umbrella. As impact investing network Mission Investors Exchange defines them:

Market-rate mission investments, also known as “mission-related investments,” are part of a foundation’s endowment and have a positive social or environmental impact while contributing to the foundation’s long-term financial stability and growth. Below-market mission investments, also known as “program-related investments,” are designed to achieve specific program objectives while they may earn a below-market financial return.

 

In the past year and a half, Barra, with its $90 million endowment, has done both. Its first try with mission-related investing happened in March 2016 with a $1 million investment in Reinvestment Fund’s core loan fund, which deploys collective capital into projects that meet the fund’s criteria — typically housing, education, grocery stores, commercial enterprises and health centers that benefit low-income communities.

“That was really a good way to get started,” Wahl said in a phone interview on the heels of a trip to the national Mission Investors Exchange summit in June. Reinvestment Fund has “such a strong track record” with providing financial returns, she said, and the core loan fund offered a chance to “also support an important project.”

That investment carries a three-year term, so Barra is still waiting to earn back its principle, but it’s getting paid interest — 1.25 percent — along the way. Learn more about that investment here.