Back in 2012, the Heron Foundation got started on an ambitious goal of going “all in”. By fiscal year 2017, it would move the entire $270 million endowment into impact investments that fit with the organization’s mission of “helping people and communities help themselves out of poverty”.
In December, the foundation reached that goal.
Now, according to Clara Miller, director and president, they’re moving into their next phase. That means, says Miller, “Optimizing our portfolio for mission and financial returns together.”
It’s good news for social entrepreneurs focused on job creation and anti-poverty work.
Generally, the foundation looks across asset classes for potential investments where providing jobs and a way to climb the economic ladder are built into the fabric of the companies. To that end, they’ve invested in everything from DBL Investors, an impact investment venture capital fund, to nonprofits like the Family Independence Initiative, which aims to help low-income families become financially self-sufficient.
Getting to 100% all in, of course, involved quite a process. “We started out with the battle cry, ‘Know what you own’,” says Miller. That meant looking under the hood of the portfolio’s asset classes to pinpoint what was there, starting with an initial screening of everything from public company equities to Program Related Investments. The upshot: “We got a fuller picture of our impact,” says Miller.
Then, little by little, they started drilling down to the enterprise level to see what was there and get rid of holdings that didn’t fit the mission. One example: reducing the number of money center banks in the portfolio. On the other hand, when they looked at bond holdings, they learned one company was building a car manufacturing plant likely to provide a lot of jobs. “We thought that was a winner,” says Miller.
At the same time, they changed the investment policy statement to reflect just how serious they were about the new strategy. For example, it now states the institution has a fiduciary duty to make sure 100% of assets are deployed to fit the mission. If that doesn’t happen, “We’re in breach of our fiduciary responsibility,” says Miller.