Family Foundations Maximize Social Impact

Transcription

1 Family Foundations Maximize Social Impact September 28, 2017 Midwest Family Foundation Webinar Series Susan Hammel, CFA, CEO Cogent Consulting Executive in Residence, Minnesota Council on Foundations

2 Agenda 1. Do good, do well investing 2. Impact investing trends 3. Implementation Negative/positive screening Collaborations Program Related Investments Other tools Questions/discussion 1

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5 Insert alphabet soup here ESG, negative screening, exclusionary screening, SRI, sustainable, responsible, impact investing, etc 4

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7 Poll Question 1 Do you use any social impact screens (positive or negative)? Yes No Not sure 6

8 Socially Responsible Investing 7

9 US Investment Funds Incorporating ESG Factors 8

10 ESG Universe (insert graphic here not sure if SASB is proprietary or could put list in table format i.e. CFA ESG guide for investment professionals pg. 4) 9

11 CFA 2015 Survey Dispels ESG Myths Myths Reality CFA Survey (2015) Myth #1 Firms offer ESG for reputation. Myth #2 ESG issues are mostly environmental & climate change. Myth #3 Implementation through exclusionary screening. #1 Reason Manage risk #1 Reason Board accountability governance issue. Reality ESG Integration 63% to manage risk 44% client demand 38% proxy for quality management 37% fiduciary duty 37% investment opportunity 78% Board accountability 62% Human capital 61% Executive compensation 54% Environmental degradation 47% Supply chain 41% Board diversity 40% Climate change 57% ESG integration investment analysis & decision making. 38% Best-in-class investing 36% Exclusionary screening 23% Thematic investing 21% impact Investing 10

12 Is a Stampede into ESG forthcoming? What would Cause to consider ESG? (CFA 2015 Survey) Fast Forward Today Resources Client Demand (57%) +$59 T AUM Investor signatories +4 T U.S. Funds w/ ESG factors PRI - Principles of Responsible investment (UN + consortium of institutional investors committed to ESG issues) (April 2015) Proven Performance (48%) 6.01% Alpha* Material ESG factors vs 0.60% Immaterial ESG factors *Annualized HBS: Corp. Sustainability First Evidence on Materiality Better info on Risk/Reward (25%) o o Standardization evolving for metrics/tools Disclosure/transparency issues o o Company (SASB, IIRC) Investor (IRIS, GIIN) SSE Initiative SEC ESG filing Clarity about Fiduciary Responsibility (22%) ESG investment doesn t violate ERISA fiduciary duty Oct 2015 DOL ruling 11

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14 Impact Investing Across Asset Classes 13

15 Cupcakes are on the rise with the help of Sunrise Bank 14

16 Village Trust Financial Cooperative 15

17 16 Otto Bremer Trust

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19 Minnesota Impact Investing Initiative A collaborative place based fixed income bond fund 18

20 Shareholder Advocacy Sundance family foundation Palo Alto Networks Board diversity Amended governance guidelines, hired first woman to its board of directors Tile Shop Gender diversity Improved policy guidelines SPS Commerce Gender diversity Improved policy guidelines Target Corporation Food waste Expanded food waste reduction efforts including gathering data, new programs, setting targets, and public reporting Dentsply Sirona Board diversity Improved policy, agreed to publicly report on progress 19

21 Contraceptive Implants Volume Guarantee Bill and Melinda Gates Foundation 20

22 Poll Question 2 Do you make program related investments (PRIs)? Yes No Not sure 21

23 Faith based lending Sisters of Mercy 22

24 The Saint Paul Foundation East Metro Job Creation Loan Fund 23

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26 where charity and investing meet TM

27 Private Foundations Donor-Advised Funds Individuals Businesses Grant or PRI Grant or PRI Donation Donation Venn Foundation Account 1 Account 2 Account 3 Account 4 PRI Deal Flow

28 Mission Investors Exchange Baltimore, May

29 Definition An Impact Investment is an investment that seeks to create both positive financial return as well as positive social or environmental impact that is actively measured -World Economic Forum 28

30 Impact Investing Snapshot Assets Under Management $60 billion $77.4 billion billion Capital Committed $10.6 billion $15.2 billion 22.1 billion Asset owners: banks, financial institutions, foundations Foundations: private, family and community International scale Housing, microfinance, financial services 29

31 Challenges and opportunities Impact washing Seeking alpha Irrational exuberance Professionals Equity 30

32 Impact Reporting PUBLIC EQUITY PRIVATE EQUITY/DEBT COMPANY LEVEL 31

33 Poll Question 3 Are there sufficient investment opportunities that meet your criteria for both social and financial returns? Yes Enough, would like more choices No 32

34 Twin Cities Impact Investing Ecosystem 33

35 Twin Cities Ecosystem Map Sources of Capital, End Users, Intermediaries 34

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38 Millennial Impact Investing Trends Breaking down silos All-in and holistic mindset Believe change is constant 37

39 Phillips Foundation 38

40 Aligning assets for positive impact is the Future 39

41 Susan Hammel, Direct COGENT CONSULTING: DO GOOD WELL 40