Local Matters: Why Not Invest Where You Live?

September 6, 2017

Philanthropy Northwest is exploring a bond fund that would give members an easy new way to make investments in the communities they care about. Modeled after a successful effort in Minnesota, we’re excited to explore this opportunity with our members. I’ll be hosting a lunch meeting during the annual conference where members can learn more and share ideas. In the meantime, here’s some background.

The Minnesota program works like this: foundations can make simple bond purchases from their endowment portfolios, which in turn fund small businesses and affordable housing across the state. The foundations get standard bond-fund rates of return in the endowment, along with important mission impacts like job creation and community revitalization.

This fund was created by members of Minnesota’s Council of Foundations (MCF), who worked together to attract a national manager who would place their bonds exclusively in Minnesota. Under the program, a foundation investment officer simply directs bond purchases to the Minnesota pool.  The Minnesota foundations have found that they can often place the bonds quite narrowly, for instance in a specific county of interest to a foundation.

MCF members worked throughout 2016 to create the fund, aided by Susan Hammel, the organization’s Executive in Residence. Hammel helped members explore how bonds inject government-backed financing into local small business loans and affordable housing projects. Hammel also helped them reach out to national managers who might bundle these kinds of bonds within Minnesota for MCF members.

Ultimately MCF members partnered with a firm called RBC Global Asset Management on the fund. More than $20 million in bond fund purchases have been committed since it was established last May.

We are reaching out to Philanthropy Northwest members to explore a regional collaboration that would allow members to direct bond purchases to their home states and counties. Please let us know if you would like to know more by contacting me, Rosalie Sheehy Cates, Philanthropy Northwest Impact Investing Fellow. Better yet, join us in Vancouver for lunch on Wednesday, Oct. 4 to talk with other Philanthropy Northwest members about this opportunity!