Learn how the Saint Paul & Minnesota Foundation deploys values-aligned practices to manage our investment portfolio.
Editor’s Note: You may have heard of a community foundation — but may not know what it is, or how it differs from other foundations. In this ongoing series, we will be breaking down the many aspects of a community foundation.
Community foundations play a vital role in helping resolve community issues and problems in a determined geographic area. One of the ways these foundations strive to make a positive impact on their communities or affinity groups is by partnering with nonprofits.
The support community foundations offer may come in a variety of ways to grow nonprofit organizations, initiatives and programs. At the Saint Paul & Minnesota Foundation, we invest in and partner with agents and agencies of change who work daily to address issues that are most pressing to their communities. This support often comes in the form of a grant, but can also include collaborative partnerships, resources and funds for the nonprofits to meet their mission and sustain their work.
Managing Financial Resources with Care
Like with most community foundations, one of our main roles is to manage the financial resources left by individuals who’ve entrusted us to carry out their giving visions into perpetuity. We also manage the resources of community organizations, nonprofits and individual donors who partner with us to do their philanthropic work. It is important that those financial resources produce positive returns and are invested in ways that align with our values.
Our first investment was over 80 years ago, when our donor Annie Paper left a gift of $5,000, that to this day continues to make an impact.
Our Investments Team strives to realize strong rates of return, while offering our fundholders diverse and socially responsible investment options in both private and public markets.
It is imperative that the Foundation not invest in products or services that create the problems our nonprofit partners are trying to solve. In 2020 the Foundation adopted several investment policies, including the Racial Equity and Investments Policy and the Environmental, Social and Governance (ESG) Investment Policy. These policies are firmly embedded within the investment sourcing, due diligence and staff recommendation processes and procedures.
As part of our Racial Equity and Investments Policy, the Foundation requires that fund managers have a diverse decision-making team or a clear roadmap to diversifying their team.
As for ESG, the Foundation recognizes the importance of these factors and the ability they have to generate long-term sustainability, profitability and risk of our investments. We also recognize that the integration of positive ESG factors lead to better social and environmental outcomes for our donors, partner foundations, communities and planet.
To affirm and improve our commitment to equity and ESG priorities, we regularly monitor the ESG performance of our portfolio through the evaluation of our fund managers and holdings.
Principles for Responsible Investing
In January of 2022 the Foundation took our investing a step further by becoming the first U.S. community foundation signatory to the Principles for Responsible Investment instituted by the United Nations. UNPRI is an international network of more than 4,600 signatories from more than 50 countries representing more than $121 trillion of assets under management as of December 31, 2021.
Investment for Good
The financial gains made through our investments are distributed into the community in a variety of ways. A commonly understood method is through Foundation-led grantmaking programs. Additionally, our donors often give through donor advised funds and other donor-led funds. Donors can also establish other giving methods, such as a charitable gift annuity or charitable remainder trust.
Funds are also distributed through Program Related Investments (PRIs). PRIs complement traditional grantmaking by offering donors another way to have an impact on the community by investing in a loan through the Minnesota Community Investment Fund. PRIs have a social and capital return, as they provide below-market-rate loans to organizations that might not have access to traditional financing, while providing a small return for donors to then reinvest in other community-led initiatives.
If you are interested in learning more about the role of community foundations, read a few of the other articles in our What is a Community Foundation series and join the Saint Paul & Minnesota Foundation’s enews mailing list.
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