Mission Investing for Local Community Benefit

By Scott Lawson

In our pursuit to be solution-oriented when facing community challenges, it’s important that we use every tool at our disposal. We have found many ways to use our assets at the Foundation to contribute to our community – the most recognizable being our endowed funds.

At LCF, we have more than 460 endowed funds that provide meaningful grant funding to support nonprofit programs and operations impacting all corners of our community. Endowments are invested in equity and bond markets, which have historically grown these funds and as a result, increased grants awarded. 

Mission Investing is a practice where a portion of the endowment is invested locally, as opposed to being invested strictly in the financial markets. As a result, a mission investment generates a local social and economic impact while producing a return on its principal investment.

Mission investments provide organizations with the capital to advance projects and programs that help our community thrive. For example, mission investments through LCF have supported the creation of affordable housing, helped entrepreneurs start and grow their businesses while simultaneously providing jobs, and developed real estate in emerging neighborhoods.

These investments are structured as loans, loan guarantees, or equity interest which results in a return of principal and interest. Financial return is not the primary purpose, so a lower interest rate can be offered. Mission investments are also complementary to financing being provided by traditional sources, such as banks.

LCF’s Mission Investment Committee oversees our mission investing activities. The committee reviews and approves all proposed mission investments based on the projected social impact and financial viability of the organization and monitors the mission investment portfolio. LCF seeks mission investment opportunities that lift up historically marginalized communities where traditional financing may not be available.

The committee recently approved an increase to the volume of our mission investments as well as a mechanism for donors to co-invest alongside LCF’s endowment. We pool investments from participating donor advised funds and our endowment, and these funds are then awarded to the organization for the intended use. With this new guidance, LCF – along with three donor advised funds – co-invested in a venture capital fund supporting start-up businesses that are creating jobs in our community. 

LCF recently hosted an educational forum on Mission Investments. The event featured a keynote presentation from Lisa Richter with Avivar Capital, a leading expert on mission investing, and a panel of local organizations that have used a mission investment from LCF for a community project. The goal of the event was to catalyze mission investing by both LCF donors and peer foundations. 

Through the practice of mission investing, LCF seeks to create a healthier and more sustainable community. For more information on mission investing, click here.