Minnesota foundations are joining forces and putting investment dollars to work to help their neighbors. The Minnesota Council on Foundations (MCF), which includes members such as the McKnight Foundation, Bush Foundation and Otto Bremer Trust, has announced a collaborative effort toward impact investing targeting affordable housing and small business lending throughout Minnesota.
“For several decades, many of our Minnesota foundations have been doing impact investing on their own, long before the term was even coined,” Susan Hammel, MCF’s impact investing executive in residence told CIO Magazine. “In 2014, we convened them for the first time and they realized there was a lot to gain from working together and learning from each other. Collaborating is part of our Minnesota DNA, especially in philanthropy…As impact investing has taken off and gone increasingly mainstream, our foundations wanted to take the informal connecting and information sharing to the next level.”
The foundations kicked off their collaborative efforts towards impact by committing more than $17.1 million to a fixed-income bond fund, which is expected to exceed $20 million. The bond fund, Access Capital Community Investment Fund, is managed by RBC Global Asset Management. “This money strengthens Minnesota’s market for affordable housing and small business securities, and grows the number of Minnesota-based foundations involved in impact investing,” Hammel, stated in a release. “The fund will have impact locally, but because it reaps nationally diversified returns, it will not have overly localized risk.”
RBC was selected from four firms through a competitive bid process that involved data collection, analysis, manager interviews, and assessment, according to Hammel. “RBC has a long-time commitment to this region and knows the market well,” she said.
The investment fund has a track record of investing in US agency-guaranteed, mortgage-backed securities and government-backed loans that support affordable rental housing, small businesses, healthcare, education, and job creation. The strategy had more than $1 billion in assets under management as of the end of last year.
Hammel anticipates that the commitment will lead to other impact opportunities. “We are hoping this is the first of many and are exploring other opportunities such as a low-interest-rate loan pool for CDFI’s (Community Development Financial Institutions Funds), social businesses and nonprofits, and perhaps a private equity fund,” she said.