At East Bay Community Foundation (EBCF) we see impact investing as an opportunity to do more than simply diverting or divesting our assets from harmful or degenerative business practices. Impact investing is a tool to help build an inclusive, fair, and just economy for all East Bay residents; particularly those that have been most impacted by systems of oppression. In line with our vision, our finance team continues to pursue unique and innovative approaches to capital allocation that go beyond current industry environmental, social, and governance (ESG) standards to further advance economic equity for all.
Our Opportunity Pool is one such innovative approach. It was designed specifically to improve access to wealth for Black, Indigenous, or People of Color (BIPOC)-owned businesses by allocating 100% of its assets to BIPOC and/or female fund managers. By shifting more wealth into the hands of diverse and local financial professionals, we are able to effectively increase access to capital for BIPOC businesses, and consequently contribute to the growth of the local economy.
EBCF is committed to investing 100% of our assets with mission alignment. All of our investment pools address the systemic barriers that exist in traditional “Wall Street” models of investing. Our Opportunity Pool specifically aims to achieve a ‘quadruple bottom line’. At EBCF, we define the quadruple bottom line as:
- Competitive market returns
- Priority to Minority and Women-owned Business Enterprises (MWBEs)
- Mission alignment including racial equity, ESG impact, and shareholder activism
- Focus on the local community of California or the Bay Area
Our focus on the quadruple bottom line means that all fund managers in our Opportunity Pool share our mission of advancing racial equity and invest assets aligned with our mission. As a result, the Opportunity Pool is an attractive option for donor-advised fund (DAF) advisers who are interested in socially responsible investing that goes beyond the current industry ESG standards.
Case Study: Authentic Ventures
Authentic Ventures is one of the funds included in the Opportunity Pool. Led by Lindsay Lee, an Oakland-based Black fund manager with over 20 years’ experience, Authentic Ventures targets early-stage investments in software companies focused on automation through an impact lens. A majority of their investments are directed toward BIPOC founders. For example, Authentic Ventures recently invested in a new company called Byteboard, a software-based technical interview platform that allows companies to more efficiently and equitably evaluate and hire talent. Byteboard does this by using project-based interviews that aim to eliminate implicit biases in the hiring process. Learn more about Authentic Ventures on their website.
OUR OPPORTUNITY POOL REMOVES BARRIERS
The Opportunity Pool is structured to prioritize long-term growth and generate above-market returns with an added racial equity lens.In order to do this, we needed to redefine our risk criteria. Traditional risk criteria disproportionately excludes BIPOC and female fund managers. For example, current industry standards may include the amount of funds currently under management, or years of experience, both of which can exclude capable fund managers who have faced systemic barriers in the financial services industry.
EBCF Chief Financial Officer Valerie Red-Horse Mohl has experience as a securities professional and an extensive track record of success sourcing and identifying fund managers. In partnership with Graystone Consulting, a Morgan Stanley Company, we were able to successfully allocate more capital to BIPOC and/or female fund managers in other asset classes such as hedge funds, REITs, debt (fixed income), public equities, cash and fund of funds.
Contrary to popular belief, impact investments like these are not required to be concessionary. Since its inception in 2019, the Opportunity Pool has withstood the test of intense market volatility and has even outperformed our other investment pools.
Through the Opportunity Pool, EBCF is proving that impact investments can be used to generate a positive return for the community and for investors. We encourage other philanthropic and financial organizations to adopt similar strategies that prioritize racial equity in their own communities. Together, we can amplify the social good that BIPOC communities are creating locally, nationally, and globally.
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If you would like to learn more about how to set up a similar investment opportunity at your own organization, please contact Chief Financial Officer Valerie Red-Horse Mohl who can assist you with implementing your own plan.
If you would like to allocate a larger share of your DAF to the Opportunity Pool, please contact Elizabeth Burger, finance administrative and program manager, who will help you through the process.
BIPOC make up 40% of the U.S. population but 98% of wealth is managed by others. EBCF is leveraging its investments to narrow the racial wealth gap. CFO Valerie Red-Horse Mohl explains.
Updating our Investment Policy Statement was a big step in our plan to create social impact using assets under management. Learn more about how we did it.