Impact Investing And Fossil Fuel Divestment

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We believe that all assets of a foundation can be used in support of the mission. While foundations typically grant 5% of there assets each year, we seek to leverage the entire corpus of investments in a way that is supportive of our mission. We use a variety of grantmaking strategies and types of investments and investment strategies to accomplish this:

The grantmaking/investment continuum:

  • Traditional Grantmaking– We make grants while also being conscientious of the need for multi-year funding commitments that include unrestricted funding to support nonprofits organizationally.
  • Program Related InvestmentsRather than gifting money through grants, Program Related Investments (PRIs) are loans or investments that support the programs and mission of a foundation, usually at a below-market rate of return. We’ve used PRIs frequently and they represent a favorite funding strategy for several reasons.  
    • More impact per dollar: The PRI, usually in the form of a low-interest loan, comes back so that the funding can be recycled again and stretches our potential impact per dollar granted or invested. 
    • Fiscal Responsibility: An added benefit is that when at least part of a grant is a loan or PRI of some sort, the grantee is motivated to also spend wisely since the funding must be repaid. 
    • More Assets in the Community: When we use PRIs, we’ve found that we’re much more likely to grant out more than 5% a year.  More of the foundation’s assets are put into the community doing work in support of the mission, rather than sitting in a traditional investment account.
  • Divestment– We have also aligned our investments with our mission by divesting from fossil fuels. As a climate-focused foundation, it makes no sense for assets to be invested in fossil fuel-related companies on the one hand, while granting to organizations to fight fossil fuel interests on the other. We’ve chosen to take a stringent interpretation of the meaning of fossil fuel divestment and have divested from companies that own fossil fuel reserves, that extract, refine, or transmit fossil fuels, that burn fossil fuels to produce electricity, or companies whose products are primarily made to support the fossil fuel industry. 
  • Investment with a focus on ESG Beyond divesting from fossil fuel companies, we apply an additional lens to actively invest in companies that are rated highly on Environmental, Social, and Governance (ESG) scores.
  • Private Equity and Angel Investments– Some of the research and companies that may help solve the climate crisis likely don’t exist yet. Not only do we support entrepreneurism as a foundation, but we see investment in early companies as a way to support the ecosystem of green and cleantech companies.
  • Spend Down– While private foundations are required to grant only 5% of their assets each year, we believe that taking the urgency of the climate crisis seriously means giving more and doing it sooner rather than later. Especially when it comes to climate change, an ounce of prevention is truly worth a pound of cure. Though the estimated costs of a Green New Deal and rapidly transitioning to a zero carbon economy seem daunting, they pale in comparison to the costs of doing nothing.

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