 |
|
Jennifer Christian Murtie Ruben D. Orduña
So what exactly is "high impact philanthropy" and what is the buzz all about? The Center for High Impact Philanthropy defines it as "the practice of making charitable contributions with the intention of maximizing social good. The aim is to make the biggest difference possible given the amount of capital invested." As a donor, how can you have the greatest impact on positive social change? How can you make your money stretch further? How do you select organizations that have measurable results? How do you know if you are having an impact? These questions and many others have become increasingly important to philanthropists. Since the market turmoil of 2008, many donors have fewer dollars and therefore have been forced to be more strategic with their philanthropy. Most experts believe this is a positive shift for the philanthropic sector. Personal Involvement is Key Foundations and individual donors have always strived to have an impact on social change, but this new approach is different in that donors are focused on personal involvement and long term change – and are more cognizant of the charitable organization's strategy. Finding charities that work directly with the people they serve is becoming an increasingly popular funding strategy. Not only do your charitable dollars address a particular issue, they support an organization that has local people on staff, a long history of success in the region, and an information base that gives them an advantage in solving social problems. You Don't Need Millions to Have High Impact It is important to remember that you do not need a large fortune to have a high impact; rather, you need commitment, energy, and time to be actively involved. Creativity goes a long way, and partnering with the right organizations, people, and institutions can create lasting social change. By definition, high impact philanthropy does not necessarily mean impacting the greatest number of people. Nor does it mean shifting emphasis to projects that can easily count immediate results (e.g., the most people served). Rather, the focus is on longer-term, more significant and longer lasting impact, even though it may be more difficult to measure. High impact philanthropy works to permanently improve the circumstances of individuals and/or communities, using effective organizations that have the right strategies. A New Breed of Hands-On Philanthropists No one exemplifies this new approach to philanthropy better than the shared clients of the Boston Foundation and Federal Street Advisors, Jim and Karen Ansara. We are humbled by the Ansaras' commitment, passion, and capacity to implement high impact philanthropy and create positive change through their efforts. The Ansara Family Fund is a Donor Advised Fund at the Boston Foundation, which is Greater Boston's community foundation. The focus of the fund is on eradicating global poverty in Latin America and Central Asia. The Ansara family annually makes 20-30 grants totaling $500,000-$700,000. This year, with the help of the Boston Foundation, Jim and Karen took their philanthropy to a whole new level. They asked the Boston Foundation to create The Haiti Relief and Reconstruction Fund ("HRRF") in response to the earthquake of January 12, 2010. In order to build the fund, the Ansaras leveraged their money by pledging to match donor contributions dollar for dollar up to $1 million. They managed to raise $1 million in less than a month, creating a $2 million fund in only a few weeks. Over the course of the next five years, the Fund will devote up to 25 percent of its resources to immediate disaster relief, and the balance to innovative projects and organizations helping Haiti rebuild livelihoods, reconstruct infrastructure, and promote human rights so that Haitians can have a voice in shaping their own futures. Another priority for the Ansaras is to support the healing and strengthening of Boston’s Haitian community in the aftermath of this disaster, as well to support the Boston Foundation in convening leaders of the local Haitian community to address long term reconstruction issues. Focus on a Specific Need What makes the Ansaras' philanthropy high impact is that they have focused on a specific need and selected organizations like Partners in Health, whose mission aligns with their philanthropic strategy. Even more important, they have made a long-term and personal commitment to the cause. Seventy-five percent of the Ansaras' fund will go to long term rebuilding efforts, and they are actively involved not only with their money but also with their time. Strategic Advisors Help Maximize the Impact The Boston Foundation has facilitated and enhanced the Ansaras' efforts through the structure and administration of the Ansara Family Fund, while Federal Street Advisors has carefully aligned the Fund's investment strategy with the Ansaras' values and goals. The Boston Foundation helped the Ansaras entrust a Donor Advised Fund, and now provides grantmaking advice and support, and helps raise awareness about the Fund. Because the Boston Foundation handles many of the fund's administrative burdens, Jim Ansara is free to spend one week a month building clinics and helping doctors in Haiti. He keeps a blog of his work, providing current and relevant updates to supporters of the Fund. Karen spends her time fundraising and raising awareness about international poverty issues. Community Foundations Give Small Family Funds Access to Top Level Resources A majority of Ansara Family Fund grantmaking decisions are made at a semi-annual meeting. In preparation for the meetings, the Boston Foundation’s Philanthropic and Donor Services staff responds to inquiries from nonprofit organizations, review proposals, manage grantee communication and oversee the grantmaking budget for the Ansara Family Fund. The Boston Foundation’s staff also performs due diligence to ensure that grantees are qualified nonprofit organizations that are exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue code. (Grants to non-U.S.-based and non-501(c)(3) organizations located outside of the U.S. are made through an intermediary organization such as CAF America.) For The Haiti Relief and Reconstruction Fund (HRRF) in particular, the Boston Foundation administers all aspects of this fund, including:
A New Investment Mentality in Philanthropy The Boston Foundation and Federal Street Advisors are increasingly working with donors to foster a new "investment mentality" in charitable giving, both by measuring "returns" from those investments in terms of impact, as well as by supporting sustainable and socially focused investment strategies in client portfolios. Foundations call this new approach "mission related investing" and with the help of their investment advisors they are finding innovative market-rate investment opportunities. Whether a donor is interested in human rights, the environment, or community development, there are ways to use their ‘investable’ assets to further social priorities. The Ansaras’ Leadership Continues to Inspire The Ansaras' commitment to tackling poverty has been written about in The Boston Globe several times, as well as The Wall Street Journal. The Journal's recent article states: "With less to give, donors want to be certain that what they do give goes as far as possible, and many are deciding that means helping people improve their lives and their prospects, not just relieving their immediate suffering." Jim and Karen Ansara make us proud to be their partners. They set a high standard for all of us, showing us how we can have the biggest impact with the resources we do have. Karen Ansara quite eloquently states:
The Ansaras are leading by example, and we believe their model of philanthropy can be replicated and used by others to fulfill their own philanthropic vision. We at the Boston Foundation and Federal Street Advisors feel privileged to be two of the partners the Ansaras work with to help them further their philanthropic mission. Where and How to Get Started There are more than 700 community foundations nationally, and like the Boston Foundation, they offer many ways to help donors meet their charitable giving interests and goals. Their grantmaking experience and vast knowledge of local issues make community foundations natural partners for individuals and families interested in high impact philanthropy. Regardless of your philanthropic budget, you can have a greater social impact with your philanthropy through research, networking, creating an organized process, and selecting effective organizations. Whether your passion is to support your community, your town, your state, your country or, with great ambition, our world, you can make an even greater difference. The Ansaras are leading by example and we believe their model of philanthropy can be replicated and used by others to find their own philanthropic vision. Aligning your investment portfolio with your giving Emily Bannister, Senior Research Analyst, Federal Street Advisors We at Federal Street Advisors believe that foundations and individuals should invest their portfolios for maximum return at an acceptable level of risk. Fortunately, this objective is not incompatible with mission related investing (MRI). We have seen evidence that focusing on environmental, social and governance (ESG) factors does not necessarily result in lower performance. The FTSE KLD 400 Social Index, for example, uses these factors to create an index of U.S. equities. It has outperformed the S&P 500 index for the full common time period from May 1990 through March 2010, returning 9.7% annualized versus 8.8% annualized for the S&P 500. Including MRI in the investment portfolio can amplify a high impact philanthropy strategy since it allows clients to leverage their invested assets to make an even greater difference than they are already making with their grants. Mission Related Investing (MRI) Requires an Additional Layer of Due Diligence It is possible to achieve outperformance with a mission focus. But just like any other investment style, there are good managers and bad managers; our job is to find the exceptional opportunities. When we research MRI managers, we hold them to the same standards by which we evaluate all managers. We recommend only managers that offer outstanding risk/reward profiles. Our research team uses qualitative and quantitative tools to assess whether we believe that managers who have done well relative to peers and benchmarks in the past have the process and team in place to outperform in the future. With MRI managers, however, we have an additional layer of due diligence to perform. We evaluate their approach to integrating ESG issues into the process, as well as the independence and sources of ESG data. We also look at the resources they offer in terms of proxy voting, thought leadership, and shareholder advocacy. MRI Can be Broad or Highly Targeted For some clients, a broad focus on sustainable investing aligns with their philanthropy, since their goals cover a number of issue areas. For other clients, the mission is more defined. In these cases, we have successfully found equity, fixed income, private*equity, and hedge*fund solutions that target specific issues. One key aspect that differentiates high impact philanthropy from general charitable giving is the goal of measuring impact. While there is no standardized reporting yet in this area, we work with managers who highlight the tangible results of their advocacy efforts, and report the percentage of their portfolio invested in companies working on issue-specific solutions. Looking to the Future It is important to find ways to integrate mission related investing (MRI) into client portfolios, allowing them to align their investments with their high impact giving. As this market grows, we see new strategies being developed all the time – and some of these will turn into exceptional new investment opportunities for clients. |
