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Cleveland Foundation Announces $150 Million Social Impact Investment Goal

Uncategorized May 20, 2019

The Cleveland Foundation today announced that it will allocate $150 million in capital for social impact investing by the end of 2022. The foundation defines social impact investments as opportunities that align social good with financial return to bring about social change.

The foundation’s social impact investing program consists of four primary vehicles:

  • Recoverable grants are extended to nonprofit organizations and paid back without interest over a period of time – usually less than five years. They can provide fast and flexible capital, while encouraging an organization to consider multi-year planning. Unlike loans, they are forgivable if needed, and from the foundation’s perspective, provide a source of recyclable capital that compliments traditional grantmaking.

  • Program Related Investments (PRIs) are below market-rate loans, equity investments, and bank deposits or debt guarantees that are used to fill capital gaps and address community issues. As regulated by the IRS, PRIs must be made for the primary purpose of accomplishing a charitable outcome and not primarily for financial gain. These outlays can be extended to nonprofit organizations and community development financial institutions and typically carry an interest rate of 2-3% over no more than seven years.

  • Mission Related Investments (MRIs) provide a vehicle to support early-stage private equity and venture capital, Benefit Corporations, and public or private companies that are mission-aligned. The foundation’s MRIs frequently center on job creation, economic development, research, and technology advancements that will provide impact for the community. Additionally, the foundation also looks for environmental and sustainable impact investments, housing development investments, and financing for entrepreneur start-up capital.

  • The Socially Responsible Investment (SRI) Pool is designed for Cleveland Foundation donor advised and organization funds. The SRI Pool consists of fossil fuel-free public equities screened for social and environmental responsibility and gender diversity and has a place-based emphasis on Cleveland corporations. The foundation’s SRI Pool has grown from just $500,000 in 2017 to $44 million at the end of the first quarter of this year. It has been the best performing pool at the foundation for the past two fiscal years.

"This announcement represents a significant moment in our organization's history and a proud point in time for community philanthropy to demonstrate fiscal leadership while taking innovative steps to meet the growing needs in our local community," said the foundation's senior vice president and chief financial officer Roseanne Potter. "When combined with our traditional grantmaking efforts, the social impact investing program amplifies our place-based impact in greater Cleveland and invites new partners to join us in creating an environment for success for everyone we collectively serve."

Read the full press release here

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