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July 2007
We’ve been talking about our strategic planning and its implementation on our website over the past year or so and will continue to share our thinking and plans with you as we move further along. We will, of course, also continue to seek your input in this metamorphosis of Meyer Memorial Trust.
There’s a second part of our strategic planning that hasn’t received as much attention, but that we view as another important part of MMT’s mission “to invest in people, ideas and efforts that deliver significant social benefit to Oregon and southwest Washington.”
To be the best we can be, we want to utilize more of our resources than our grantmaking to achieve our mission. Mission Investing is an area that is receiving more and more attention from foundations.
Especially over the past few years, MMT has increasingly utilized its Program Related Investments (with below market rate returns) to extend our mission related activities beyond grantmaking. At this point, we have loaned nearly $18 million for a wide variety of projects. Now we are expanding these efforts into our market rate return investments.
This movement is partly due to the realization that foundations can unwittingly undo the good done by their grantmaking by investing in activities that do harm or undermine the good work of grantees. We witnessed notable examples of this reality in the Los Angeles Times series of articles about the Bill and Melinda Gates Foundation. Most foundations, when subject to that degree of scrutiny, would likely discover a portion of investments that run counter to their mission.
We are proud that MMT has increased our corpus six-fold while making nearly $423 million in grants over the past 25 years. Our returns the past 10 years have put us in the top 10 percent among private foundations. And we’re happy to say we’re not aware that any of our investments have directly undermined our grantmaking efforts to improve the quality of life in Oregon. But we want to hold ourselves to a higher standard than “do no harm.”
In fact, we’ve joined together with the Annie E. Casey and F. B. Heron foundations to issue a challenge to foundations to increase mission related investments to 2% of all U.S. foundation assets over the next five years. The new campaign envisions that the resulting $10 billion would be committed to investments yielding a social outcome consistent with each foundation's mission. We are optimistic that this initial challenge can be achieved, and even exceeded, rapidly.
At MMT we are well past the 2% challenge. For example, $37 million (currently about 5.5%) of our portfolio is invested in:
--Nth Power – a venture capital firm that is committed to "cleantech" energy technology. One of its founding partners is located in Portland and has been in clean tech energy space for more than 10 years.
--Endeavour – a buyout firm headquartered in Portland that invests in middle market companies in the Pacific Northwest, it mostly invests in service and manufacturing companies with “franchise value” headquartered in the western U.S. Endeavour’s regional strategy is based on the premise that doing business face to face is still the best foundation for partnerships, with the advantages of responsiveness, access to Endeavour’s principals, investment of regional capital back into the region, and fewer but deeper business relationships.
--OVP - an early-stage venture capital fund with offices in Portland and Seattle that focuses on investment in the network infrastructure, enterprise software, digital biology, specialized electronic systems, business services, life science, communication, and Internet sectors in the Pacific Northwest.
--Voyager – a venture capital firm with offices in Portland and Seattle that focuses on business software and services, digital media, and wireless technology (two-thirds of their investments are in the Pacific Northwest).
In each case, we are looking to obtain market rate returns within a 10-to-12-year time horizon. Our mission investments to date are addressing sustainability (Nth Power) and economic development in the region, with a goal of:
--keeping companies in the Pacific Northwest,
--helping them grow and make even greater contributions to the region’s economy, and
--helping create new companies in growth business areas that improve the economic vitality of our region.
We have also invested $1 million in certificates of deposit through a CDARS (Certificate of Deposit Account Registry Service) program using Albina Community Bank as part of our cash management program, which provides more deposits to Albina, which in turn allows this local bank to provide more capital in our own community while providing appropriate safety for our deposits.
In addition, MMT recently partnered with the Oregon Investment Council to bring internationally recognized investment managers, local business leaders, money managers and our trustees together in an effort to gain multiple perspectives on the opportunities of sustainable investing. We came away from this day-long workshop with a much greater understanding of the breadth and depth of the potential for expanded investment in sustainable businesses and practices.
Most recently, in an effort to accelerate the Trust’s efforts in mission investing, we have created a visiting executive position at MMT for venture capitalist and Oregon Innovation Council co-chair David Chen. While pursuing his interests in clean and sustainable investment opportunities, Mr. Chen will assist MMT in evaluating current and future mission investing opportunities.
We expect to continue to bring reports to you about this aspect of making MMT the best that it can be.
I welcome your comments and feedback.
Doug
