Following the Money

Meyer Memorial Trust has been moving toward more mission-related investing over the past few years. As of June 2010, approximately 8.1% of our corpus is in mission related investments. In addition to our leadership work in the PRI Makers Network since 2003, MMT is one of three members of the Founders Circle of More for Mission Investing, which continues as Mission Investors. The More for Mission Campaign is a proactive commitment to broadly promote mission investing and challenge foundations to take up mission investing practices. The goal of the campaign is to increase mission investment commitments by $10 billion over the next five years. The Campaign aims to help foundations build capacity so that they have the tools to be able to better align their investments with the mission of the organization.

From the More for Mission website: In determining a strategy and approach to mission investing a foundation thinks about the spectrum of mission investments and how their mission and program strategies align. The  "Mission-Related Investing Continuum" developed by Luther Ragin of the F.B. Heron Foundation illustrates the spectrum of mission investments available.  At each end of the spectrum are varying levels of risk and associated returns—below-market and market-rate.  A foundation has the ability to assess opportunities across the entire spectrum and pick investments that make the most sense based on the foundation’s broader mission investing strategy.

MMT's move to Mission Related Investing was the subject of a Case Study by students at Harvard University's Kennedy School Case Program issued May 3, 2010.

Meyer Memorial Trust uses a process illustrated in the graphic on the right to prioritize our investment in relation to our mission and values. (Click on the image to see a larger version.) MMT has recently added three MRI investments:

Boston Common
Boston Common shares its clients’ commitment to using their investments to foster progressive social change. We pursue our clients’ social missions through their portfolios with a mix of social screening and shareholder advocacy, each driven by our in-house social research process. We favor companies making positive contributions to society and the environment, and seek to include them in the portfolio wherever possible. Conversely, we avoid investing in companies with product lines or environmental and social records that violate our clients’ missions. On behalf of all our clients, we regularly leverage share ownership in companies to voice concerns and promote change through shareholder advocacy. Boston Common also votes its clients’ proxies in favor of best corporate governance practices and social issues.

Community Capital
Community Capital Management is a majority women-owned firm that provides fixed income investment services to foundations, religious organizations, pension funds, not-for-profit healthcare systems, insurance companies, financial institutions, and mission-related investors. Community Capital Management offers investors the opportunity to invest in our government-related, core fixed income strategy via a separate account product or via a mutual fund.

F&C
F&C has pre-eminent positions in both managing Emerging Market equities and in addressing Environmental, Social and Governance issues. They are managed from an investment perspective through its highly experienced Emerging Market Equities and Governance and Sustainable Investment (GSI) teams

CEO Doug Stamm regularly reports on MMT's progress in investing more in our mission. We've included some of his posts below.

Developing an MRI focus at MMT

From Doug Stamm's July 2007 Investing More in our Mission report:

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% 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 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 10-12-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
• 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 Chair David Chen. While pursuing his interests in clean and sustainable investment opportunities, Chen will assist MMT in evaluating current and future mission investing opportunities.

From Doug Stamm's Update in July 2008:

Today we are sharing the outcome of Equilibrium Capital's work with you. Mission Related Investing: Building a Portfolio explores current obstacles to MRI development and sets forth an implementation plan. While originally intended as an internal document, we decided to share it with others because we find it to be a remarkable summary of the state of the field that also provides a map for actions MMT and other foundations can take next. This work also inspires the Meyer Memorial Trust’s deep dedication to the issues of sustainability. Traditionally, investors work with consultants or so-called “gatekeepers” to identify investment products. The study found that these “gatekeepers” are not aware of the many products and MRI opportunities being developed in the marketplace and therefore institutional investors have become the market drivers for MRI opportunities. That puts them at the forefront of influencing the development of MRI and sustainability domain expertise across the traditional investment value chain. The report suggests a four-step implementation process: 1) objectives setting; 2) investment; 3) evaluation; and 4) integration. The fourth step achieves mission implementation across all organization tools, programs and assets.

MMT was an integral part of the effort to convince Cambridge Associates to develop a MRI research initiative. Cambridge's focus on MRI brings credibility to the movement, given the firm's large market share. This project could have tremendous effect on increasing MRI.

Cambridge intends to expand its knowledge of key players in MRI and build a manager database. The firm will produce annual performance reports for each type of MRI strategy, such as Sudan-free and clean technology. It will define best practices for institutions regarding the establishment and implementation of an MRI program. As we announced earlier, MMT is partnering with 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. Our MRI approach was featured in a recent article in Alliance Magazine, "news and analysis of the latest developments in philanthropy and social investment worldwide." At this point, MMT has $40 million in investments aligned to its mission, largely in local venture capital, clean tech and buyout funds. We expect that amount to increase significantly in the future.