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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
Given the challenges we face in Oregon, philanthropy IS and SHOULD be moving beyond traditional notions of charity. What does this mean, what does it look like? From my perspective, the most appropriate terminology is for foundations and philanthropists in Oregon is to aspire to be social entrepreneurs.
What is a social entrepreneur? Straight from wikipedia (today’s compendium of human wisdom): “The job of a social entrepreneur is to recognize when a part of society is stuck and to provide new ways to get it unstuck. To find what is not working and solve the problem by changing the system, spreading the solution and persuading entire societies to take new leaps. Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.�? — Bill Drayton, CEO, chair and founder of Ashoka, a global nonprofit organization devoted to developing the profession of social entrepreneurship.
That’s how some foundations, including the Meyer Memorial Trust, are coming to see our role in society. We are increasingly aware of the unmet needs in our state and how the old way of doing business is not up to the task… we need to be more engaged and act more forcefully––as social entrepreneurs––to meaningful contribute to solving these staggering problems.
MMT has served a useful role in being a Responsive Grant foundation merely responding to community requests, but we know that alone is not enough anymore. The stakes are higher now. We’re not addressing the biggest and toughest issues in the most strategic way if we wait only for solutions to come through our door or, these days, show up in our inbox. We must be more focused, more intentional, and certainly more aggressive if we are really going to lead or inspire meaningful social change….this is the charge for a foundation that truly aspires to be a social entrepreneur.
So where are there examples of this work--helping our state get unstuck, changing the system, spreading solutions?
>>> DEVELOP OR JOIN INITIATIVES IN THE AREA OF PUBLIC EDUCATION:
➢ Chalkboard Project is the most visible example of a strategic and focused effort, involving several foundations. This effort reflects collaboration, world class best practices research, civic engagement, building bridges with all interest groups, transparency in the process, advocacy and public policy. These are the tools of a social entrepreneur.
➢ Oregon Small Schools Initiative is another kind of new partnership MMT has forged with the Bill and Melinda Gates Foundation to develop and implement models for high schools that work across the country and apply those best practices here in Oregon.
But even within our traditional general purpose grantmaking, we’re no longer just saying yes or no to proposals that reach us. Instead as a budding social entrepreneurs we are:
>>> LOOKING FOR WAYS TO CHANGE SYSTEMS AND SPREAD SOLUTIONS IN EVERY GRANT
Here’s an example: A mental health agency serving low income patients with multiple sites lost state funding so they turned to the Meyer Trust with a grant request to purchase and implement a patient tracking database. Rather than issue a grant to purchase an off the shelf system, we asked if they would consider being the pioneer organization to develop an Open Source Software system that would meet their needs, but also be available for free to other mental health agencies facing the same dilemma. They agreed, even though it would take longer and require more work on their part. Now that the initial database project is wrapping up with an electronic claims submission component. A second agency is beginning to use it and, in fact, funding another feature that will further enhance it and be available to the first agency and others to follow. So rather than fund one request that only helped one agency, we were able to facilitate creating a solution that will be available at no cost to all health care providers, resulting in significant operational efficiencies and improved outcomes.
Through this grant, we also invested in entrepreneurs developing Open Source Software, a movement that has tremendous significance in Oregon beyond nonprofits.
>>> FAVOR, ENCOURAGE AND REQUIRE NON-PROFIT COLLECTIVE PROBLEM SOLVING
Another way we are being more active or forceful with grant seekers is illustrated in this recent example: We were approached by several environmental organizations working separately on eco-based systems management within the Oregon three mile territorial zone. At our urging and participation, the organizations collectively prioritized needs and submitted a joint proposal that targeted the best use of every group's strengths and ensured a synergistic result. See the COMPASS website.
By viewing philanthropy through the eyes of a social entrepreneur we see that our investments need to have more than one dimension to address the needs of not just one nonprofit, but contribute to the good of the community, creating significant social benefit in Oregon.
>>> EMBRACE REASONED RISK AND NEW PROGRAMS THAT SERVE DUAL PURPOSES
Embrace and support social enterprise efforts by non-profits that further non-profits' missions while generating revenue.
E.g., New Avenues Ben & Jerry’s Ice Cream and Outside In’s Virginia Woof Doggie Day Care identified business opportunities, developed business plans, and now operate businesses that help them carry out their mission (in both cases to prepare homeless youth for better futures).
>>> EXAMINE THE USE OF OUR ASSETS BEYOND GRANTMAKING (INCLUDING THOSE OF A SOCIAL ENTREPRENURIAL EFFORT NOTED ABOVE) AND ASK:
Should a private foundation be more than a private investment company that uses some of its excess cash flow for charitable purposes?
How can we leverage all our resources and return more to the community each year than the 5% of our corpus the law requires?
• MISSION RELATED INVESTMENTS:
This means finding opportunities to align our financial investments with our organization's mission, values and programs. It means guarding against actions like the foundation that had a program to address childhood obesity while investing heavily in the fast food industry. Maybe it means establishing a venture capital fund in Oregon, providing economic assistance to economically depressed areas, etc.
• PROGRAM RELATED INVESTMENTS:
MMT has taken a national leadership role in use and evangelizing of PRIs…investment tools with below market rate returns. Some examples include PRIs made to Ecostrust for a forestland investment fund to demonstate sustainable timber management, support of Cascadia Behavioral Healthcare's job creation programs, and the Deschutes River Conservancy's work in water mitigation credits.
So if we behave like a social entrepreneur in the ways I mentioned above, we can expect to be more effective… as long as we are honest and open and transparent about our work. When we get it right, we should talk about it and do more. We also need to talk openly when we get it wrong, and resolve to it differently in the future. And we must seek out honest, constructive input from others. Our success depends on you not just telling us what you think we want to hear, but telling us like it is…
The more we commit to the role of social entrepreneur, the more we can and will "revolutionize the fishing industry." None of us in the field of philanthropy should settle for anything less.
As we announced recently, MMT has taken a major step to grow into our role as social entrepreneur by engaging FSG (Foundation Strategies Group) Social Impact Advisors to support us in a strategic planning process designed to significantly enhance our ability to acheive greater social impact for Oregon and SW Washington. This project will be the most comprehensive and deepest look ever at MMT's activities, and represents a significant commitment by our foundation.
We will keep you abreast of our continued efforts to make our work matter more.
Doug
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Doug Stamm
Executive Director
This is a critical time in our region. The quality of life we hold so dear is being threatened on several fronts. While we read and hear of economic recovery, we know that too few are participating in it. Demographic changes are occurring that will present both challenges and opportunities to Oregon and southwest Washington long into the future. Federal and state funding of programs is being reduced, a trend reflected in the proposals that reach our door.
While we know our work is appreciated in the communities we serve, and the Trust has much to be proud of, we are setting our sights even higher for the future. During the past six months our staff, trustees, consultants, and community partners have been actively engaged in a process of analysis, self-examination and reflection. We have reached a seminal point in that process and now it’s time to share with you some key aspects of our work to date.
When Meyer Memorial Trust began operating in 1982, our $120 million in assets made us the 37th largest foundation in the nation. While our assets have grown to about $538 million today, after awarding nearly $365 million in grants, the field of philanthropy has grown so remarkably that in 2004 MMT was the 100th largest foundation in the country. We were once the largest foundation in the Pacific Northwest. Now the largest foundation in the world calls the Northwest home, and many new foundations have outpaced MMT’s corpus.
As one of our trustees recently summed it up, “$500 million isn’t what it used to be," prompting us to ponder how the Trust could continue to provide significant benefit to Oregon and southwest Washington. Our trustees’ response: To become a national model for foundations that serve specific regions. Accordingly, we’ve committed ourselves to being best at what we do -- serve a focused geographic area in a way that makes it materially better.
How will we know if we are a national model for regional foundations?
What will MMT do differently? We’ve started down the track but have much more work to do. However, here’s what we know so far…
Our new mission and values serve as a guide for our culture and behavior. We encourage you to hold us to these standards.
All programs are being evaluated to determine how effective we are now and how we can improve our impact in our region. While general purpose grantmaking will remain at the core of our business, there are no sacred cows in our assessment. We are determined that our work matter.
We expect to initiate new programs and grantmaking styles designed for maximum social impact. In this vein we have begun to modify and enhance our grantmaking procedures, with full implementation scheduled for early 2006.
Our Program Related Investment program is being refined and we are looking at areas to enhance our mission-related investing. From top to bottom, we are rethinking everything we do. We plan to make concerted efforts to reach out to regions and communities we are not serving well enough now. This fall we plan to leave our office and come meet you in your neighborhoods and communities, from church basements to grange halls. In addition, we will ask you to help us assess our work as we secure an outside evaluation of our grantmaking.
What happens next? While many of the new strategies have been identified, we will finish our planning this fall and accelerate implementation of plan strategies. We have already begun to implement some of the changes you can expect us to continue. You may have already noticed an increased emphasis on communications from our office; expect to see continued efforts to creatively connect with you about our work. Other enhancements are already reflected in our redesigned website and online application processes. Although some long-time staff have left to pursue the joys of retirement, new hires are contributing new energy and perspective.
The Oregon Small Schools Initiative and the Chalkboard Project have made considerable progress this past year. Reform efforts are underway at 15 high schools across the state and Chalkboard’s K-12 Action Plan was unveiled in June. We encourage you to keep checking in with those initiatives and providing your candid input. We will never be finished improving and implementing changes. Learning, evolving and innovating is key if we are to continue to best serve the people of Oregon and southwest Washington. Check our website frequently for more innovations and refinements…then weigh in with your questions or comments.
We’ve never been more enthused and energized about our future.
Doug Stamm
Executive Director
Having completed my second year as executive director at Meyer Memorial Trust, I have a deeper understanding and appreciation of what the Trust has done so well over its first 20 years. I have also gained greater clarity about new directions for the Trust to forge in the future.
Some of those changes emerged in our Fiscal Year 2003-04, what we are calling a year of Taking Initiative. Some examples follow:
This heightened level of activity was matched by robust growth in our assets. As we closed out the fiscal year, following three years of nearly flat or declining assets, our corpus grew by nearly $100 million (33%) to more than $500 million, after paying out nearly $26 million in grants. (View most recent independent audit)
As I reported last year, we at the Meyer Memorial Trust are in the midst of change. Driven by the vast needs that exist in our state, and following in Fred Meyer’s entrepreneurial and innovative footsteps, we plan to continue to look for ways to take initiative on behalf of Oregon. For example, we will build on our efforts this year and also continue to:
We are at the initial stages of charting our course, recognizing there are many paths to follow. Going forward, rather than continue with a printed year-end annual report format, we will utilize our new website to report to you frequently on our areas of focus and initiatives and encourage your candid feedback and evaluation of our efforts. We really mean it!
One of the most rewarding aspects of my job is meeting with change agents who stimulate thinking and take novel approaches to problem solving. I continue to be humbled and inspired by honorable intentions, creative vision, energetic spirit and hard work of Oregonians who do so much on behalf of their state, communities, and one another. Those encounters remind us daily that we at the Trust are privileged to do this work and that we bear a responsibility to support your good work to the fullest of our capabilities.
Doug Stamm
Executive Director
