Mission-related Investment 

Mission investing is a strategy that is increasingly used by foundations across the country to achieve greater impact. It is a way to complement grantmaking objectives by supporting the work of effective organizations with debt or equity investments. The investments are expected to generate returns which may be at or below market rates.

Donor Investment in the Healthy Community Fixed-Income Portfolio

Using this option, donors have the ability to invest broadly, through their donor advised fund or supporting organization, in a portfolio supporting multiple projects in Washington state. Projects to improve quality of life include affordable housing developments, capitalizing low-income credit unions, brownfield restoration and other community development efforts across our Healthy Community framework. This portfolio consists of investment-grade bonds that generate market rate returns. In first quarter of 2008, the portfolio returned 2.37 percent (gross of fees) compared to 2.17 percent for the market benchmark. The investment income is returned to the Donor Advised Fund or Supporting Organization.

How it works
The portfolio is managed by Community Capital Management, Inc., a fixed-income investment advisory firm that specializes in identifying high-quality bond issues that respond to community and economic development needs in a specific geographic area. Fund activity is monitored by members of the Foundation’s Investment, Grants and Community Leadership committees. Investment in this fund requires a longer-term commitment; therefore, donors should not plan to withdraw funds frequently.

How to participate as a donor 

• Send a written recommendation via post or email to your Philanthropic Services Advisor to move assets into this fund. Investments and withdrawals are made quarterly so requests must be received by the 15th of March, June, September or December.
• The initial investment amount must be at least $10,000.
• Assets from Donor Advised Funds or Supporting Organizations that are invested in the portfolio are not available for grantmaking.
• Investment returns are returned to your Donor Advised Fund or Supporting Organization. Your investment is monitored by the Foundation, and investment activity is reflected on your donor fund statement.

Donor Identified Investments from Donor Advised Funds and Supporting Organizations

This option offers donors the opportunity to make investments in eligible nonprofit organizations from their Donor Advised Funds or Supporting Organizations, to provide critical funding to a specific project of interest. Any income is returned to the donor advised fund or supporting organization.

How it works
Many nonprofit organizations periodically initiate investment funds to generate working capital. Assets from Donor Advised Funds or Supporting Organizations can be used to make these investments and any gains are returned directly to the Donor Advised Fund or Supporting Organization.

For example, Global Partnerships’ Microfinance Funds are pooled assets that support microcredit loans in Central America. As loans are repaid to Global Partnerships, principal is paid back with interest to investors. Similarly, the Cascade Land Conservancy Conservation Investment Fund is used to respond to land acquisition opportunities where financial resources are needed immediately and can be paid back over time through fundraising. In both instances, any investment returns are returned to the donor advised fund or supporting organization that made the investment.

As these are investments and not donations, investors receive investment returns but do not take a tax deduction for the investment.

How to participate as a donor

• Identify opportunities of interest to you and discusses them with your donor services representative.
• Determine the investment amount to be drawn from your Donor Advised Fund or Supporting Organization.
• Your Philanthropic Services Advisor will work with The Seattle Foundation’s finance team to gather all needed information on your selected opportunities.
• Like traditional grant recommendations from your donor advised fund, our Grants and Community Leadership committees approve the transaction based on mission fit and financial merit. Once approved, the finance committee monitors the investments.
• While funds are still officially part of your Donor Advised Fund, they considered illiquid and are not available for grantmaking.
• Investment gains are returned to the Donor Advised Fund. Your investment is monitored by the Foundation and investment activity is reflected on your donor fund statement.

Donor Investment in Specific Projects to Complement Foundation Grants

By combining your investment with those of The Seattle Foundation and other donors, you can increase its social and mission impact.

Donors who choose this option leverage their investment with Foundation grantmaking in support of a particular project. Projects are chosen by the Foundation for showing high impact in addressing community issues. Currently, the Foundation is focusing their support in the areas of economic opportunity and educational success and will expand the focus over time.

How it works
Investment opportunities are identified by The Seattle Foundation staff and then reviewed by the Grants and Community Leadership committee, with approval based on potential impact on identified issues. For example, funds might be used to capitalize loan assets for under-banked businesses.

While loans may be made to individual nonprofits on a case-by-case basis (requires an additional layer of due diligence), they are typically made to intermediaries with the skill to select and monitor investments.

How to participate as a donor
In early 2010, The Seattle Foundation made a mission-related investment of $1 million to Enterprise Cascadia’s revolving loan fund pool. This 10-year investment at the rate of 1 percent brought the loan fund to $35 million. Our funds are anticipated to support more than 25 small business loans ranging from $25,000 to $250,000 in King County. The Seattle Foundation is working to raise additional investments from our donors to further support small business stabilization and development efforts. Learn more about this initiative

For more information about The Seattle Foundation's Mission Investment Program, contact your Philanthropic Services Advisor at (206) 515-2111.