The Minnesota Council on Foundations, in partnership with three Minnesota foundations, has announced the launch of a statewide impact investing collaborative.
Inspired by a similar initiative established by the Michigan Council on Foundations, the three MCF member foundations — the McKnight and Bush foundations and the Otto Bremer Trust — have agreed to commit more than $17.1 million to an impact investing fund. The pooled funds will be invested in RBC Global Asset Management's Access Capital Community Investment Fund, a fixed income bond fund focused on affordable housing and small business lending in Minnesota.
U.S. tax law requires that foundations annually pay out at least 5 percent of the market value of their assets based on a rolling three- to five-year average. Traditionally, the other 95 percent of a foundation's assets are invested to grow its endowment and support future grantmaking. Impact investments are a way for foundations to invest a portion of their endowments funds in activities and programs designed to generate both a financial and social return.
At least eight other Minnesota foundations, including the Initiative, PFund, Minneapolis, Mortenson Family, Schnieders Family, and Sundance Family foundations, are actively considering the opportunity. MCF also has invested a portion of its own assets in the fund.
"This money strengthens Minnesota's market for affordable housing and small business securities and grows the number of Minnesota-based foundations involved in impact investing," said Susan Hammel, impact investing executive-in-residence at MCF. "The fund will have impact locally, but because it reaps nationally diversified returns, it will not have overly localized risk."