Investing for impact: Leveraging assets to advance systemic change 

The Jessie Ball duPont Fund’s impact investing journey began in 2008 during the Great Recession, when our endowment lost $90 million in 90 days. We realized that if we restricted ourselves to simply distributing 5% of that diminished endowment as grants, we wouldn’t be able to address complex systemic issues in our communities. So our trustees turned to impact investing to bring more of our assets to bear.  

We went through a period of learning and experimentation. In 2020, we updated our overall foundation strategy to focus our grantmaking—and our impact investing—on placemaking and equity to build communities of belonging. Our impact investment review now includes an explicit equity lens, and many investments support placemaking—from small loans to businesses in under-resourced neighborhoods to working capital loans to institutions addressing affordable housing shortages. We’ve since increased the portion of our $380 million endowment dedicated to impact investing from about a third to 52%. We’re proud to be among a small group of foundations that have achieved that milestone. 

While impact investing is not a new concept, some investment professionals and nonprofit staff still assume that it involves a tradeoff between social benefit and financial return. Over the past 15 years, we’ve built a program that demonstrates that these impact investments are not only the right thing to do but also the smart thing to do.  

Here are a few other lessons to consider: 

• Engage: Our trustees asked staff to explore ways to better deploy all of our financial assets, and staff designed learning opportunities, including attendance at conferences to learn more about the specific avenues of impact investing that would best suit our needs and risk profile. Establishing a shared understanding of the need for patient, flexible capital to support systemic change helped build trustees’ confidence in approving impact investment deals we proposed—and helped us keep going when we faced setbacks such as a borrower being unable to repay.  

• Experiment: We use both program-related investments (PRIs) and mission-related investments (MRIs). PRIs achieve specific program objectives and often include debt, loan guarantees, and ownership equity earning below-market-rate returns. MRIs are investments that provide social and environmental benefits as well as market-rate returns. With both PRIs and MRIs, we started small and experimented with investment types.  

• For example, we provided low-interest PRI loans to community development financial institutions focused on affordable housing and small business lending. Over time, we learned that bridge loans to nonprofits against government reimbursements could also benefit the community. Our bridge loan to Jacksonville-based Changing Homelessness provided working capital more quickly than other sources, securing more hotel rooms for unhoused people during the COVID-19 pandemic. By supporting program service delivery during the lag in government reimbursement, the loan enabled Changing Homelessness to demonstrate the capacity and financial stability needed to secure $8.5 million in CARES Act funding. 

• Hire experts: In 2021, our trustees approved a $50 million carveout to dedicate to impact investments—which, together with our other existing impact investments, totaled 40% of our portfolio at the time. We recognized the need for dedicated impact advisors to reduce staff time and effort spent on filling our deal pipeline for MRIs and to manage that carveout. Our advisors also have connections in the impact investing world that neither we nor our traditional investment advisors could access. 

• Codify: Setting clear goals and measures of success was imperative when bringing on the dedicated impact advisor. We codified our approach in our Investment Policy Statement, a step that felt both radical and essential at the time and has proven critical to our impact advisor’s success in sourcing deals that meet our expectations. 

• Collaborate: We’ve been fortunate to learn from peers in the Community Investment Guarantee Pool, through member organizations like Mission Investors Exchange, and through the Northeast Florida Impact Investing Exchange, which we co-founded to share best practices with like-minded funders. 

• Innovate: A foundation can create public-private partnerships as an impact investor that wouldn’t be possible with only grant dollars. Today, we’re engaging partners to understand systemic issues and identify a role for impact investing to play in solutions. In 2022, we established the Jacksonville Microfinance Fund (JMF) to offer flexible capital to small business owners, emphasizing women and people of color. In 2023, the first JMF investment in Honeycomb Credit’s crowdfunding loan program generated $165,000 in capital for local businesses. This past April, we helped catalyze the Jacksonville Affordable Housing Fund to provide funding to increase the supply of affordable multifamily rental units in Northeast Florida.   

• Lead: Building on our 15 years of experience, we’re excited to help drive the sector forward. Our commitment to transparency–we’ve maintained our Platinum Seal on our Candid profile and publicly explored the legacy of our founding donor–extends to impact investments: We publish 100% of our investments in our Form 990 and maintain a biannually updated Impact Investing Dashboard visualizing progress against our goals and national benchmarks. 

As we look to the next decade, we hope to expand our loan guarantee program and continue to increase diversity among our fund managers. We also see opportunities to leverage our deep knowledge of our communities to find catalytic investments. We’ll keep learning, experimenting, and innovating as we seek to create communities where everyone feels they belong. 

Photo credit: Jessie Ball duPont Fund