Mission Related Investing Policy

Purpose

The Foundation is committed to aligning its invested assets with its mission and values, and desires to generate both social and financial returns with its capital. The Foundation will pursue Mission related and Impact investments (“MRIs”) holistically across the portfolio and invest a portion of its assets in Program Related Investments (“PRIs”).

General Guidelines for Mission Related Investments (M.R.I.s)

M.R.I. investments may be made up of managers that invest in public and private equity and credit strategies that closely align with the Foundation’s mission and values. Such investments will follow the objectives and guidelines outlined in the respective sections of the Investment Policy Statement and be subject to the same quality and diligence standards and return expectations as all other investments. Public equity and credit managers will be evaluated against specific market indices that best represent their investment style, although given the nature of these investments there may be certain strategies where benchmarks are imperfect. Private limited partnerships will be expected to achieve an internal rate of return over the life of the investment that is commensurate with public equity benchmarks plus a premium for illiquidity and risk. In addition to financial metrics, the Foundation will evaluate M.R.I.s from an impact perspective using manager, advisor or other third party provided reporting.

General Guidelines for Program Related Investments (P.R.I.s)

The objective of the P.R.I. portfolio is to advance the Foundation’s values and mission by meeting the capital needs of strongly aligned organizations. While the Foundation seeks to generate a modest return from its P.R.I. program to achieve its broader financial objective, the production of income or the appreciation of property are not primary objectives. The following considerations will be used in deploying the P.R.I. allocation:

• P.R.I.s must meet the IRS definition of Program Related Investments.
• The P.R.I. portfolio shall be driven by impact opportunities and not seek to diversify by asset class or type of P.R.I..
• P.R.I.s are generally expected to have an impact in the Foundation’s geographic areas of focus.
• P.R.I.s are generally expected to be deployed as loans or debt, although other strategies/investment structures may also be utilized.
• Selection criteria should follow the basic P.R.I.nciples of the Foundation’s grant determination and be shown to offer reasonable prospect of repayment. Additional levels of due diligence may be applied depending on the type of investment involved.
• The P.R.I. portfolio shall be limited to 5% of total assets, with no single P.R.I. exceeding 1% of total assets at the time of underwriting.
• P.R.I.s are expected to deliver below market rate returns and/or exhibit higher risk than MRIs. Loss of P.R.I.ncipal is not expected, but higher risk P.R.I.s with greater potential for loss of capital may be explored.
• The majority of P.R.I. investments shall target timeframes of 2 to 10 years, although certain types of investments may have a longer term. All investments shall be evaluated regularly throughout their terms.
• P.R.I.s may be made to either not-for-profit or mission aligned for-profit organizations. P.R.I.s to individual persons are prohibited.
• While it is an investment, a P.R.I. shall not be included in the asset base used to calculate the Foundation’s distribution requirement. The objective is to recycle funds earned into new P.R.I.s.
• P.R.I.s would be recorded as separate business assets and not mingled with managed assets for performance reporting. (P.R.I.s) performance will be tracked by staff and reported to the Board annually. A nominal benchmark will be established for each P.R.I. based on the offering documents of the investment. The overall P.R.I. portfolio will be benchmarked to inflation as measured by CPI-U.
• P.R.I.s will also be evaluated on their social impact.

Specific Guidelines for PRI Portfolio Risk

The Foundation seeks to maintain a portfolio of investments comprised of various levels of risk. As such, every investment shall be assigned to a risk classification, based on its characteristics and/or risk profile. Investments will be categorized into one of three risk classifications: (1) low; (2) moderate; or (3) high.

To ensure the longevity of the fund, the majority of investments in the portfolio shall be categorized as low risk. However, to further advance mission and maximize impact, higher risk opportunities will be taken but constrained to a smaller portion of the PRI portfolio.

The allowable ranges of portfolio risk are described below. The portfolio’s risk may fluctuate depending on the circumstances of each investment in which the following allowable ranges are considered acceptable.

PRIs are made with the expectation of repayment. Loans are typically unsecured, but collateral may be considered for higher-risk borrowers or to improve the risk rating.

Guidelines for loan guarantees and other credit enhancements:

• Loan guarantees and other credit enhancements shall be limited to 5% of total assets.
• No single guarantee or other credit enhancement shall exceed 1% of total assets at the time of underwriting.
• Loan guarantees and other credit enhancements shall generally be limited to a term of 10 years or less.
• When possible, guarantees may be structured such that any advances to cover obligations convert to loans or, in the case of a not-for-profit organization, potentially a grant or PRI loan.
• If a loan guarantee or credit enhancement is called upon resulting in a payment obligation, the amount may be included as part of the Foundation’s budgeted payout in accordance with the spending policy.