Although investments in traditional public markets have served us well in providing income for granting, we believe our investments can increasingly support our mission. Impact investing – investing with a focus on social and financial return – is a way to align more of our assets with our mission to drive positive change. In 2015-16, HCF’s Board of Directors made significant steps toward this goal.
20 by 2020
Last fall, following a five-year impact investing pilot, the Board established a target of investing 20 percent of the Foundation’s assets in impact investments by 2020. To achieve this “20 by 2020” goal while providing returns that ensure long-term financial stability, HCF will employ a mix of strategies aligned with priorities that include a preference for local investments, balanced with national/global investments to provide a diversified portfolio. Focus areas for impact investment include education, affordable housing, youth, health, employment and other areas that align with granting priorities. The Foundation’s next steps will be to assess opportunities, investment criteria, local and national partnerships and measuring and reporting on social impact.
Recognizing that all investments, including public market investments, have a social or environmental impact that can be positive or negative, the Foundation is deepening its examination of its public market portfolio holdings. Again, building on its five-year pilot with an “ESG” portfolio where environmental, social and governance practices are an important part of investment considerations, in 2015-16 the Board undertook an audit of its current traditional public market portfolios. The audit was conducted by Sustainalytics, global leaders in helping investors to develop and implement responsible investment strategies.
Audit results identified that portfolios under the direction of each of HCF’s three investment managers were outperforming benchmarks for ESG performance. This demonstrates that HCF’s portfolios comprise companies with a “stronger than average preparedness to manage material environmental, social and governance risks.” The Foundation will be working with its investment managers, who are all signatories to the United Nations Principles for Responsible Investment, to determine next steps in the evolution of our investment policy.
Hamilton Community Investment Fund
Locally, the Hamilton Community Investment Fund offers loans to charities and non- profits thereby “recycling” capital for community use. A breadth of local organizations continue to benefit from financing from this fund, including the Mustard Seed Co-op, the Cootes to Escarpment EcoPark System, and Indwell. Most recently, the fund has approved a loan to Trilliium Housing Non-Profit to develop a project that will deliver housing affordability in Hamilton.
Trillium Housing has acquired a three-acre site in the city where it will develop approximately 70 townhouses. The organization develops units at the entry level of the local market and provides greater affordability through the Trillium Mortgage. The Trillium Mortgage combines with conventional financing to create affordable financing that enables a family to buy a home. The Trillium Mortgage is payment-free until discharge – it’s like Trillium Housing owns a piece of the home so that it is more affordable for the family. The value of each Trillium Mortgage is based on each income-eligible purchaser’s individual circumstance.
The innovative Trillium Housing model uses a partnership structure to create impact investment opportunities that deliver financial return and housing affordability without the need for government subsidy.