A Resolution for Philanthropy in 2024:

Embark Upon and Deepen your Impact Investing Journey

By Amy Chung, Managing Director, Impact Investing and Judi Larsen, Managing Director, CEO Programs Office of The California Endowment

Our history of working at the intersection of health and community has taught us that where people live, work and play have fundamental impacts on their overall health and well-being. Yet, there are communities, across the state, and the nation, that have been chronically disinvested in and marginalized. Their residents and leaders continue to tell us there is a huge gap in equitable and accessible capital to fund essential affordable housing, healthcare facilities, and responsible financial services.

In the face of these urgent needs from our communities we have the opportunity to go beyond what our grant funding can do alone. Impact investments such as loans and guarantees can support thriving communities through financing greater access to affordable housing, healthcare, and the tools of economic security and stability. These impacts can change community infrastructure and provide people the dignity and opportunities they deserve.

Through deploying impact investments in support of our vision of wellness, inclusion and shared prosperity, The California Endowment has been working beyond the IRS mandate of giving away five percent of our assets each year.

We recently published a report on what we’ve learned from ten+ years of impact investing. We have learned how impact investing through our initial Program-Related Investments (PRIs), which combine social impacts alongside financial returns as a single practice, supports our mission and values.

We share these learnings from our own work to invite other foundations to embark on and deepen their impact investing journeys in 2024. The urgency felt by the families and communities we serve requires that we all take up the challenge to change the status quo and do more.

Impact Investments Fit Many Missions

No matter your foundation’s mission, impact investing can likely accelerate progress for those that you serve. 

Consider the transformation under way in Oakland, California, where the founder of Roots Community Health Center, Noha Aboelata, MD says, “It takes more than a doctor and an exam room to uplift those who have been impacted by systemic inequities and poverty and bring health to a community.”

Roots is one of seven community health centers and clinics to receive a long-term, low-cost loan from the Healthier California Fund. We launched the Healthier California Fund in 2016 in partnership with Capital Impact Partners, a community development financial institution (CDFI), now a part of Momentus Capital, to fill critical gaps in community centered health access. The Fund made low-cost, long-term loans that health providers such as Roots could not otherwise access from traditional banking sources. Roots used the capital to evolve from a mobile service provider to a brick-and-mortar clinic that provides not just medical and behavioral health care, but also delivers crucial support services such as health navigation, workforce enterprises, housing, outreach and advocacy.

To date, The Endowment has made 56 PRIs to 41 organizations, with more to come.

Why not just make grants and leave the world of capital and investments alone?

For foundations to advance our missions, we need to use all the possible tools in our toolbox.

Impact investments can do things that grants don’t typically do, such as arrange low-interest loans with reasonable payback terms for entities without credit histories or collateral, provide early investments that give outside investors confidence to join in financing affordable housing and community infrastructure such as grocery stores and guarantee loans that support greater community control of real estate. These are just a few of the creative examples of how impact investing tools can make it easier for communities of color to access capital and support their own prosperity.

We have found that PRIs made through our impact investing practice serve as a strong complement to our grantmaking. We are working to transform capital investment practices into those where community voices and power are centered. To do that, we focus on providing capital to financial intermediaries such as CDFIs that are rooted in the vital infrastructure of low-income communities. Our communities have been strong stewards of loans from CDFIs. Once their loans are paid back, these dollars can be reinvested into more projects in their communities.

We hope our lessons learned can be helpful as you embark on your own impact investing journeys:

  • Collaborate with those you seek to serve: Systemic change requires community collaboration to develop solutions. Through investing with financial intermediaries that are strongly embedded in communities, our capital reaches those closest to the issues and thus the solutions. 
  • Partnerships are important: Building a capital ecosystem that creates wellness, inclusion, and prosperity for all requires a broad range of community stakeholders who can reimagine financial “business as usual” with new knowledge and new possibilities.
  • There is no health equity without racial equity: Our work acknowledges that racial equity is a social determinant to health. We are working to catalyze a more just financial ecosystem in California by advancing racial equity in our impact investing activities.
  • Money alone is rarely the solution: Addressing community priorities often requires many different resources beyond grants and investments. Philanthropies can provide thought partnership, serve as anchor investors, make introductions to additional investors and much more.

    • We are excited about the potential to build a system where investments and capital markets become a force for good for our beloved communities.

    For those of you thinking about impact investing, we encourage you to make your first investment! There is no better time than now to use your power as an institutional investor to seed and grow an inclusive and equitable California, and world, for all.

    The California Endowment is a private non-profit, statewide health foundation that works to make California a healthier place for all. Created through a health care conversion in 1996, it now has more than $3.5 billion in assets and awards over $175 million in grants annually to community-based organizations. Our vision is a “California for All” that leads the nation as a powerful and conscientious voice for wellness, inclusion, belonging and shared prosperity.

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    This content was paid for by The California Endowment. The editorial staff at The Chronicle had no role in its preparation. Find out more about paid content.

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