Arabella Advisors

Impact Investing: Making the Case to Your Trustees

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Several months ago, Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors released Essentials of Impact Investing: A Guide for Small-Staffed Foundations. Below is an excerpt from the complimentary and actionable guide, geared to foundations with few or no staff that want to align their investments and missions. 

By David Wood, Initiative for Responsible Investment

The early stages of impact investment adoption for foundations lie at the board level.

The idea to explore impact investment as a philanthropic strategy often comes from a single board member, or from staff or consultants who have seen other foundations adopt impact investing. Board engagement is a critical next step for implementing an impact investing strategy: learning what individual board members think about the possibility, educating the board on the state of the field, and taking a broad survey of potential areas of interest or investment opportunities that engage the board’s imagination.

In most cases, board approval is required for a foundation to engage in impact investing, and that often requires ongoing, high-touch engagement from impact investing champions— whether staff or fellow board members. Early board engagement often involves peer-to-peer presentation from board members who are more familiar with the field—and an allaying of the skepticism of board members who may fear that impact investments may not perform well financially or socially.

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New Guide to Impact Investing for Small-Staffed Foundations

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Pages from Essentials of Impact Investing full layout_v8Exponent Philanthropy, together with partners Mission Investors Exchange and Arabella Advisors, is pleased to announce the release of Essentials of Impact Investing: A Guide for Small-Staffed Foundations.                 

Below is an excerpt from the actionable guide—a Q&A with Luther M. Ragin Jr., former president and chief executive officer of the Global Impact Investing Network (GIIN) who helped accelerate the development of the impact investing industry. He speaks to opportunities for small-staffed foundations that want to invest for impact. 

Q: How does impact investing from small-staffed foundations help create impact? 

A: The same way it would from foundations with large staffs or from other philanthropically minded organizations. But small foundations are unique in two noteworthy areas:

  • Flexibility. Their small size makes for nimble structures that can adapt or respond more readily than larger foundations. This nimbleness leads to clear signals on the part of funders and allows asset managers and social entrepreneurs to make sharp decisions based on these signals. It’s better to get a “no” in a matter of weeks than after a process of several months.
  • Specialized knowledge. Small-staffed foundations have unique understanding and expertise in particular geographic or program areas, or both. This can be leveraged to attract other outside investors who can capitalize on the foundation’s connections to the community.

Q: What are some of the specific strategies leaders in small-staffed foundations can use to play a role in moving capital in markets including or beyond their traditional grant-making activities?

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Bringing the Next Generation on Board—at Its Own Pace

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By Betsy Erickson, Arabella Advisors

It’s a lesson teachers and parents know well: No two people learn in exactly the same way or at exactly the same pace. And it’s a lesson worth bearing in mind for those seeking to create pathways for family members to engage in a shared philanthropic legacy. Arabella Advisors has worked with families for over 10 years, and we have learned that an important ingredient for success is to allow family members to decide for themselves when and how to engage in the family’s philanthropy.

We love telling the story of Bill Clarke, founder of the Osprey Foundation and our client for the past seven years, who has embraced a very flexible approach with his own foundation—one that has resulted in deep, personal, and satisfying engagement from each of his children and their spouses.

Bill established the Osprey Foundation 11 years ago to empower individuals and communities through education, health, economic opportunity, and human rights in a sustainable way. In the beginning, he didn’t know exactly where he wanted to invest his resources, much less how his three children, who were then in their early 20s, should be involved. “I wasn’t thinking about bringing them on the board right away, but I knew that we had all been involved in mission work, development, and foreign travel, and that they’d be interested in becoming more involved eventually.”

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Growing Into a Board Member Role

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By Diana Tyler Heath and Molly Tarrant, Arabella Advisors

One of the most rewarding elements of advising families is watching their engagement deepen and their family bonds strengthen, often through the addition of next generation board members who are passionate about making an impact and who bring new skills and perspectives. As we’ve seen with many of our clients, when done thoughtfully, introducing young family members to philanthropy can help shape their worldview, develop their professional skills, and bring them great personal rewards.

Students at Kabanga Protectorate Center (Tanzania), a Palmer Foundation grantee and refuge for children with albinism

Students at Kabanga Protectorate Center (Tanzania), a Palmer Foundation grantee and refuge for children with albinism

Peter Lischick, current treasurer and member of the board of directors of The Palmer Foundation, is one such next generation board member. The Palmer Foundation turns 25 next year and has been in existence nearly all of Peter’s life. Like many family foundations, its early structure was relatively informal and reflected the annual giving and interests of its founders, Peter’s great-grandparents. When the foundation’s assets were fully vested, his grandmother took over leadership of the foundation and his mother and other members of her generation joined the board. They set out to involve the next generation at a young age.

When Peter was nine or ten years old, he joined his two brothers and a cousin on a junior board. “I served as the vice president by virtue of being the second oldest of the group. Our parents kept the board very structured, and taught us about Roberts Rules of Order, sourcing and evaluating grant proposals, and conducting discussions in a respectful and productive manner,” he says.

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