2018 Annual Report: Financial Equity


Located on Portage Street in the Edison neighborhood, The Creamery will consist of apartments, a YWCA child care center, and a small business accelerator.

 

Kalamazoo Community Foundation is moving into a new generation of impact investing, incorporating lessons-learned from earlier efforts to reinforce our strategic priorities of equity and education.

Since 2000, KZCF has used a variety of approaches beyond grantmaking to make life better for all in Kalamazoo County. These efforts have included impact investing, which is investing in companies, organizations, and funds to generate measurable social and environmental impact alongside a financial return. That money can be re-invested back into the community.

KZCF's impact investing has included low interest loans to area nonprofits such as Metropolitan Place, the downtown Kalamazoo festival site, Community Promise Federal Credit Union, Edison Place, Air Zoo, and Western Michigan University's Innovation Center. Investments were also made in three Kalamazoo-based venture capital limited partnerships.

Most recently, KZCF approved an investment in MSHDA bonds for fundimg The Creamery project on Portage Street in the Edison neighborhood. That project will provide apartments for low and middle-income people, a YWCA child care center, and a small business accelerator.

According to Susan Springgate, vice president for Finance & Administration, “impact investments can help sustain and scale high-performing community-based initiatives, as well as innovation across a range of sectors.” And now, Springgate says KZCF’s impact investing “can leverage our assets throughout Kalamazoo County in support of deepening our impact to advance equity.”

KZCF’s priority on equity and education is meant to improve conditions that impact life trajectories for the community’s most marginalized people. This includes improving educational outcomes and creating systemic change through collaborative efforts that reduce disparities and improve conditions for everyone.

Impact Investment Committee

KZCF launched its Impact Investment Committee (IIC) in 2018 as part of this effort to increase financial equity throughout the community.

Springgate says the selection process for this new committee was done “to ensure greater engagement across the community, especially of those voices who are traditionally absent in community problem-solving. We were mindful of this by recruiting those involved, affected by, or concerned with engaging a more equitable approach to investments.”

Recruitment for IIC was the second time in the last year that KZCF recruited community members in a new way. The Anti-Racism Transformation Team (ARRT) also came about as the result of a more inclusive community-based application process.

Springgate describes it as "opening our arms to expand membership to community voices who have not had a seat at the table at the Community Foundation in the past. This is part of our evolution in living out our value of equity in our internal processes and, as a result, we know we will do better work for our community.”

IIC is responsible for recommending impact investing portfolio strategy to the KZCF Board of Trustees, approving impact investments up to $250,000, and recommending impact investments over $250,000 to the Board. KZCF has allocated $22.5 million to this portfolio. The minimum size for impact investments is $10,000, while the maximum is $2 million. The committee also monitors portfolio performance quarterly to ensure compliance with KZCF’s impact investing policy.

Jim Escamilla, a member of KZCF Board of Trustees and chair of the IIC, sees the committee as an exciting opportunity for additional community impact.

“We have a diverse group making up our committee,” says Escamilla. “From individuals with financial backgrounds to community members who are totally vested to improving equity in Kalamazoo County, the committee is a mix of ethnic backgrounds that bring broad perspective to this challenging work. Some have been long-time social workers and have seen the struggles that people in our community have had to endure.”

Long-Lasting Impact

The committee is looking at new ways to invest.

"The old way of investing has many drawbacks," says Escamilla. "While we want to generate a return on our investment that can fuel future work, we also have to consider the generational impact of income inequity. For example, many families have benefited from home ownership with those resources passed down from generation to generation. Other families, disproportionally people of color, were excluded due to laws such as redlining so they're not gaining wealth. We need long-term solutions for struggling families.”

Escamilla adds, “I believe this committee can really have an impact on our community. This impact investing work has the potential to result in long-lasting impact. We may stumble along the way, but we’ll be smart about our work. We’re working on a hybrid approach, a new model for impact investing.”

Springgate sums up this effort, saying how KZCF is seeking to better understand the use of investment capital as a tool to further charitable work. “This portfolio is an opportunity to partner with a wide variety of community entities to advance these projects and to stand out in this field of philanthropy.”

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