Recap: Food Impact Investing for Philanthropy

Panelists at the meeting

On October 5th, the Finance and Investment Working Group of CFF partnered with Slow Money NYC to host a meeting titled Food Impact Investing for Philanthropy.  The following is a recap and video recording of that meeting.

Part 1 of the video (below) begins with introductions of everyone in the room and their interest in the subject area. If you want to jump right to the presentations, go to the 14min mark.  The Q&A discussion is in Part 2, at the end of this post.

How do we make investments in food enterprises that prioritize people and the planet in addition to and maybe over profit? In other words, what does triple bottom line investing look like for food work in our region? And how can philanthropy get involved?

These were the questions confronted by funders and investors alike who came together on October 5th to join Community Food Funders, Slow Money NYC and Philanthropy NY at the Surdna Foundation. Funders and investors put their heads together to better understand the spectrum of food impact investing, the elements that make the sector innovative, and particular challenges and successes as reflected through specific foundation funding experiences.

Slow Money NYC’s Derek Denckla and Hudson Varick Resources’ Karen Simons contextualized the broad sphere of impact investing, summarized food-specific dynamics of impact investing, and referenced active food investors and current challenges that investors face.

Sarah DeNicola of Confluence Philanthropy then honed in on philanthropic impact investing with an overview of mission-related and program-related investments, both of which allow foundations to move resources beyond traditional grantmaking channels.

Rounding out the presentations were program staff from two foundations, Alison Corwin and Tatianna Echevarria from the Surdna Foundation and Stacey Faella from the Woodcock Foundation, who shared their experiences in completing their own program-related investments (PRIs) in the food system field.

The Surdna Foundation, which operates at the juncture of market-based and policy-based environmental intervention, discussed the methodological framework that structured their funding process, including the development of a PRI-fund as an additional 2% on top of the foundation’s 5% annual payout. They also reflected on their own apprehensions about risk mitigation and the central role that relationship-building plays in impact investing. Finally, they compared their experience making program-related investments to that of their traditional funding, paying special attention to key elements of the former that are absent in the latter, such as processes of due diligence and specific vetting for larger loans.

As Woodcock’s only full-time staff person, Stacey Faella brought another lens to the operational dynamics of making program-related investments while sharing her experience funding an intermediary partner (Root Capital) and a more direct investment (Copake Agricultural Center). Faella described a resource challenge smaller foundations sometimes face, which is that there may not be internal capacity for due diligence on an investment opportunity, and the costs of hiring a consultant to do so can significantly outweigh the expected financial returns on a PRI.

The event came to a close with an opportunity for open discussion. Group members affirmed the value of approaching food impact investing “in concert rather than in competition,” questioned the value of particular impact investing metrics, and reflected on the value of initial failures, as one participant commented, “failures push future successes.”

To close, Shawn McLearen, founder of Placeful, underlined the value of investments that value the locality of food businesses and push the commitment to funding sustainable food infrastructure. He invited people to join Slow Money NYC’s work group on Foodshed Investing Rating Systems, which will be discussed at the upcoming North East Sustainable Agriculture Working Group (NESAWG) Conference.

Part 2 of the video (below) has the Q&A portion of the day and Shawn’s final comments.

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