I have long wondered if a major foundation could become a CDFI–or, more generally, what a foundation could achieve if it used its endowment as leverage for debt and other types of investments. Wouldn’t that be something?
This morning, the Ford Foundation announced that it will use $1 billion of its endowment over 10 years (so, $100 million per year on average) for Mission Related Investments (MRIs). At fiscal year end 2015, Ford reported an endowment of approximately $12.4 billion.
Ford Foundation President Darren Walker calls MRIs a “new tool.” It is a new tool for Ford, though The Heron Foundation started pioneering MRIs more than a decade ago and MRIs have gained momentum steadily. There is a healthy network of mission-related investors called the Mission Investors Exchange. Ford’s commitment appears to up the game.
MRIs are a version of what some people call “working endowments.”
CDFIs, by comparison to Ford’s commitment, have working endowments of more than $12 billion and possibly as much as $15 billion that they are using as mission-related investments every day, annually. Year after year. (Data compiled from industry analyses, CDFI Fund data, and my own research.)
How does that translate into lending volumes? The combined aggregate lending through Program Related Investments (PRIs) by the Ford, MacArthur, Casey, and other major foundations totals close to $750 million over more than 30 years. Much but far from all of that was loaned to CDFIs. PRIs are made out of grant funding and so are different than MRIs.
Ford effectively invented PRIs and MacArthur, in particular, helped promote them widely. Indeed, without that leadership it is questionable whether CDFIs would have succeeded as much as they have.
CDFIs lend upward of $10 billion per year now.
There are a few ways to think about this:
- Foundations such as Ford, MacArthur, Casey, and Heron are again pushing the limits of philanthropy, opening opportunities that others can leverage.
- Ford’s $1 billion commitment over 10 years is important but not game-changing; at the least, it’s promising but not yet proven as a strategic investment.
- CDFIs are more accomplished and more substantial than they tend to recognize (notwithstanding the fact that the Trump Administration believes the industry is “mature”).
- Or, The Ford Foundation (with approximately the same amount of working endowment as the The CDFI industry) could make a heck of a CDFI.