Journey to Mission Alignment
A Letter From Jim Sorenson
After almost a decade of learning-by-doing and a never-ending commitment to forge ahead in a nascent space, I am proud that the Sorenson Impact Foundation has held true to its mission of serving the needs of underserved communities around the world through supporting innovative, game-changing start-ups and the impact investing space broadly. Part of our success has been our parallel commitment to be nimble, react to inevitable change in a new and growing space, and open our hearts and minds to the notion that some of the greatest discoveries are yet to be realized.
Beginning in early 2017, we opened our minds in an unprecedented way: we decided to leverage the foundation’s balance sheet (~95% of any foundation’s assets) to support our mission and impact alongside our programmatic dollars (~5% of any foundation’s assets). Seeing the numbers, it may come as a surprise that this was a “new idea”. That is where the need to be bold and break down historical barriers came in, not just for SIF but for other foundations like Heron, Ford, Phillips and Cordes, who have embarked on similar journeys.
Historically, our foundation, like many of our peers, focused on growing the field through our grant work and “putting our money where our mouths are” by making equity and debt investments in the form of program-related investments (PRIs). We took what a typical investor would consider to be enormous risk investing in early-stage impact start-ups and taking a chance on ideas that we thought had the potential to make an outsized positive difference. I am proud to say that in just five years, we have impacted well over two million lives around the globe through our direct investments, 75% of which are lives in low-income communities.
Yet, even though we manage our program-related investments like any other investor, had the program-related investments not been spent as investments, they would have been allocated to grant dollars. So, the primary risk we were taking was that we would not succeed in promoting impact investing as a viable asset class. The real risk to our portfolio was, in fact, de minimis.
The balance sheet of a foundation is its survival mechanism, and historically, financial advisors and trustees have guarded it closely. However, as the impact investing space has continued to gain momentum, we recognize we are at a time where we have enough options to truly invest our portfolio for impact and financial growth simultaneously, without concession or undue incremental risk.
So, we did. At this moment, we have aligned ~50% of our assets with our mission, which we accomplished in just 18 months. And the rest of the portfolio is set to be aligned, not only with mission but with deeper, thematic investments, by the end of 2020. Through this effort, we have supported companies that are improving equity for women and people of color, enhancing clean energy solutions, and creating affordable housing. Importantly, we have not sacrificed a dollar of investment gain: since starting the mission alignment process in December 2017, we have outperformed various market-rate benchmarks and are now tracking over 100 bps over our simple benchmark.*
It is my hope that this case study detailing our mission alignment journey as well as the early positive results can serve as inspiration to the trillions of dollars of foundation and other investment capital that, like us, have the power to leverage their balance sheets and investment dollars to truly make an impact in this world.