Giving beat: Investor exchange blazes a new trail

The Twin Cities will become the hub of a national philanthropy movement this week that prods foundations to spend more of their endowments on Main Street and less on Wall Street.

About 400 philanthropists from across the country will attend the Mission Investors Exchange conference in Minneapolis, where they will share ideas and experiences to boost the impact of their investments in nontraditional arenas.

Those arenas could include small business loans, economic development, environmental protection or projects addressing racial inequalities.

The idea is to better align foundations’ missions with their outside investments, said Gary Cunningham, a vice president at the Northwest Area Foundation.

“This is a huge shift in the industry,” said Cunningham, a member of the conference host committee. “And many foundations have found they get a higher rate of return than in investing on Wall Street.”

Another advantage: Some stock market investments can conflict with a foundation’s goals, he said.

Foundations must give away 5 percent of their endowments for charitable donations. The rest — until recently — had been invested in stocks and other financial devices.

The idea of tapping endowments has been around for years, but it’s taken off in the past five years. At least $653 million is currently invested in everything from affordable housing to new energy solutions.

Minnesota is no stranger to the trend. The Northwest Area Foundation invested $20 million in the past 10 years in businesses that paid living wages and good benefits, said Cunningham. It recently set aside $40 million for yet-to-be-determined projects.

The McKnight Foundation invested $21 million on projects aligned with its Region & Communities programs and Mississippi River preservation. It’s recently set aside $200 million for projects.

The Minneapolis conference is sold out, with 150 people on the waiting list. Said Cunningham: “That’s a huge indicator this is a trend moving forward.”

 

Jean Hopfensperger • 612 673-4511

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