As a community foundation, we listen regularly and deeply to the residents of our region, and base our goals and strategies on their input. Our core values of leadership, equity, inclusiveness, and accountability have guided our work for the past two decades.
Our most recent comprehensive community listening process resulted in our current focus on broadening access to opportunity for the region’s most vulnerable residents, and on increasing donors of all types who give more strategically to their own and to The Denver Foundation’s objectives.
Moving Beyond Grants
Place-based impact investing describes a range of key strategies we use to advance TDF’s work.
In 2013, TDF began investing non-grant resources to achieve both social and financial returns. Our goals were to deploy additional resources in service of our mission, and to engage our donor-advised fundholders in strengthening access to opportunity throughout the region. The Foundation initially created a $1 million impact investing pool from its operating reserve, and empaneled a committee of trustees and experienced community investment volunteers to oversee a three-year pilot project.
The impact investing pilot project, which was made permanent in 2016, has deployed almost $1.2 million in a variety of impact investments, including a low-interest working capital loan to a startup coffee house that trains and employs 18– to 24-year-olds facing barriers to employment, and a six-figure investment in a fund that provides gap financing for affordable housing development close to transit stations. All of these investments projects are performing financially, although most are at too early a stage to offer any conclusions about financial risk and return. All are generating important social returns, such as the youth training and transit housing development outcomes noted above, as well as:
- creating and expanding new businesses owned by low-income entrepreneurs and newly arrived immigrants and refugees;
- preserving and renovating nonprofit shared spaces that meet critical community needs and employ hundreds of staff; and
- providing safe and supportive housing to individuals who had been living on the streets for years.
Donor-advised fundholders have co-invested with the Foundation on several of these projects, and all signs point to a growing appetite for impact investments among fundholders, especially as the pipeline of opportunities continues to grow.
This early success has led TDF to consider how we might expand the investment resources devoted to this work. Discussions are underway to create a multilayered PRI/MRI/SRI strategy — i.e., program-related investments, mission-related investments, and socially responsible investments — that would further engage donor-advised fundholders and expand the range of the Foundation’s investment assets that are deployed through an impact strategy. A centerpiece of that strategy is to explore development and/or participation in impact investment platforms.
One of the most promising of these is the Community Investment Platform (CIP), which is being developed by Mile High Connects (MHC), a close partner and fiscally sponsored project of TDF, and a variety of other public and private sector partners. The CIP focuses on unlocking private sector impact investment into real estate opportunities that will, for example, preserve and develop affordable housing, and support community land trusts to stem displacement of low-income families from their neighborhoods. The platform will enable impact investors to aggregate their investments in a range of mission-driven place-based projects, and will allow these investors to select specific areas of interest and impact. TDF is developing this platform with MHC, and also researching other platforms through which it could deploy both its own and donor-advised philanthropic capital.
Community Wealth Building
Community wealth building (CWB), a term popularized by the Democracy Collaborative, describes another key set of place-based investment strategies that The Denver Foundation is using to advance its access to opportunity goals. CWB focuses on helping communities develop collaborative, inclusive, and locally controlled economies that provide good jobs and healthy environments for their residents.
TDF has helped to launch and staff a local Community Wealth Building Network, a growing association of community-based organizations and residents in Metro Denver. Participants are mapping and connecting the many local projects throughout the Denver region that are putting community members at the center of local economic development. One of these projects is creating worker-owned businesses in the region, through which employees can earn both a salary and an ownership stake in businesses that they control.
Another ongoing project is developing a network of “anchor institutions,” which are large organizations — think health, higher education, and municipal government — that are anchored in communities and thus can have a significant influence on local employment, economic impact, and use of land and resources. The Denver Foundation and Mile High Connects have linked 16 local anchors in a “learning and doing” network to explore ways they can better engage with and support the economic development of their surrounding communities. Strategies include hiring and purchasing locally, and making direct impact investments in and using their land and real estate assets to create affordable housing or commercial space that addresses needs in surrounding neighborhoods.
Successes, Challenges, and Gaps
The Metro Denver region is experiencing a surge of interest in place-based impact investing, with both philanthropic and for-profit investors seeking to deploy investment capital in ways that strengthen local communities while earning a financial return. It’s important to keep in mind, however, that local philanthropy is catching up with a movement that has been underway in other parts of the country for more than a decade.
In this early stage, Colorado’s philanthropic community seems to be typified by an abundance of caution on the part of foundation leadership. With notable exceptions, foundation investors have been reluctant to devote significant capital, especially from endowments, to socially focused investments that may (but may not) earn lower rates of return than more traditional asset classes. This reluctance is slowly being overcome by growing awareness of how peers in other regions have used impact investing to advance their social and financial missions, as well as by the imperatives to find new ways of investing in community to solve increasingly severe problems.
As the interest in place-based impact investing grows, the Denver region must develop more points of entry, investment platforms and investable opportunities, so that newly activated capital can be deployed for community benefit. And while interest and enthusiasm for this approach are mounting, impact investing is not the answer to every need in our region. Many high-capacity nonprofits that provide critical services to our area’s most vulnerable residents still need traditional grant dollars to do their work effectively. As investors look to bring socially minded capital into newly developing markets, place-based impact investors should consider how best to combine grants and investments to grow the resources available to address the Denver region’s most challenging problems.
The mission of The Denver Foundation, the oldest and largest community foundation in the Rocky Mountain region, is to inspire people and mobilize resources to strengthen our community.
Patrick Horvath is Deputy Vice President of Programs and Director of Economic Opportunity at The Denver Foundation. He also represents the foundation on the steering committee of Mile High Connects. Previously, Patrick was Associate Director of the Urban Justice Center in New York City, where he provided civil legal services to homeless adults.