Since making one of the largest onshore oil discoveries in 1967, oil entrepreneur Sam Gary has been pioneering the idea that business and philanthropy can — and should — work together for those who need it most. Sam founded The Piton Foundation in 1976, yet he was equally committed to supporting the community through his energy business, which worked in tandem with the foundation to make investments that improved the lives of Colorado’s children. Today, Sam’s long-held belief in using the power of business to tackle social issues is widely recognized as social impact investing, a practice that is quickly evolving from a trend to a movement that is on the verge of becoming mainstream.
Two Vehicles: One Mission
Through his experience with The Piton Foundation, Sam realized that philanthropy alone is not enough to overcome persistent issues of inequality and lack of opportunity. After the sale of his energy business in 2011, Sam and Piton’s board of directors began looking for creative ways to solve the problems facing Colorado’s low-income families that couldn’t be accomplished exclusively through a philanthropic organization. This led to the creation of Gary Community Investment Company (GCIC), a for-profit certified B Corporation that uses a range of investment tools across asset classes to balance risk and return while creating lasting social impact.
Soon after creating GCIC, Sam’s longtime desire to combine private sector and philanthropic resources was realized when GCIC and The Piton Foundation were brought together under a shared vision. This umbrella organization, known as Gary Community Investments (GCI), invests in for-profit and philanthropic solutions for Colorado’s low-income children and their families.
Unlike most foundations, GCI does not seek to exist in perpetuity. By approximately 2035, we intend to fully invest all our financial assets into community and business vehicles that are focused on solving the challenges facing Colorado’s low-income families. To achieve this goal, GCI is taking a total portfolio approach to investing, aligning all our assets with our mission, regardless of whether an investment is made using philanthropic, market-rate or near-market-rate capital.
How We Invest
Because GCI believes that investing in early childhood yields the greatest social return, we focus most of our resources on improving outcomes for young children ages prenatal through five years old. Through our supporting strategies, we take a two-generation approach, investing in the families, communities and systems that foster young children’s development.
As GCI works to invest all our assets into the community, we are focused on transferring our corpus into high-performing organizations that have the power to create and sustain meaningful change. To ensure we are making the most transformative investments possible, we’ve developed the Transformative Impact Grid, a visual tool to help us evaluate new opportunities, clarify expectations for investment results and report on outcomes. This grid is reshaping GCI’s long-term investment strategy, serving as an internal guide to help ensure that the grants, program-related investments and for-profit investments we make have the power to achieve — and sustain — our mission.
GCI’s Commitment to Impact Investing
Because making significant change in the lives of low-income children and families will take far more resources than philanthropy and government can provide, GCI believes impact investing can support the public and philanthropic sectors in addressing social challenges by unlocking significant sums of private capital.
Through our total portfolio approach, GCI leverages the appropriate capital — from philanthropic to market-rate — to drive the social outcomes we are seeking. For our market-rate investments, we hope to demonstrate that it is possible to create social impact without sacrificing profits. This market-oriented approach to delivering social value allows us to use business as a force for good and a driver of social change.
In addition to making direct investments in Colorado, GCI is working with an investment advisor with deep experience in impact investing, to transition our traditional investment portfolio to 100% impact, helping us to further align all our capital with our mission.
Through our inside and outside Colorado investment strategies, we hope to advance the field of impact investing by encouraging other funders to think creatively about investing. There are many local partners, such as The Denver Foundation and The Colorado Health Foundation, who are investing for impact, and we feel fortunate to pursue this work alongside them.
Successes: More Resources & Increased Accountability
Through impact investing, foundations can bring more financial resources to the table — and nonprofits are becoming increasingly savvy about the types of capital available beyond traditional grants. Although Piton’s portfolio has always included recoverable grants and program-related investments, we are seeing more opportunities to leverage these near market-rate tools than ever before.
In addition, there has been growing interest in innovative funding models like Pay for Success (PFS). In 2016, GCI invested in the City of Denver’s first Social Impact Bond program, a PFS model that will provide housing and services to homeless individuals. And, we supported Westminster Public Schools in piloting a quasi-PFS approach to providing a high-quality, full-day pre-K program. Through these investments, GCI seeks to pave the way for future PFS efforts.
Impact investing has allowed GCI to engage nonprofits on a deeper level about sustainability and remaining relevant beyond the grant-making cycle. We are more focused on working with investees on achieving shared outcomes, including emphasizing the importance of evaluation and using data to assess progress toward our goals.
Challenges: Sourcing & Measurement
Through our experience, GCI has found it challenging to source market-rate, mission-aligned investments in Colorado, making us realize the importance of building this deal flow through innovation strategies that inspire social entrepreneurs to think about issues related to early childhood.
And, unlike financial performance, it’s more complicated to measure social return on our investments. Although impact measurement is complicated, it’s essential to our strategy and something we will continue to refine so we can improve our practice, better understand investment- and portfolio-level performance, and continue to contribute to broader field-building.
Gary Community Investments, which includes the Gary Community Investment Company and The Piton Foundation, invests in for-profit and philanthropic solutions for Colorado’s low-income children and their families.
David J. Younggren is the President and CEO of Gary Community Investment Company and The Piton Foundation, where he has served as a board member for more than 17 years. He also serves on the boards of Urban Land Conservancy (past chairman), Colorado Children’s Healthcare Access Program (chairman), Belle Creek Metropolitan District (President) and Colorado Forum Fund (chairman).