The Third Immersion: BALLE-RSF Community Foundation Circle

By Catherine Covington

Surrounded by the beautiful rolling hills of Napa County, California, the BALLE-RSF Community Foundation Circle (CFC) gathered at Mayacamas Ranch last November for the third of four gatherings. It has been a year since the initial gathering of the CFC, and so much has happened within the group both personally and professionally. During the opening circle, the question was asked, “what brought you here?” It yielded the following reflections:

“I have learned so much over the past year, and have received help from so many of you that has enabled me to do things I was overwhelmed by before.”

“This group has bolstered me through the anxiety I had about tackling this work. BALLE and RSF have been incredible stewards.”

“The relationships have become paramount over the work. This Circle itself has the most meaning for me right now. “

The theme of this particular gathering was capacity. Much of our discussion centered on the F.B. Heron Foundation’s work, and what its approach inspires. We also updated one another on the progress each community foundation leader has made with respect to their place-based investing projects, and the challenges everyone sees in the horizon. Lastly, we contemplated how to memorialize and share the work of this CFC cohort, and how to best use our time at the fourth and final gathering.

I find it so challenging to capture the magic that happens when the group gathers as we always cover so much content. And yet, I’ll do my best to relay some of the highlights.

Heron’s Approach

Our invited resource expert was Dana Pancrazi, vice president of capital markets at the F.B. Heron Foundation. There, she is responsible for identifying and cultivating opportunities for deploying the full range Heron’s investment “toolkit.” From my perspective, Dana provided the group with two poignant discussion topics; the first was about knowing and “owning what you own”—a reference to a foundation’s fiduciary duty of obedience to mission. The second topic dealt with the challenges of hiring talent after determining a shift in strategy away from the status quo.

Several years ago, Heron undertook a portfolio examination project where it examined every holding in its investment portfolio. The findings from that project helped spur the foundation’s strategic shift, which required the removal of silos between program and investment staff.

(You can read more about Heron’s inspiring transition here.)

After the portfolio examination was complete, Heron staff pitched their board on a new strategy that showed the exponential influence the foundation could have in the field by restructuring internally. Once approved, the strategic shift enabled the foundation to invest across the financial spectrum—deploying the best combination of financial, human, knowledge, and social capital toward its mission of helping people help themselves out of poverty. Heron’s new approach also allows for greater consideration of social outcomes in addition to financial returns.

Our deep conversation about Heron’s strategic pivot left me with two key takeaways. The first was that a foundation should not mistake its only value in the market being its proximity to money; how that money is directed and managed matters just as much, if not more so. I attribute my second takeaway to points made regarding the importance of educating the board about a foundation’s investment holdings.

Risks of Not Knowing

There is reputational risk in having a reporter uncover your foundation’s investment impact and holdings before you do. A front page story in The New York Times or Wall Street Journal about duplicitous asset holdings by a well-intentioned foundation only takes days to write, but can destroy years of good will.

Once a board knows about the holdings, they can’t ignore the facts. There is an importance in demanding transparency from investment advisors that you pay—not the other way around!

Community foundations know their communities deeply, and are accountable to their constituents in ways no other funders experience. Their reputational currency is way more valuable than their asset size.

Capacity Crunch

Inspired by Heron’s efforts, we examined key challenges that could or would surface in replicating similar restructuring efforts at our respective organizations. In line with our theme of capacity, we zeroed in on three hurdles: hiring, titles, and community buy-in.

With regard to hiring, the group recognized that finding individuals capable and patient enough to deploy capital across more than one spectrum (i.e. grants and investments) was uncommon. And when those exceptional individuals are found, their promise could be obscured by the politics of titles and silos—a feature of most organizations that ties even the most die-hard innovator to historical ways of working and creating.

The last, albeit most important, hurdle involves the capacity of the foundation as a whole to gain and retain community support in its decision to materially change its approach to managing financial assets.

All said, these capacity challenges were not seen as insurmountable. Our conversations about them were balanced with mention of the incredible opportunities for leadership and impact that community foundations have embedded in their very DNA.

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The final highlight I want to share is how blown away I was by the progress each community foundation leader has made since our first gathering. All of us in the group share a collective appreciation for the hard work being done at the board, staff and community levels; and what the ongoing support of the CFC has helped make possible. I’m excited to see what transpires during our final gathering in March 2016 and beyond as the ties among members of the CFC are deep with ripples to be felt for years to come!

Catherine Covington is senior manager of client engagement at RSF Social Finance.