Returning to RSF as an MBA Summer Associate
Feb 6 2020
As I stepped off the PresidiGo shuttle, I couldn’t wait to start my first day as RSF’s MBA Summer Associate. Prior to enrolling at Berkeley’s Haas School of Business, my professional background included asset management, impact investing consulting, and direct operating experience at a social enterprise in Kenya. I also had the opportunity to work with RSF’s Lending team as a Social Impact Fellow to source and perform preliminary diligence on potential Food & Agriculture borrowers back in 2015. My experience at RSF had been nothing short of inspirational, and I was excited to come back to the organization in a new capacity as a member of its Investments team.
The Investments team is focused on investing money on behalf of its Donor Advised Fund (DAF) clients, and I knew I would be working on the DAF’s Liquidity Portfolio. This impact-first portfolio aims for capital preservation, net of fees, so that donors maintain liquidity for grantmaking while supporting leading mission-driven institutions. I was excited to work with a product that’s unique among competitors in its pursuit of a portfolio that is wholly invested in impact investment funds before donors grant out the capital.
Given the dynamic nature of the fund, I began my summer working on a liquidity modeling project to help the team make decisions about the tenors of the underlying products for our portfolio given historic pattern in capital inflows and outflows. I also worked alongside my colleagues to create three impact criteria that the Investments team uses to evaluate every transaction: Community Engagement, Outcomes Orientation, and Change Agent & Scale. This involved creating a scoring system that was applicable across asset classes to understand how our underlying managers think about impact and, in turn, their alignment with RSF’s organizational values. We scored our historic portfolio on these new criteria to help us quantify the risk/return and impact trade-offs we were making in the portfolio, and ended up freeing up capital to allow us to invest in new funds with top-tier impact and financial performance further enabling us to optimize the portfolio.
After wrapping that up, I spent the second half of the summer doing a market scan across the CDFI, private debt, and cash landscapes to better understand what investments could help us get maximum liquidity, the highest returns, and the most impact as measured by the impact criteria outlined above. I enjoyed identifying managers that I thought checked these boxes, and speaking with their teams to better understand their impact and investment strategies. In all, I performed initial diligence on approximately 45 managers and spoke with 18 managers working in the US and internationally. This process also enabled me to benchmark the returns that were being offered at various tenors. Notably, we were working in a fiscal environment with an inverted yield-curve and knew that we wouldn’t be rewarded for locking up our capital; therefore, we focused on managers with products that had tenors one year and under for our summer Investment Committee recommendations.
Our market-level diligence turned into two concrete investment recommendations: 1) a decision to double down on one of our current managers, Root Capital, and 2) to make a new investment in BlueOrchard Microfinance Fund. We came across an interesting dynamic between these two funds: one had impressive scale while the other was deeply impactful at a local level. Therefore, in this recommendation, we balanced BlueOrchard’s higher returns, scale, and liquidity with Root’s more modest returns, one-year lock-up, and best-in-class outcomes measurement. I worked alongside the Investments team to perform further diligence, write in-depth investment memos, and successfully presented our recommendations to RSF’s internal Investment Committee.
While these activities took up the majority of my summer, I also had the opportunity to participate in our forward-looking DAF strategy planning, conduct a market analysis on our competitors, and dig into the merits of participating in a follow-on equity financing for a legacy investment.
The RSF culture and staff were exactly how I remembered them. My coworkers were warm, diligent, and imaginative in their pursuits to help their values-driven clients align their money with the causes they care about. In fact, I loved my summer at RSF so much that I decided to continue working with the Investments team into the Fall of 2019 and pitched-in on a whole slew of new projects… but I’ll leave that update for another time! Thanks to the whole RSF community for welcoming me with open arms, and for teaching me so much about investing and community over the course of a wonderful summer.
Alex is currently a student at the Haas School of Business.