At Heron, we’re always looking for opportunities to better align our investments with our mission — which sometimes involves investing deliberately in specific geographies. Here is a spectrum of strategies that we look to when we are trying to invest in a specific place.
To convey our mission to our preexisting and prospective managers, Heron has created a Letter of Intent for our fixed income portfolio.
A few years ago, Heron gave a sizable grant to stimulate job growth in a city that had high rates of unemployment. While our intentions were good, our grant resulted in unintended consequences for the community— prompting us to reevaluate how we think about net contribution in a place.
The F.B. Heron Foundation (“Heron”) exists solely to serve a public purpose — in our case, making investments that further the ability of people and communities to move out of poverty and thrive. This purpose guides not only our grant-making, but the use of all of our resources, including investment capital, so that we use them fully to contribute to the reduction of poverty, the widening of opportunity, and the improvement in material and social well-being for disadvantaged people and communities. The Heron investment policy thus reflects our intent to determine the social and financial return on all assets, and to select opportunities for deploying capital, whether as grants or as investments, so as to maximize both kinds of return.
Heron champions the people who believe profoundly in the promise of their community and who dare to chase the shared dreams for the place they call home. We work directly with local organizations that are embedded in, deeply trusted by, and inherently driven by the voice and vision of their neighbors. We invest in their know-how, skills, and determination to build a community that reflects and honors the dignity of all and where prosperity is shared.
Heron does not operate as a traditional “funder.” Heron partners with communities to source relevant and actionable research, nurture a learning collaborative of peers, help communities reclaim their narrative of place and self, foster stronger collective agency and social bonds, and provide long-term financial support.
We aspire to be, first and foremost, an organization that nurtures a network of local people advancing their communities and achieving the transformation they seek. Heron works mainly in rural communities experiencing persistent poverty, systemic challenges, historic disinvestment, and a legacy of disenfranchisement. We also believe that this model is applicable across all geographic regions, all socio-economic classes, and in urban, rural, and exurban communities alike.
When Heron declared its intention to invest 100% of its assets for mission, we needed to find new ways to track and visualize the portfolio as it changed over time. Six years later, we want to share where we stumbled in the process, what we have learned from our attempts, and where we are today.
As an investor and a grant maker, much of “Heron’s impact” isn’t ours at all, but is the aggregate impact of the enterprises that we invest in. Enterprises do things like hire people, use resources, manage waste, and design products. They can do any of these well or poorly, with positive or negative repercussions for their employees, customers, suppliers, investors, neighbors, and other stakeholders. We think of the collective positive and negative impact of any enterprise as its net contribution to (or detraction from) the world.
In our role as a capital provider to both nonprofit and for-profit enterprises, we have seen that proper capitalization is an essential ingredient for healthy, resilient enterprises that serve clients, investors, and other stakeholders with excellence over the long haul.
In an effort to be as transparent as possible, Heron has been posting the performance of its financial portfolio dating all the way back to 1992. And lately, observant readers have been sending us questions about the way in which Heron’s portfolio performed during the 2008 financial crisis.
Heron sees enterprises of all sizes as the drivers of change in their communities, and we believe that we become complicit in the activities of an enterprise when we invest in them. We therefore try to consciously construct a portfolio that aligns with our values and complies with our fiduciary responsibility to mission.
We hope that by sharing our efforts to construct a conscious portfolio, we can encourage all asset owners and investment professionals to measure, evaluate, and monitor the net contribution of their investments, and to create investment products and portfolios that reflect their values.
In part two of a video series on nonprofit capitalization, Heron’s Rodney Christopher shares thoughts on assessing where an organization stands financially, and four capitalization goals to help ensure a nonprofit has the right kinds of money when various needs arise.