Much like any values-based organization with capital assets, religious institutions have dual goals when they invest: to generate a return and to uphold their principles and values. And many are achieving those goals¹ through impact investing.
For the United Church of Canada (UCC) Foundation, which grants funds to support the church’s programmatic work, impact investing has become an increasingly important component of its investing strategy. “The UCC has always been on the forefront of socially responsible investing,” says Sarah Charters, President & Executive Officer of Philanthropy at the United Church of Canada Foundation. “A few years ago, we were part of a conversation about how foundations only give out a small portion of the money they manage – and the question arose: ‘What are you doing with the rest of that money? How are you ensuring that money is truly aligned with your values and truly doing good?’ That’s how we came into our impact investment philosophy².”
About four years ago, the Foundation partnered with Genus to explore their options for thematic impact investing. “We were interested in finding ways to do good things with our assets,” Charters says. “We have always invested to the best of our ability in accordance with the United Church’s values. But the investing space has evolved over 20 years and we wanted to make sure that our investments were in best-of-sector companies with solid governance in place.”
“It’s a real feel-good moment to see that we’re contributing to something that’s improving lives in Canada and in other places.”
The Foundation needed a turnkey solution for this next step in their responsible investing journey. “We had many discussions about the best approach for us,” Charters says, “and as we developed our overall strategy for impact investing, we realized we needed a partner that could do all the things related to investing – from sourcing the investments to doing the due diligence and actually investing the funds.”
That’s when they came to Genus.
An active approach to impact investing
The United Church Foundation, like many institutions and individual investors, found itself looking for more from its investments. “We’ve been passive investors for a long time,” Charters says. “We’ve been in pooled funds where we don’t have proxies to vote. But we were looking to get more involved in that process.”
For its first foray into impact investing, the Foundation carved out $5 million in assets. “We wanted to see if we could make the impact we were hoping to,” Charters says.
Its first step, after partnering with Genus, was to establish themes – “the environment, Indigenous reconciliation, anti-racism and rural community development,” Charters says.
Genus helped the Foundation to align investing opportunities with those four priorities. “We have invested in food chain robustness in a couple of areas in Canada. We’ve invested in Windmill, which helps newcomers get their professional credentials. We’ve also invested in Raven Capital, which supports Indigenous entrepreneurs,” Charters says.
The Foundation receives Net Impact Reports for all of its investments with Genus, so it can measure the impact it’s making. “When we look at the reports – and especially the detail on the purpose of the investments – it’s a real feel-good moment for the board to see that we’re contributing to something that’s improving lives in Canada and in other places. And we’re doing it in a way that builds up capacity.”
A plan to grow impact
While the Foundation’s impact investments currently comprise a small amount of its overall portfolio, it has bigger ambitions when it comes to impact investing. “Our strategic plan has us working toward getting 50% of our investments into impact investments by 2027, which is hugely ambitious,” Charters says. “But I think as the board and investment committee get more comfortable with the process, we’ll be able to add money to the portfolio and refine our goals even further.”
Part of the process in increasing their impact comes down to learning what works best for the organization – and by connecting with others who are doing the same. The Foundation has done that by reaching out to a network of peers and experts in the space. “I’ve learned that everybody is happy to share and collaborate,” Charters says. “It’s definitely a good idea to reach out. It’s a friendly space.”
Interested in exploring whether impact investing is right for your religious organization? Contact a Genus advisor to learn more.
References:
- Why faith-based organizations are shifting to impact investing (no date) Knowledge at Wharton. Available at: https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wharton-podcast/backstreet-wall-st-ep-07/ (Accessed: 19 January 2024).
- Investment ideology: United Church of Canada Foundation (2022) United Church of Canada Foundation. Available at: https://www.unitedchurchfoundation.ca/investments/investment-ideology/ (Accessed: 19 January 2024).
