Rethinking the “How” and “Why” of Our Mission Investing

 in partnership with the castanea foundation and john merck fund, high meadows helped finance ayers brook goat dairy starting in 2012. in 2017, ayers brook paid back the investment.

in partnership with the castanea foundation and john merck fund, high meadows helped finance ayers brook goat dairy starting in 2012. in 2017, ayers brook paid back the investment.

Our board of directors values continuous learning. We dedicate nearly half our time together in conversation with our grant and investment partners and other experienced practitioners. Our partners point us towards new and more effective ways for High Meadows to use its resources— our financial and human capital.

One afternoon this fall, the conversation was about mission investing. Mission investing is one tool for deploying our financial capital to serve our mission. Grantmaking is another one of our tools. The difference between a grant and a mission investment, put simply, is that we expect an investment to be paid back over time, as would any financial institution. Because we’re getting paid back, High Meadows can put more resources out into Vermont than we’d be able to with grants alone. You can learn more about our investment portfolio here.

Again, this is a simple explanation for how and why High Meadows does mission investing. There’s much more to think about and many more questions to ask about how High Meadows makes and assesses these investments. That’s what our recent conversation was all about. Stu Fram of RSF Social Finance, Nancy Wasserman of Sleeping Lion Associates, Janice St. Onge of the Flexible Capital Fund, Tim Storrow of the Castanea Foundation, and Chelsea Lewis of VCF (and member of the High Meadows board) joined in to share their own experiences and begin asking those questions.

Here’s a question: How do we decide the rewards of an investment are worth the risk? It depends on what we identify and appreciate as rewards. Stu Fram described how RSF Social Finance thinks beyond financial returns when they’re weighing the risk of an investment. Stu thinks about how financial investments can generate community capital, with social and ecological returns.

Stu suggested, if an investor expands its definition of reward, maybe its mission investments don’t need to be fully paid back— not with money, at least. There might be times when structuring an investment with a “negative return” could open the door to opportunities or impact that a traditional investment return cannot achieve. Stu offered more questions to help us explore the form and function of our mission investments:

  • Does the structure of our investments reflect our values and goals?

  • How do the experiences of those in the communities impacted by our investments inform what we do?

  • How are the risks of a loan shared among the investors and the investee? Who is accruing the benefits from the loan?

You learn more about this approach, and hear about some examples of this kind of investment, in Stu’s recent article for the Stanford Social Innovation Review.

As we broach these questions, High Meadows is excited to have a close partner in the Vermont Community Foundation. VCF was one of the first community foundations in the country to devote a portion of its assets to enterprises that help achieve its mission— in 2001, VCF started to put 5% of its investments directly in Vermont businesses and organizations. Chelsea Lewis has been working to orient VCF’s own mission investing approach towards closing the opportunity gap. How can VCF’s investments create more opportunities for Vermonters to succeed? Like RSF Social Finance, VCF is articulating its investment goals in terms of human, civic, and natural capital.

This conversation has encouraged us to articulate more clearly what High Meadows is seeking to accomplish through mission investing. We can learn a lot by looking for models and lessons in our current portfolio. Take this story published by RSF Social Finance about Commons Energy, a High Meadows investment. The story of Commons Energy demonstrates how grantmaking and investing are two distinct and complementary tools that we can use achieve positive social and environmental outcomes.

Through our ongoing learning and more conversations like this one, High Meadows will continue to look in our toolbox and consider different and more effective ways to use what’s inside.